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Food delivery platforms are a hairy business. From groceries to ready made meals, a plethora of startups have found it hard to monetize and manage the complexity of fulfillment, delivery and contractors. For example, Instacart’s grocery delivery service was plagued by a lawsuit last year in California and faces more issues over wages this year while restaurant delivery services Seamless and Grubhub have dealt with their fare share of debacle and farmers’ market darling Good Eggs folded across three markets including New York in 2015.
Caviar, a meal delivery app and online marketplace that partners with over 2,000 restaurants in seventeen different cities across the country, is quietly applying the sum of all those failed lessons learned. Its success is based upon nurturing growth for its community of “partners:” restaurants, caterers and food trucks.
Launched in New York in 2014, Caviar now works with over 400 of these so-called food partners in Manhattan and Brooklyn. They range from budding food trucks and catering companies to established restaurants.
Its business model reflects a wider business trend in foodtech. Primarily a food delivery business (albeit tech-based), Caviar’s recent acquisition for a reputed $100 million by Square, a credit card processing and point-of-sale toolkit favored by small vendors, reflects a wider trend of pure-play tech investing in consumer-centric food businesses. The upshot? Both Caviar and Square can apply tech infrastructure at scale to cultivate customers (both food and non-food vendors).
When it comes to managing food, Caviar operates a business model that’s closer to what FoodtoEat does for corporate catering. Having encountered a lot of resentment among restaurant owners and chefs against delivery platforms today, and with chefs aiming to up the stakes by launching their own food delivery platforms like Dave Chang’s Maple, Caviar’s goal is to “increase [a restaurant’s] revenue without having to grow overheads.”
How the company does that is down to its marketing, ordering and delivery networks. For starters, Caviar makes it super convenient for customers to order food. Requests take the form of single orders or “Caviar for Teams.” Orders can be scheduled up to a week in advance, customers can set a budget and split the bill for their deliveries using payment technology powered by Square. Then there are “shared carts,” where a group set or orders is batched into a single order. For the hangry, there’s “Fastbite,” which delivers set meals in minutes.
In terms of delivery, restaurants receive digital orders in real-time for either immediate or future fulfillment. Once cooked, the food is picked up by a Caviar delivery contractor and delivered at the customer’s specified time.
To stay on top of busy periods in-house, restaurants can stop accepting new orders at the push of a button. To manage cost base and produce, vendors curate what menu items they offer for delivery. For example Vinegar Hill House in DUMBO, Brooklyn, only offers its year-round menu staples. The downside? Flexibility comes with caveats, such as the lack of leeway for customers to ask for substitutions (many partners display a “no substitutions” policy on their menu pages), and set order minimums. This seemed especially prevalent for new restaurants.Meanwhile customers receive notifications over e-mail or SMS (or both) to follow their meal’s journey. The costs of putting such a system in place for individual food vendors would be prohibitive, which is where Caviar’s third party technology picks up the tab. That’s also the case for its fleet of delivery personnel who collect food and deliver to customers. Delivery staff are contractors with their own transport. The cost is factored into the bill in the form of a flat-rate eighteen percent service charge and $1.99-6.99 delivery fee on every order. A non-required tipping policy ensures customers are spared additional costs.
Caviar is especially keen to point out the advantages it can offer to partners in the form of marketing services. Caviar pays to promote food partners on its platform and social. It also sends food photographers to capture menu items for their Caviar listing and targets potential eaters based on their location and cuisine preferences.
These services enable some restaurants to build their business from scratch. New York’s first dim sum restaurant Nom Wah Tea Parlor, for example, has been partnering with Caviar for two years. While the restaurant’s manager Wilson Tang was initially skeptical, since signing on with Caviar the restaurant increased sales by $10,000 a month. Thanks in part to the additional revenue from Caviar Nom Wah opened a second location in Philadelphia. Before their newest restaurant was even open to the public, Philly eaters ordered dim sum from Nom Wah’s new kitchen exclusively via Caviar.
At the other end of the scale, Caviar partners with food pop-ups such as Mr. Curry, which occupies Williamsburg sandwich venue Saltie three times a week. Customers can also order from food hall’s like Berg’n and Smorgasburg. Finally there’s the option to order from restaurants even when their doors are closed. Michael White’s steakhouse Costata, for example, closed their SoHo dining room in January. However customers in Manhattan can still order their favorites on the platform.
So what’s the verdict? Well, for consumers who care about price, your average order on Caviar won’t be as cheap as some other food delivery platforms. However I’d argue that’s the price to be paid for supporting small businesses and contractor welfare. That shows. In New York and on the West Coast, I was impressed by delivery speed and customer service. You actually get a smile with your delivery. Computer glitch submitted your order in twice? You’ll get a phone call to double-check that’s correct. New York traffic turns a mile commute into a two-hour journey? Somehow Caviar gets food to you regardless. Delivery guy’s bike got stolen in the middle of an East Village pick-up? You’ll get a call or text to notify you about that. Sympathetic additional tip and replacement hoverboard: optional.
Images courtesy of Caviar.