Startup Idea - Restaurants Delivering Prepared Food As A Subscription

One of the repeated complaints I have heard from my social network during quarantine is that people are dying to go to restaurants. They are bored with home-cooked food.

Food, of course, is not the only reason why people go to restaurants.

The Economist has a great article titled, Why do people go to restaurants? 

The restaurant remains a symbol of freedom. It enshrines the idea of choice – the existence of choice, that is, and our capacity to make choices. Fourteen different kinds of coffee, including one spiked with mandarin liqueur, and the possibility of having a milkshake or a Calvados instead. As Chris Corbin muses in a sunnier moment, speaking for himself and the business as much as for those who pass through the restaurant doors: “We’re not artists or musicians. But still, a restaurant is an extension of yourself, or a vehicle to express yourself. Why shouldn’t everything in it give pleasure?”

In other words, people go to restaurants for the experience.

I have a slightly different view on the subject: people go to different kinds of restaurants for different reasons. The high-end experiential restaurant is only one motivation.

There’s also the neighborhood restaurants that serve as extended kitchens for those evenings when we’re too tired to cook.

In the Covid era, people have been forced to cook a lot more than they were used to. Some have embraced home-cooking. Others have found it to be a burden.

On the other hand, restaurants are facing an existential moment, gasping for survival.

I think, for a certain segment of the population, a subscription service to a set of restaurants would work really well.

Let us say, an affluent family of four in Menlo Park, California, isn’t really into cooking. What if they have the option of having a relationship with seven different local restaurants that specialize in seven different cuisines, and one of them delivers their dinner each night?

Yes, we need software to manage this kind of an arrangement. The software needs to manage the subscriptions, remember which restaurant is supposed to deliver food to which household on a given night. It also needs to be able to manage nuances like offering a variety of ingredients. Monday night, a particular household was served beef, so the restaurant serving the Tuesday meal should serve shrimp, and the Wednesday meal should be chicken.

On the receiving end, the family gets to eat a Thai soup and chicken green curry with rice on Wednesday, an Italian lamb stew with pasta on Thursday, an Indian paneer tikka masala with naan on Friday, etc.

Furthermore, software can also manage the process such that each restaurant only serves a certain recipe to the same family once in six months. Boredom can be effectively managed by software.

The Backend

Let’s look at how to make this work operationally. 

Say, each cluster has seven local restaurants that serve seven different cuisines. Each of them is assigned 100 households to serve per night of the week. So, each restaurant serves seven 100-household groups each week. 

Group 1 is served by a Chinese restaurant on Mondays, a Turkish restaurant on Tuesdays, a Thai restaurant on Wednesdays, an Italian restaurant on Thursdays, an Indian restaurant on Fridays, a Vietnamese restaurant on Saturdays, and a French-Californian restaurant on Sundays.

Group 2 is served by a French-Californian restaurant on Mondays, a Chinese restaurant on Tuesdays, a Turkish restaurant on Wednesdays, a Thai restaurant on Thursdays, an Italian restaurant on Fridays, an Indian restaurant on Saturdays, and a Vietnamese restaurant on Sundays.

So on. 

To keep things simple at the kitchens, all the families could be served the same menu on any given day from each kitchen. So, if Group 1 is eating Thai green curry chicken, everyone in that group eats the same dish. The cook prepares green curry chicken for 100 people. Shopping, inventory management – everything becomes simpler.

Instead of waiters waiting on people on site, they deliver the food. 100 meals can be easily delivered by four people by dinner time.

Some Numbers

Assuming a $50 per night subscription charge, each family pays $1500 per month to be part of a cluster of seven restaurants.

Each restaurant makes $5000 per night minus 10% commission by catering to 100 families. That would be $135k per month, $1.6 million annually.

There are 700 families in each cluster, and each restaurant serves 100 families per day, seven days a week.

The technology company makes $180k per year per restaurant. That is over a million annually for the entire cluster.

With 100 such clusters, 70,000 families, and 700 restaurants, the company hits $100 million in revenue.

The business model has the advantage of being predictable, sustainable, and robust. Lifetime customer value can be very significant. Customers can be acquired easily through Nextdoor and word-of-mouth. In fact, sales and marketing investment may not need to be exorbitant.

For the restaurants, it vastly reduces operational complexity and marketing challenges. I don’t think they’d be so difficult to convince.

Of course, there are issues to be worked out: cancellation policies, what happens when people travel, what if they want to go out, go to parties, etc. But in my opinion, those are workable details.

This startup idea can be done both as a bootstrapped, local service, or a national or global Unicorn. In any case, it needs to be started as a bootstrapped business.

If you want to work on this idea and are looking for mentoring, come to One Million by One Million / 1Mby1M and we will help you.

Related reading:

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Startup Ideas for the Post Covid World: Meaningful Friendships Through Literature and Film

Startup Ideas for the Post Covid World: Home-Based Healthcare

Startup Ideas for the Post Covid World: K-12 Education

Startup Ideas for the Post Covid World: Distributing the Workforce

Startup Ideas for the Post Covid World: Facilitating Travel Experiences

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Photo by Stefan Vladimirov on Unsplash