Sometimes a strategic twist to an accepted business concept is all it takes for a start-up to make the breakthrough and find a lucrative untapped market. And that, in essence, is what Toronto-based Ritual Technologies has achieved with a mobile app that lets users place, pay for and pick up lunchtime food orders and drinks, but deliberately doesn’t include delivery as part of the service.
Founded in 2014, the company is already up and running in 50-plus cities across North America and Europe. And since last October, they have been in Hong Kong, which was selected as the first location in the Asia-Pacific region, with all the signs here pointing to rapid growth built on a fast-expanding customer base.
“We realised that when restaurants partner with third-party services like us, they do so to grow their sales — and to deliver is not the only way,” says Ray Reddy, the firm’s co-founder and chief executive. “And if they have already decided to pay a delivery company’s high fees, it is then a no-brainer for them to partner with us.”
A number of factors helped Hong Kong stand out as the obvious place to launch in Asia.
“The app is used by office workers during the day, so we like markets which have a dense population, a ‘foodie’ culture, a lot of independent restaurants, and where people are generally early adopters of new technology,” Reddy says. ‘We also like cities that are big enough to give plenty of room to grow.”
Once basic research was completed in quarter two 2019, the next step was to bring in a specialist launch team with experience of opening new markets. Their particular focus is the onboarding of restaurants and training up the initial 20 or so local recruits who later assume responsibility for managing the network of partners and customers.
Starting in Central, the first goal was to sign up around 100 outlets able to offer morning coffee, lunches and afternoon drinks. Already, there are 200-plus on the app, and the plan is to expand next to Wanchai and then elsewhere.
“We are very focused on neighbourhoods where a significant number of people are very close by — within a five-minute walk,” Reddy says. “Office workers and other users want a convenient way to place and pick up orders and to pay the same price as in the store.”
The sales pitch to prospective partners generally highlights the app’s advantages in helping to build a high-quality customer base nearby, which should also generate regular repeat business. To this end, the app even offers a “Piggyback” function, which lets users place and pick up orders for colleagues and, in doing so, earn and redeem reward points as part of a tie-in loyalty programme.
“Restaurants often have a problem in getting people to find them, so this is the cheapest way they can grow their sales,” Reddy says. “And we have come up with a unique fee model where they get payments for onboarding their existing customers on the platform.”
He originally set up the firm with two friends who were also his former classmates at high school and when studying computer science at the University of Waterloo. After graduating, the trio built a mobile media platform between 2008 and 2011, which was subsequently bought by Google, where Reddy then went to work as a product manager running mobile commerce. He benefited from the experience, but also realised that the idea for Ritual was best developed outside the big corporate environment. A team of six had a first version ready in around four months, and friends and family helped test it out before the official launch in Toronto.
“We keep investing in the core product and, every day, the aim is to make it better for users and restaurants,” Reddy says. “What we find most rewarding is that you shape a product which then shapes the world by changing the way people transact business. As users build relations with businesses in their neighbourhood, you can affect the zeitgeist.”
The general plan is to keep launching in about 10 to 15 additional cities per quarter and, in parallel, to provide more real-time data to help restaurants analyse customer satisfaction metrics for things like food quality, service efficiency, and the overall user experience
A big challenge for restaurants is that POS (point-of-sale) systems tell them the value of business done in a day, but not about new customers or those returning within 30 days.
“We help them measure the in-store experience,” Reddy says. “They can then know about the error rate in orders and if staff need extra training. They have real data insights on why business is up or down and can benchmark against other restaurants in their category or neighbourhood. We do that free because our success is very tightly connected to theirs, and if they stay in business, it’s better for us too.”
When assessing key performance indicators (KPIs), speed of service is among the most important. Most people have a one-hour lunch break, so it’s essential to prepare food fast and, in fact, 80 per cent of orders are ready for collection in 10 minutes.
“We also handle first-line customer support and stand for trust when it comes to service,” Reddy says. “If an option or add-on is not there, we can credit the customer for the price difference, and we guarantee they receive what they thought they were purchasing.”
To date, Ritual has raised US$127.5 million in venture funding from backers in Toronto, New York and Silicon Valley. That capital goes towards expansion and adding features to the platform, for example dashboards to manage menus and pricing in different cities.
“We use capital to accelerate growth. Our first few cities are already profitable, and we want to go faster,” Reddy says. “With food delivery, you can actually lose money on fulfilling an order. But for us, every order is profitable or at least break-even.”
