As every food delivery company tries to gain an edge over its rivals with discount codes, faster service, and a shift to the creepy realm of ghost kitchens and dark stores, a startup is building on a lighter social concept – allowing people to see what their friends are snacking on, which makes it possible to order food and drink for each other and order in groups, with shoppers collecting everything themselves – just raise a substantial Series B and says it is already profitable in a number of markets.
Snackpass, which describes itself as “food meet friends” – essentially a social commerce platform for ordering in restaurants; “snack,” the CEO tells me, has a double meaning of eating, and a flirtatious reference to a cute pie – raised $ 70 million, an oversized Series B that he will use to continue expanding his business to more markets in the United States
Conceived four years ago while Kevin Tan, the CEO who co-founded the company with Jamie Marshall, was still a physics student at Yale, Snackpass has grown staying true to its superior roots. The startup now has 500,000 users in 13 college towns and has seen its growth explode 7 times in the past three months alone. This round values the startup at more than $ 400 million.
This last tranche of funding comes from an interesting group of investors. Led by Craft Ventures, it also includes Andreessen Horowitz (who led his $ 21 million Series A), General Catalyst, Y Combinator, and a long list of individual backers who attest to the attention Snackpass receives and how successful it is. place that it is growing as a go-to food platform for millennials and young users.
This list includes AirAngels, the investor union of Airbnb alumni; Bastian Lehmann from delivery giant Postmates acquired by Uber (and you, Bastian?); David Grutman, a hospitality entrepreneur; Draymond Green of the Golden State Warriors; Gaingels; HartBeat Ventures, Kevin Hart’s venture capital fund; celebrity musicians the Jonas Brothers; Shrug Capital (the VC who says he’s interested in mainstream startups that are actually interesting to a “non-tech” audience); Pags Group, the family office of Boston Celtics co-owner Stephen Pagliuca; hip DJ Steve Aoki; Turner Novak of Banana Capital; William Barnes of Moving Capital; and the former Uber investor union.
The vast majority of food ordering platforms these days are focused on delivery and in many cases on how to gain an edge over other platforms by running it – a push that is happening. often at the expense of thinner margins than a Roman pizza. . Snackpass’s big breakthrough, if you could call it that, was just to reverse that one-upmanship, to move away from that premise entirely, in an effort to disrupt something much more prosaic: the queue.
Tan said Snackpass asked its users what they would do if they didn’t use the app, and they replied, “Oh, I’m just in line to order,” he told me. said in an interview.
“The market share right now is held by people lining up at the checkout and placing their orders. Our vision is that in five years it won’t exist, like, there won’t be any records. We don’t think it makes any sense.
He notes that for those who really want to be delivered, people can opt for this as well – Snackpass integrates with delivery services like UberEats to meet that – but 90% of orders on Snackpass are takeout, which means no. only the company does not have to take care of its own delivery fleets and infrastructure, but the operating costs to provide are not there either.
It turns out that in fact, a lot of young people seem happy to go out to eat something good. This means that they can socialize and take a selfie with their food or drink (boba tea is very present) at the place where it is bought. It becomes an experience.
This is also where the market is in another sense.
“What people don’t realize is that delivery is only 8% of the restaurant industry,” Tan told me. “And while there’s a lot of competition from big, similar companies, and it’s a huge market, the restaurant industry is like, a lot bigger, it’s $ 800 billion. And 90% of those purchases are still offline, ”he continued, referring to the many people lining up, ordering, buying and leaving. “It’s anonymous, and it’s on the verge of breaking up. And we’re focusing on that much bigger blue ocean.
Its formula seems to work with its target users. Tan said the service has an 80% penetration with students in the markets where it was launched. The average customer orders four and a half times a month, with some customers ordering every day. “You can actually see it’s five to ten times more engagement than delivery platforms, like UberEats. “
The company’s commissions vary and start at 7% and its current suite includes online ordering, self-serve kiosks, digital menus, marketing services, and a customer referral program. It’s already profitable (in some markets) but as it continues to grow (and maybe expand into other demographics) you can imagine it adding and expanding all of these. .
There’s something about Snackpass that reminds me a lot of Snapchat, not just that the names sound like them, and not just that they both resonated with college-aged users (and not just that they target them both squarely). It’s something about the fancy of the app, and how it takes a slight twist in its approach to do something that might otherwise feel bulky or mundane, or what, basically, older people do.
At present, there is not a lot of social “user graph”. in itself on Snackpass, and it doesn’t particularly integrate with specific social apps, either, but you can imagine a partnership across the board, especially considering how companies like Snap and Facebook are getting a lot more involved in the game. trade.
“By creating a social experience around food through shared rewards, giveaways, and a social activity stream, Snackpass has created a dynamic and engaging restaurant ordering system,” said Bryan Rosenblatt, Partner of Craft Ventures, in a press release. “The growth of its market and the virality of the product, coupled with Snackpass’s exceptional team and vision, make it the ultimate solution for consumers and businesses. We’re excited to help take Snackpass to the next level with this latest round of funding. “
Update to clarify that Snackpass is profitable in some markets, but not all; correct the spelling and names of some of the investors; and note that Snackpass does not currently work with DoorDash.