“Best of” editions are great media properties for city sites, city magazines and alt weeklies. Can they make the shift to e-commerce? Can they generate leads for a business; generate incremental sales and new customers; and ‘scale’?
The challenges and opportunities for what might be called “local curation commerce” is addressed in Monday’s profile of Bean Box, a specialty coffee company that distributes samples from local roasters in Seattle; and today’s profile of Peach, which delivers lunches to corporate customers from local restaurants.
Founded as “Peach Labs” in 2014 by a trio of Amazon engineers in Seattle, Peach has raised $10.75 Million from Madrona Venture Group, Vulcan Capital and Maveron. It now delivers lunches from 200 restaurants to employees at 1,300 companies in Seattle, San Diego and Boston. Dallas is about to launch.
As it expands, the 50 person company is prioritizing large cities with significant office park “food desert” type environments. It also looks at the population’s food ordering behavior, especially noting how other food delivery services are faring.
Peach’s basic concept is to make lunch delivery “scale” in five ways:
1- Work with restaurants to create specific dishes for customers. Retail pricing is in line with typical restaurant dishes and drinks: $9.99-$11.99, and $3.49-$4.49. In return, restaurants get to efficiently process orders in late morning before the lunch boom – typically, 30-50 orders. Restaurants also get to cut back on complex orders that slow down the kitchen; and get introduced to a new clientele. They also receive feedback from candid reviews. Reviews come back from 30% of the customer base.
2- Charge a $1 delivery fee to customers. Because Peach will only deliver to companies that have 50+ employees (i.e. many orders in one location), the nominal delivery fee can be a money maker. Peach also keeps employee credit cards on file for fast processing.
3- Minimize delivery infrastructure. Deliveries are limited to lunch hours, so the company does not need to support full time drivers. Drivers can be students seeking to make a quick $30-55 for a one hour delivery, or Uber/Lyft drivers looking for a high revenue period. At some office locations, however, parking can be a challenge
4- Build frequency. Be everywhere a customer is. Most orders come in via SMS, but orders can also be taken via Slack messaging and a Chrome toolbar extension. At the same time, Peach encourages company subsidies, or “Peach Perks”; and offer different cuisine types throughout the week. Peach Perks are typically either $5 off, or 100% subsidized. Companies may rationalize them by employee satisfaction; time saved from going out; and avoiding Silicon Valley-like in house kitchens and catering. Peach says that companies that provide a $5 Peach perk will see participation increase by 5X.
5- Use knowledge of company dining preferences to handle catering orders for team lunches, special days and events from preferred restaurants.
Peach claims to be so efficient that it makes a margin of 20 percent on each order. Competing companies that enable customers to order off a menu at peak hours, such as Postmates and Amazon Restaurants, presumably don’t have the same efficiency.
They also may not be able to build a customer base for a curated lunch experience. In fact, Amazon Restaurants set up a competing service of curated lunches in Seattle – Daily Dish – but has apparently decided not to expand to other cities.
The curated lunch experience – “Make Lunch Amazing,” goes the tagline — is considered a key to Peach. Customers can order curated dishes from four categories: “Meat,” “Veg,” “Lite” and “Special.” The latter changes every month and gives restaurants the opportunity to showcase their “creativity and passion” for cooking, perhaps leaving behind overused chicken dishes to focus on proteins such as pork belly, salmon and lamb.
Chicken, however, still carries the day. As the company recently bragged on its website, “We’ve delivered over one hundred thousand orders of Chicken Tikka Masala. It’s the dish that embodies what made Peach, as a concept, take off. Equal parts adventurous and comforting, Chicken Tikka Masala is an antidote to #saddesklunches everywhere.”