Retail

Snack Shops Run Lean By Tapping Into Delivery Platforms

Snack Shops Cater To Munchy-Seeking Consumers On Food Delivery Platforms

Before starting a company that leverages existing food delivery platforms to sell snacks and candy, a Canadian entrepreneur noticed an interesting trend: There were delivery-only “restaurants” coming onto the scene that only served customers who ordered from Uber Eats. “In reality, it’s just a kitchen somewhere,” Snacko Founder and Owner Connor McPhail told PYMNTS.com in an interview. “You don’t need that prime location.”

At the same time, McPhail noted there was a huge gap in the market on these platforms, as no one seemed to be jumping in to deliver late-night desserts or snacks. He was confident to start his own, as his business model comes with a few advantages. For starters, McPhail works out of what he describes as a funky renovated shopping container just outside the downtown area of Toronto.

Rent for his container is low because the space is so small, and the business needs only one person there at a time to operate. It is also a packed environment, with shelves of candy and chips stacked to the ceiling. Several tablets serve as a dashboard to accept orders from delivery platforms, displaying which candy and snacks his customers are asking to be brought to their homes, apartments or offices.

The Business Model

From a startup point of view, the setup is ideal for testing out McPhail’s concept. The initial investment was low, which lowered the risk of the venture. At the same time, he wants to stay as nimble as possible to expand and replicate the concept across Canada. And the cost-efficient set-up of his business allows McPhail to keep the costs down for consumers.

Snacko offers a wide selection of snacks, including chips, chocolate bars and other candies. Beyond the more traditional fare of Oreos, Rice Krispies and Lay’s Classic Potato Chips, he also wants to bring some quirkier, more unique offerings to his online store. McPhail plans to launch an edible cookie dough from a local catering company, as it’s “a pretty hot trend now, but it’s still pretty hard to find.” At the same time, the offering falls within Snacko’s goal to become a virtual marketplace for up-and-coming snack and drink companies to market their products.

To prepare a customer order, Snacko simply packages candy, chips or another kind of snack into a bag and hands it off to a delivery driver from Uber Eats, DoorDash, Germany-based Foodora or Canada-based SkipTheDishes. Those drivers are then able to get those orders into customers’ hands within 10 to 20 minutes. “It’s very, very quick,” McPhail said of the process.

The Online Food Marketplace

Beyond on-demand food platforms, consumers can order snacks and candy from grocery stores online, but there are some downsides: For instance, it might take a day or two to receive the items, or same-day delivery could take four or five hours. That setup isn’t ideal for a customer who has a serious case of the munchies. “It doesn’t work for somebody who wants a snack right away,” McPhail said.

By using on-demand delivery services like Uber Eats, he noted, Snacko gets its inventory into customers’ hands in less than 30 minutes. And in terms of transporting items around a city, McPhail said no one does that better than companies like Uber Eats, which have drivers around the city waiting to pick up online services.

McPhail did say that some companies are trying to build their own networks of drivers or customers, but they have a challenge: They are investing in their businesses, but consumers might not necessarily come. Those companies are burning through cash and have to find new customers and drivers in the cities where they choose to expand, he noted. By using existing delivery platforms, McPhail said he is able to scale up, because the companies he works with are already in different Canadian cities – showing that these networks have potential uses for merchants beyond delivering takeout.

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