71.7 F
Los Angeles
Friday, Jun 2, 2023

Food Tech Companies Look to Build on Pandemic Boost

Most California restaurants have reopened for in-person dining but Chris Webb, co-founder and chief executive of online ordering company ChowNow Inc., said you wouldn’t know it from the number of digital takeout orders the company continues to process.

“I personally am a little surprised,” Webb said. “I thought as the country reopened, people are going out to eat and dining rooms and patios are open, that you would see a slowdown in the number of orders on the system. But we haven’t seen that.”

The Playa Vista-based company, which was founded in 2010, announced in December that it had processed its 100 millionth order, with its software generating $3.9 billion in sales since its launch.

Webb said the company was already growing quickly prior to the pandemic with restaurants looking for new ways to reach customers who were becoming increasingly accustomed to online ordering.

“We were planning for growth over the next four or five years,” Webb said. “It just happened that those years of growth all happened in 12 months.”

ChowNow isn’t the only Los Angeles-based company disrupting the food and restaurant industry. A host of local startups have been instrumental in changing the way hungry customers shop for groceries, order takeout and sample food from multiple restaurants. The technology they provide promises to play a vital role for the industry post-pandemic.

ChowNow, which processes orders both through an online app and by integrating directly into a restaurant’s website, is providing restaurants with a way to manage online orders without paying the steep commission fees charged by online delivery marketplaces like DoorDash Inc. and Grubhub Inc.

Restaurants using ChowNow can pay for a customized ordering app and are charged a monthly fee in lieu of a commission-based pricing system.

“We want to find a way to drive demand to restaurants without them having to pay these huge commissions,” Webb said.

The company is now focused on giving restaurants new tools to build up a loyal base of customers and process online orders as cheaply and efficiently as possible, he said.

While ChowNow is working to simplify the online ordering process for restaurant patrons, Marina del Rey-based Thrive Market Inc. is seeking to streamline the shopping experience for consumers seeking a healthy lifestyle.

Launched in 2013, the company manages an online grocery delivery platform with a focus on natural and organic foods. Customers pay a monthly or annual subscription fee, which gives them access to a curated selection of products offered at discounted prices.

Wave of signups

Co-founder and Chief Technology Officer Sasha Siddhartha said the company saw a wave of signups in March and April 2020, when strict lockdown orders were in effect and supplies at grocery stores were limited.

Those supply shortages were temporary, but Siddhartha said customers’ experiences during that time helped to make online grocery shopping more mainstream.

“As our customer experience improves — as the notion of online grocery shopping becomes more well understood — the purchase frequency and (spending) of our customers grows,” Siddhartha said.

“In the early days of the pandemic, we were worried about potentially having new members who were kind of going to be one-and-done customers,” he added. “What we’ve actually seen is the customers we’ve onboarded in the past year have been as engaged or more engaged than customers acquired in past years.”

Siddhartha said the company’s focus on providing a customized user experience differentiates it from rival grocery delivery services like the one operated by ecommerce giant Amazon.com Inc.

The company’s shopping software allows users to select from a wide array of category selections to find foods that conform to dietary restrictions, ethical sourcing standards and other features. It also generates recommendations based on input from customers about how many people they are shopping for and what kinds of products they need.

“We’ve become much more of a mainstream player, and we’re targeting customers who may not be quite as knowledgeable about every single grocery category and what the path toward health and wellness means for them,” Siddhartha said.

While Thrive Market’s emphasis on user recommendations and a curated selection of items is aimed at simplifying the grocery shopping experience, Kitchen United Inc. is giving restaurant patrons the ability to make complicated multi-menu orders that once would have been virtually impossible.

The Pasadena-based company operates off-premise facilities, commonly known as ghost kitchens, where orders can be fulfilled for dozens of restaurant concepts simultaneously.

Proprietary software

Kitchen United is located across town from Silicon Beach, and its business model is largely a real estate play, but proprietary software enables its complex operations, and major investors include GV, the venture capital arm of tech giant Alphabet Inc.

“From the get-go, we’ve had a pretty technology-oriented mindset,” said Chief Business Officer Atul Sood. The company’s software not only facilitates orders for multiple restaurant concepts but integrates with delivery apps to schedule pickups and synchronizes cook times, so orders from multiple menus can be served up at the same time. “If you want a rack of ribs, and somebody else wants a Wendy’s Frosty, you can do that at the same time with the same delivery driver and the same check,” Sood said.

“The complicated aspect to that is that the ribs may take 15 minutes to prepare and the Frosty takes under a minute,” he said. “So we need to gate the Frosty by 14 minutes before it’s served in order for the ribs to be hot and the Frosty to be frozen.”
Kitchen United was founded in 2017 and now operates ghost kitchens in five cities. Sood said business was already accelerating prior to the pandemic, but the rise in takeout and delivery orders last year expanded the company’s customer base.

Orders fulfilled through ChowNow also testify toward this trend, Webb said. “I think people have been trained on the convenience of online ordering, whether it’s curbside pickup or delivery,” Webb said. “It’s a way of life now.”

As technological innovation transforms the way food is prepared and delivered to consumers, Los Angeles-based businesses will continue to play a leading role.

Companies like Ordermark Inc. and Promenade Group Inc. are also giving restaurants and local businesses new tools for managing online orders and delivery. Miso Robotics Inc. and other companies backed by Santa Monica-based venture capital firm Wavemaker Labs Inc. are developing automation technologies for a variety of kitchen tasks.

Being based in a food city like Los Angeles has its advantages, according to Webb. “The diversity of restaurants here in L.A. gives us exposure and the ability to work with all different types of restaurants and allows us to have a broad view of the industry — from that hole-in-the-wall Thai restaurant to Sugarfish,” he said.

Featured Articles

Related Articles