Businesses that grow out of a merchant’s personal experience can either be doomed or saved by that intimate connection. If you start up a business because you find an unmet need in your own life, you’ve got some important consumer research under your belt. But if you don’t then broaden your mindset to the imaginary market at large and all its players, your business risks spiraling into irrelevance.
Snapfood.com got its start in its founders’ real-life experience. A group of employees of New York-based software company Clever Oak were working late nights trying to complete a wireless technology product and were becoming increasingly tired of their options for ordering in meals. They began wondering if they couldn’t design a system that would help bring local restaurants and local customers together over the Web. The result, in June 2004, was Snapfood.com: an e-business that takes orders and sets up food deliveries via the Internet—and takes credit card payments in the bargain.
Users can go to the Snapfood.com Web site, enter their location and search the menus of all the restaurants currently in the Snapfood system that will deliver to their area. Since Snapfood’s total delivery area stretches from midtown Manhattan to SoHo, or about a forty-block span, not all users will be able to get food from all restaurants—not if they want it hot, anyway.
But they can pay by credit card, and they won’t pay a premium to get the food delivered either. Snapfood accepts, authenticates and clears the credit transaction through its own in-house system, then pays the restaurant itself—minus a transaction fee. Item prices are exactly the same as they are on the in-store menus, although restaurants may still impose a delivery charge separate from the a la carte prices. Snapfood then sends the order to the restaurant kitchen via fax—a low-tech device suited for an industry where technological savvy is not to be presumed—and the restaurant itself does the delivering.
That credit card capability is one key to Snapfood’s value proposition, says president Lon Binder. For the company, it means not having to operate a collections department to get restaurants to pay up for orders conveyed. The restaurants themselves benefit from the customer wisdom residing in Snapfood’s user database; the company offers refunds for failed orders, but a customer who shows too many refund requests will get shut out of the system. “We can tell them if a customer has abused the system at more than 100 different restaurants, not just theirs,” Binder says.
And customers get the convenience of not reading a string of numbers over the phone when they order, and the security of not giving their credit card number to a restaurant employee. And of course, no busy signal
It’s that ability to balance value for both users and suppliers that constitutes Snapfood’s edge over such earlier failed online delivery ventures as Food.com, a joint venture of McDonald’s, Kraft Foods and Blockbuster that launched in multiple cities in 2000 and tanked soon after. “Most of us in the company come from backgrounds that include restaurant experience,” says Binder. “Either our families have owned restaurants or worked around them--consulting for restaurants, opening them, handling their real estate. We figured once that we have about 250 years’ worth of restaurant experience on our board of directors.”
That’s important because Snapfood’s success depends in a real sense on its ability to form close trusted relationships with its suppliers, the restaurant owners. These people are (a) extremely busy, and (b) skeptical of outsiders, working as they do in a world of pilferage, short weight and revolving-door employment. Binder and his team don’t require them to operate any technology more complex than a fax machine, and they visit the businesses to explain systems and operations before a restaurant can join the program. Order-handling instructions must include pictures for the line workers who don’t read English or don’t read at all.
And Binder admits that with so much restaurant experience on the payroll, his people can’t help getting a bit involved with helping their foodservice clients sharpen their offerings. In fact, the company does a full menu analysis for participants, simply to increase its value to them. He recalls advising one Tex-Mex outlet to add a low-carb item to the menu and getting a quick rebuff. “So we said, ‘Okay, just take your normal tostada, remove the cheese and put it in a box instead of a shell,’” he says. “Now it’s basically steak, lettuce and onions. And that is now their biggest selling menu item.” Snapfood has also advised other outlets to cut back on their delivery zones in order to make sure the quality of the delivery product remains high. Fifteen different data points, from minimum orders to food prep and travel times, go into figuring out those optimum delivery zones, which also vary depending on time of day.
Snapfood staff—five full-time, 11 part-time and two consultants-- visits restaurants frequently to make sure food prep and operational standards remain acceptably high. When they detect problems, they go straight to the owners. “These people can’t see everything that’s going on in their kitchens, especially at multiple locations,” Binder says. “We act as a combination of the best manager and the best server they ever had, alerting them to problems.” He says Snapfood has dropped four outlets from its program in nine months of operation so far.
In the beginning, it took up to two months to add a new restaurant to Snapfood’s stable; now they can often get a new participant up and running in two days. “We’re very process-oriented,” Binder says. The company maintains a continual watch over the accuracy of its menu information and also goes through the day’s orders every night to see if customer requests have created new menu items. “If a customer writes that they want cheese on a pork sandwich, we’ll call the restaurant, ask how much the cheese cost, what type—and then next day there’ll be a pork sandwich with cheese on that menu.”
As for getting the word out to customers, early promotion for Snapfood was “basically me and another person out on the street handing out fliers,” Binder says. Since the company started with only four restaurants, the area being leafleted was necessarily small—one midtown ZIP code. Today, with 120 providers in the network, Snapfood promotes itself in nine ZIP codes, but still relies heavily on street fliers. They also do some online marketing through local portals such as New York Citysearch, along with print advertising, joint promotions with restaurant partners, and some direct sales to corporate clients.
Besides adding more restaurants to its roster, Snapfood’s immediate plans include ongoing improvements to its Web site. Binder, who has consulted on Web site design for more than 100 companies from TheStreet.com down to small start-ups like his own, says it’s time for the company to take the advice it frequently gives its participating restaurants. “We tell them a Web site is supposed to make money,” he says. “Get away from the online pamphlet. Some of our participants, like the Taco Bandito chain, point their Web site directly to us; others include us as an ‘Order online’ button on their main site that snaps to us.”
For Snapfood, that advice translates into enhanced search functions. Users can now search by restaurant names or type of cuisine; the name function is pretty sophisticated, but the food search does not bind the results to the user’s location—something that can lead to diner disappointment if they live just outside the delivery zone of that Thai restaurant that looks so good in search results. “That doesn’t work well for us now,” Binder says. “But give us time. We’ve got the capacity in-house to make it good.”
