INSUBCONTINENT EXCLUSIVE:
“We were in the back washing blenders so they could keep taking Snackpass orders,” recalls co-founder and CEO Kevin Tan
The team from order-ahead food startup Snackpass was willing to get their hands dirty to keep up with demand at one of their first
restaurant partners, Tropical Smoothie Cafe on the Yale University campus.Why were people so eager to pay for takeout through Snackpass?
Because it lets them earn loyalty points to redeem for free food — both for themselves and as gifts for their friends
Sending people Snackpass rewards became a new way to flirt or show gratitude at Yale
And through the Venmo-esque Snackpass social feed, users could keep up with a fresh form of gossip while discovering restaurants.“Anywhere
someone is standing in line to order something, we can solve that with Snackpass,” says Tan
“Consumer spending will be social in the future.”That future is already taking hold
Two years after launch, Snackpass is on 11 college campuses across the U.S., often boasting a 75% penetration rate amongst students within
It takes a cut of every order and keeps margins high because users pick up the food themselves rather than waiting for delivery
While other food ordering startups battle to offer discounts as marauding users deal-hop between apps, Snackpass keeps users coming back
through its loyalty program.
Its momentum, retention and opportunity to expand from colleges to dense cities has now won Snackpass a $21
million Series A led by Andreessen Horowitz partner Andrew Chen
The round was joined by other heavy hitters, like Y Combinator, General Catalyst, Inspired Capital and First Round, plus angels, including
musician Nas, NFL star Larry Fitzgerald and legendary talent agent Michael Ovitz
Building on Snackpass’ $2.7 million seed, the cash will go toward hiring up with the goal of reaching 100 campuses in two years.“Takeout
is an important market because it’s huge — also in the hundreds of billions — and fragmented,” writes Chen
“The opportunity complements the food delivery market in a big way: For the average restaurant, there are 6 takeout orders for every
delivery order!”“Its own language”Like many of the best startup ideas, Snackpass was born out of the founders’ own needs at Yale
Slow and expensive food delivery services didn’t make sense for smaller orders like a coffee, ice cream or a pepperoni slice on campuses
small enough for customers to walk or bike to the restaurant
Tan says, “I was dabbling in several side projects, including helping a friend who managed a local pizza shop build a website to help
better reach the local student community.” He realized how tough it was for restaurants around colleges to retain and reward customers,
especially as regulars graduated.Tan joined up with neuroscience student and Thiel Fellow Jamie Marshall, who became Snackpass’ COO
“I had grown up calling in every order,” Marshall tells me
“Waiting in line didn’t make sense for me
I used every order-ahead platform and thought this was the future.” Jonathan Cameron, a serial entrepreneur who’d built his own
order-ahead app called Happy Hour, rounded out the founding team.Snackpass founders (from left): Jamie Marshall and Kevin TanSnackpass
offers users a list of nearby restaurants from which they can order ahead, with special tags for ones offering deals
Menu items include counts of how many people have ordered them and how many rewards points you’ll earn buying them
You pay in the app, skip the line at the restaurant and grab your order from the counter
Each restaurant can configure their own rewards system with how much items earn and cost, such as giving you a free coffee for every 10 you
buy.Users can then spend their points to get themselves free menu items, or send a virtual Snackpass gift card to any of their phone
contacts or people they find via search
This gives Snackpass a way to grow virally that most food apps lack
Thankfully, you can block people on Snackpass if they get creepy showering you with gifts.Each purchase and gift on Snackpass shows up in
its social feed unless you make it private
“That’s become its own language
People use it to flirt with each other, or bond and connect with someone new,” Tan tells me
“There’s some drama or intrigue there seeing who’s sending gifts to who
People even look at the feed in the way they look at someone’s Instagram to see what’s going on with them.”Snackpass has also done
some integration work specifically for the college market that sets it apart from other order-ahead and delivery services
It can sync with students’ campus meal plans so they can spend them through the app
And student groups from clubs to fraternities can pre-load and replenish accounts for their members
Snackpass works with the same organizations to launch on new campuses
“We host parties, sponsor tailgates and make it feel like a student-led effort so it grows organically across campus communities,” Tan
“These efforts, combined with the social feed which would give anyone FOMO if they’re not in the app.”Network effect commerce
With all
the competition in the space, restaurants can be inundated with apps to manage, some of which just exacerbate spikes in demand that
“There is certainly a risk that local restaurants will start to get platform fatigue, finding that using some apps will take too big of a
bite out of their margins,” says Tan
That’s why Snackpass built features that let restaurants batch orders and control how many come in at a certain time so dine-in patients
and non-app users aren’t stuck with unreasonable delays.Snackpass has recruited talent from Uber Eats and an advisor from Yelp’s
executive team to help it navigate the tricky SMB sales process
One ace up its sleeve is that it can offer to send push notifications to announce recently signed partners or specials they’re launching,
driving the new customers restaurants are desperate for
Tan says his startup is considering if it could charge for this kind of promotion down the line
Most customers who walk into restaurants are effectively in incognito mode, but Snackpass provides its partners with analytics to help them
improve their own businesses.“At the surface level there is a lot of competition in this space,” Tan admits
“The social aspect of the app has been the key differentiator for us
Other companies have been focused on creating the fastest, cheapest, most efficient delivery service, but it’s really hard to make those
margins work and consumers are trained to shop around on different apps to get the best deal or fastest delivery time
Eating food is supposed to be fun and social, and our generation grew up online and in social networks
We’re combining the social aspect of eating with the utility of order ahead, which has helped us build loyalty and enable retention
amongst our users.”It will still be a battle to overtake long-running competitors like Allset, Level Up and Ritual, plus incumbents that
offer takeout pickup like Uber and Grubhub
Logistics is a cut-throat business, and plenty of startups have already failed in the restaurant loyalty space.Having Andreessen
Horowitz’s support could give Snackpass some extra firepower
“A16z has better support and services for their portfolio companies than any other VC we’ve come across and they’ve delivered,” Tan
“We knew that Andrew Chen understands growth and marketplaces from his blog and his Twitter.” That’s critical in a crowded space where
such a precise balance of customer acquisition and lifetime value is necessary.Snapchat, TikTok and Fortnite have all tapped into the youth
market with a lighthearted nature that keeps users coming back until they develop network effect
Snackpass is managing to do the same, not with a messaging app or game, but a commerce platform
“We play up creativity, silliness and delight in areas where most companies focus on utility and convenience,” Tan concludes
