How an order-ahead app is building a P2P food delivery network

December 17, 2019 12:40
Ritual, steered by co-founder and CEO Ray Reddy, focuses on takeout orders that users pick up at a restaurant without waiting in line, and allows a way for smaller and independent restaurants to test off-premises ordering. Photo: Ritual

The food delivery market has been flooded with capital, paving way for the rise of a new batch of online platforms. As firms seek to stand out from the crowd, Ritual, a Toronto-headquartered startup has made a name for itself in North America and is also gaining traction overseas with its own take on tech-enabled lunch and a unique model of "social ordering".

Reimagining the process of people walking to a nearby restaurant or cafe to pick up food for lunch, without waiting in line, the firm has outlined plans to establish a presence in more international markets after foraying into the UK and Australia earlier this year. 

In Asia, Hong Kong has become its first new market, with the startup unfazed by the months-long social disturbances in the city.

In an exclusive interview with EJ Insight, Co-founder and CEO Ray Reddy explained how Ritual’s unique value proposition -- order ahead, skip the line, group ordering -- makes the app stand out in the crowded food ordering market across more than 50 regions and cities around the globe.

"Our belief is that, for technology to become a mass-market product, it has to be convenient for customers without a price increase. And that's really hard to do with delivery," said Reddy.

"What's hard about delivery is that it is difficult for everyone: restaurants pay a lot and feel like they're paying a lot, yet, a lot of the delivery companies still are having a hard time in making money in a lot of markets.”

Ritual does not deliver meals; it is focused on enabling people to order food or coffee in the area and pay through a smartphone app. Then they go to the establishment, walk up to the counter and grab their items without waiting in line. It does not charge fees; the menu prices are the same as what customers would pay without the app.

"Because we don't pay drivers, we don't have to charge partnering restaurants high fees and it's a win for everyone.”

While delivery companies in many markets actively encourage restaurants to mark up prices, according to Reddy, Ritual goes the other way. "One of our core values is that the price paid in the Ritual app is the same as in-store; we actually reward our customers to report prices that are different from the store.”

Another differentiator is that the order-ahead app has a social ordering feature called “Piggyback” that encourages users to make bulk orders with colleagues. “Essentially we’ve digitized the office coffee run. In fact, it became a peer-to-peer delivery network.”

Focusing on people with a daily ritual of getting lunch with the team and leaving the building to go pick up coffee or food, Ritual’s Piggyback feature enables members who are part of a company team (users will be grouped and invited to join a company team based on their workplace location after registration) to piggyback onto a team member’s order. And the orders will be brought by a team member back to the team's pre-determined drop-off location in the office.

The member taking the orders for his team will earn bonus “Ritual” points, but Reddy points out that people typically don't mind picking up orders for people in their office.

“It is ‘social currency’; you do it for the person who sits beside you, because people want to do something nice for their co-worker. To bring back a few extra drinks or lunch items on your order is no big deal for people.”

It also creates a more socialized experience around leaving the office and walking around for a lunch or a coffee.

Designed as a hyper-local service, Ritual’s main selling point is saving users’ time by ordering ahead and skipping the line, which is different from the value proposition of food delivery apps.

"Ritual is the workday companion while delivery tends to be when you're home and you don't want to leave,” Reddy said. Speaking of the different service, he provides an example of coffee.

"Coffee is a very big deal for us, things like bubble tea and coffee aren’t usually what people use delivery for. And we tend to be (used) mostly on the workdays, people use us about ten times more per month, than most other delivery, which tends to be (used) mostly evenings and weekends.”

For restaurants, Ritual takes a percentage charge of each transaction that comes through the app, yielding the platform’s main source of income. The fee percentage is varied among restaurants based on multiple factors, but on average it is about half the price of what restaurants would pay for delivery platforms.

"In a lot of other markets, restaurants really don't like paying fees on their own customers" noted Reddy. Therefore, an offering from Ritual is that if customers sign up Ritual with restaurants' own unique code, for transactions of these customers through Ritual, restaurants won't pay fees to Ritual.

“Unlike delivery, we don't have the drivers,” Reddy said. As it is always the restaurant staff that are involved in delivering the customer experience of Ritual, the startup emphasizes much more than delivery platforms on in-store operations and experience in partnering restaurants.

To ensure Ritual's partnering restaurants deliver the right experience to the customers, the platform provides real-time data on various operational indicators such as store experience, food quality, order accuracy and customer satisfaction metrics, the important data which many restaurants have never have on hand.

"Today a lot of times all they have is a POS, that says, you did HK$3,000 in sales today, but why? They can't really answer that question, they don’t really even know how many orders did they make wrong. So for the first time, we can show them, that the reasons why.”

"We are providing a consultancy service for the restaurants.”

Reddy pointed out that the platform analyzes restaurants’ anonymous operation data, and provides benchmarking figures and data ​​of various operating indicators to partnering restaurants. “It's about context, you have to show it to them relatively, you have to say, here's what the top restaurants are doing, here's what the bottom restaurants are serving, here's where you are in the middle.”

When the sales that Ritual generates make up 5 percent or 10 percent of the total store sales of the restaurant, it becomes a proxy and a reasonable reflection of the business and operations, according to Reddy. And in some of Ritual’s oldest markets, sales through Ritual can account for more than 25 percent of the store sales.

Ritual aims to help restaurants adapt to the same changes in user behavior that retail has seen in the past decade. Other than onboarding a food delivery platform, restaurants, coffee shops or typical stores still have much more to do to provide an omnichannel experience.

"A lot of people who work at Ritual either come from a background with restaurants or with local businesses. One of the things I think we've seen is that a lot of the big restaurant chains are investing a lot in technology, and we're trying to democratize that, to bring the same type of technology that big coffee brands and very large chains are using, take that kind of technology in, and make it available for everyone at much smaller restaurants.”

“Level the playing field. I think a lot of people who work with Ritual really believe in that mission,” said Reddy.

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EJ Insight writer