Cutting ahead in line at a fast-food restaurant is rude, but Jason Strashek can't help but be delighted after witnessing that apparent social faux pas recently at a few Subway sandwich outlets running a pilot program.
Vancouver's Avanti Commerce Inc., of which Strashek is CEO, has developed a mobile app and desktop service allowing people to select their sandwich over the Internet before bypassing the line to pick it up at a Subway restaurant a few moments later.
“You'll have people scratching their head in line when they see customers walk by them [to pick up ready-made orders],” he told Business in Vancouver.
“Behind the front counter, the merchant benefit is ultimately they don't have to bother with writing up the sale, capturing the payment, having a customer kind of hemming and hawing, ‘Maybe I want this kind of cheese.'”
The company slated official deployment of the new service for September 8. It's gradually rolling it out market by market before the service hits all 27,000 North American Subway outlets.
“We know there's a massive opportunity here,” Strashek said. “There are 300,000 [restaurant] locations in the U.S. and Canada that can use what we're offering.”
And a healthy appetite among investors is also supporting the demand for food tech startups like Avanti.
Grocery delivery and food startups raised $486 million in funding across the globe between 2013's second quarter and 2014's first quarter, according to venture capital database CB Insights.
That's a 51% year-over-year jump.
Meanwhile, the 109 deals struck during that period represent a 55% year-over-year increase, as well.
In 2012, Food.ee raised about $1 million in venture capital from angel investors that included Vancouver's Ryan Holmes, founder of Hootsuite.
But instead of trying to make fast-food service even faster, the West Coast startup is taking the opposite route, focusing on providing “slow food” options to workers.
Food.ee has partnered with Vancouver eating establishments such as Calabash and Irish Heather to deliver lunches to offices across the city. Instead of maintaining its own fleet, the company keeps costs low by hiring couriers to drop off the meals.
“The problem with corporate caterers is it's overpriced, it's not very good and it's been that way for a long time,” Food.ee CEO Ryan Spong said.
“The alternative, which is typically just takeout, is less reliable and it's worse usually because it's greasy Chinese, pizza and so forth.”
The combination of technology and demand for better food helped Food.ee realize 20% month-to-month growth so far this year, according to Spong.
He admitted an incumbent food delivery service such as GrubHub (NYSE:GRUB), which posted record revenue of $60 million in 2014's second quarter, could pose a challenge in this emerging market.
“Part [of] what's changed now is that everybody has access to [information technology] in their pockets, basically, wherever they are,” Spong said.
But he pointed out it's mostly regional players populating the corporate catering world, which leaves room for food startups to wedge their way into the market.
Food.ee is expanding to Toronto in October, and Spong expects the company to have a footprint in other Canadian cities such as Calgary and Ottawa by spring 2015.
As for Avanti, Strashek said he's confident the company will stick around because it has already had three years to work out the kinks in its system.
“Many other companies have tried with various sexy apps,” he said. “The problem is most of those start to fall apart, mostly as a function of the fast-food businesses or the coffee shops just being ill-prepared to handle [implementation].”
But Avanti originally partnered with Subway in 2011 to develop the sandwich franchise's online catering service before jumping into the fray with the mobile app for individual orders.
He said the company has its sights set on completing a deal with Taco Del Mar next.
“We have templates already pre-built for coffee chains, noodle chains, burger chains, sandwich chains,” Strashek said. “But if we don't get all of the big fish, then certainly there's tons of the smaller players.”
