LOS ANGELES, Calif.—DTT Surveillance, a manufacturer and installer of surveillance solutions for the quick-serve restaurant industry, announced this week $15 million of debt financing provided by CapitalSource. Combined with a $7 million investment this past summer from Post Capital Partners and Gemini Investors, DTT now has $22 million with which to fuel growth that may include an eye toward verticals outside its traditional sweet spot.

The financing is important, said CEO Sam Naficy, because of the company’s transition in 2007 to a subscription model for its services. “We used to sell an outright package,” he said. “We’d sell a $10,000 to the restaurant client, provide great service and the warranty, and then every three years they’d buy a new. Like the Dell model.” However, the company wanted to increase recurring revenue, so switched to a simple monthly payment with a very low installation cost, and in the past 33 months has created $800,000 in recurring monthly revenue.

“We’ve spent about $10 million to generate approximately $800,000 in RMR,” Naficy explained. “Our creation cost is in the 13 or 14 dollar range.”

Bill Polk, managing director at CapitalSource, called the video monitoring space “white hot” right now, “and we want to be there.” Thus, DTT had two things going for it, he said. “We are impressed with what Sam has done with his laser-like focus on [the quick-serve] sector,” and video monitoring as a business in general has “very powerful economics behind it when you consider the trade-offs with manned guards under many circumstances.” Also, he said, “the technology is becoming more cost-effective to install and manage. Five years ago, video monitoring didn’t have the kind of design features that made it particularly cost-effective to do. And those who have now cracked the code are starting to make nice margins. It’s really starting to work out for those who’ve gotten ahead.”

Thus, there is both ready supply and significant demand: “You’ve got the market really asking for the product and a provider able to provide it in a cost-effective way,” Polk said.

Naficy attributed at least a little of DTT’s success to luck: With the recession, fast-food restaurants have been booming. “As people trade down,” he theorized, “they go from Morton’s to Sizzler, and from Sizzler to Subway, and we control the sweet spot of that lower end. So we’ve reaped the benefits of that.” But even the relatively recession-resistant fast-food restaurants have been made more cautious by the economy, so DTT’s new model hit at the perfect time for that, too: “These customers prefer instead of spending capital to spend $200 a month, because their own abilities to raise capital have been affected.”

It hasn’t been easy, though, said Naficy. “Spending nine million in capital over 18 months is hard,” he allowed. Nor was it easy finding debt financing in this market. Because of the private capital this summer, though, “we were fortunate not to need the financing,” Naficy said. It took as much as a year to find the right lender, but, in the end, “CapitalSource was engaged and involved and they really made a push to a favorable deal,” he said.

Now DTT will be financing growth, and pushing into the “large footprint chains,” Naficy said. Further, “there are significant acquisitions that we’re looking at. We’re looking at business intelligence and analytics as the next phase of the company. We’ve always talked about convergence, convergence, convergence, and now that’s being taken to the next level, beyond just integrating video and data. Now, the leaders of the industry will analyze that data and tell people what it means.”