While there are many positive things to be said for the on-demand mobile economy, one that cannot be mentioned enough times is that going hungry is not an option for anyone with a functioning mobile phone. There are apps that deliver takeout, apps that deliver groceries, apps that make restaurant reservations, apps that pay for the meal – all of which are good news to consumers, who have a buffet (yes, we intended that pun) of options to choose from when hunger strikes.
But for the makers of all of those apps looking to help the hungry consumer in an increasingly crowded space, popularity presents an unexpected problem – standing out and being noticed by those consumers who are inundated with options.
Which is why ChowNow – an online takeout ordering platform for restaurants – decided that the best way to reach consumers was to power the restaurants that already serve them.
“Everyone is trying to insert themselves between the consumer and the restaurant,” says ChowNow CEO Chris Webb. “We work behind the scenes and behind the restaurant and that allows [the restaurant] to directly communicate with their customer. We have gotten a lot of feedback that implies our customers [their restaurant partners] really, really like it.”
ChowNow enables online ordering and offers a marketing platform that makes it easy for restaurants to take orders from their website, Facebook page, and through branded iOS and Android apps.
Webb explained to MPD CEO Karen Webster that the third-party ordering platform model that other players in the space have adopted represents a kind of double-edged sword for those merchants. Though those engines can function as an acquisition tool to bring consumers to a restaurant, they run the risk of being disintermediated from customers.
“The No. 1 feedback I got [from restaurants] was that they hated these platforms that would get in and allow restaurants to get online quickly – but over time they lost the connection with the consumer. They even found themselves having to pay a commission on every transaction. And that was any customer – even people who were regular once-a-week orderers.”
Webb told Webster that as the idea for ChowNow was coming together, it became clear that the needs of the takeout restaurant customer were somewhat different than the general needs of the typical restaurant operator. While a third-party platform might offer a business significant value as a discovery platform, helping consumers find a takeout restaurant is just less important since the majority of “to go” restaurant business is actually repeat business.
“We’re not a discovery platform,” Webb told Webster. “The true value of a marketplace in any industry – eBay, Uber, etc. – discovery is the No. 1 value that they bring. The reason [marketplaces] don’t work well in the restaurant to-go business is that discovery has already taken place about 80 percent of the time. The real value is in customer interaction.”
And it is a value that investors see too. Last week the Venice, California-based startup announced that it had brought in an additional $10 million in venture funding in a round led by Upfront Ventures (with additional participation from Steadfast Venture Capital, Daher Capital, and Karlin Ventures). Going forward, Webb told Webster that that money will go into both scaling their marketing efforts – up from their current five-person team – and improving the product.
“We’ve seen too many companies in our space try to grow too quickly too soon and not get their product in a great place. We wanted to get our platform into a great place where we were getting great feedback from our restaurants [and] where we weren’t losing that many vendors.”
The firm has also made some new strategic hires: Nick Kellermeyer, a former executive at GrubHub, and Arpan Jhaveri, a former senior leader at Yodle, join the team as Vice President of Sales and Vice President of Product & Marketing, respectively. Webb told Webster that now seems like the right time to grow, as restaurants are really leveling up their technological pursuits.
“Restaurants as an industry have always been slow to adopt technologies,” Webb noted. “I think that’s changing today because the space is getting more and more competitive and everyone out there is looking for an advantage. They are also looking out there and always seeing people on their phones, so they can see that opportunity. I think they’re making decisions a little slower because they are overwhelmed by options despite wanting to move faster.”
Webb says it helps restaurants move faster but also, it helps them move smarter. For example, he noted that they have fully integrated both Apple Pay (since the end of January) and Google Wallet (more recently), and now have those payments methods available to all of their merchant partners.
“Every one of our orders that is placed is paid for online. Historically, that’s always been credit cards, but we were the first online ordering company in our space to launch Apple Pay. That’s the bridge we’ve taken.”
And Webb notes, it is a bridge that so far is paying off – as Apple Pay has turned out to be very popular with their restaurant clients’ iPhone-carrying consumers.
“The numbers we are seeing around Apple Pay are very, very impressive. Within the last 60 days since our platform has been updated, we’re seeing, on average, iPhone users making 15 to 20 percent of their payments using Apple Pay. Some of our customers’ apps are seeing 30 percent using Apple Pay.”
And that, Webb notes, is across the board. ChowNow is currently partnered with thousands of restaurants in 45 states, and that 20 percent number is fairly uniform. It’s also a figure Webb expects to increase.
“One of the biggest drop offs when you look at the sales funnel when you look at eCommerce is that final account creation checkout process. Apple Pay has done a really good job of making that as easy as possible on the consumer,” Webb noted. “One of the main reasons we like it is that it allows customers to create an account using their thumb.”
Webb also noted that early information indicates that using Apple Pay (as opposed to standard account creation methods) makes the account creation process for new users 35 percent faster.
The food industry is full of mobile players, which is not all that surprising. As Webster noted in her conversation with Webb, food establishments are an excellent place upon which to build consumer habits, because everyone has to eat. ChowNow has the interesting idea of working with the business that actually makes the food to reach the customers.
While they are still expanding, so far, it seems to be an idea that restauranteurs and investors alike can sink their teeth into.