How Does ChowNow Make Money?

ChowNow is a food ordering platform connecting local restaurants with online customers. The company was founded in 2011 by Christopher Webb and Eric Jaffe. The company makes money via subscription (with three main plan options, with the monthly at $199/month, annual at $129/month, and two years at $129/month), setup fees (2.95% plus $0.15 for every order it facilitates), and order fees (12%, but the restaurant can essentially have this fee waived if it adjusts its menu prices to compensate).

History of ChowNow

While Webb was working in finance in 2007, he took a call from his mother about an investment opportunity. Three people were starting a new restaurant in his neighborhood of New York City and were looking for backers.

Webb was initially hesitant because he knew how difficult it was to turn a profit in a restaurant. But after reading the group’s detailed business plan, he decided it was a worthwhile investment.

The restaurant, known as Tender Greens, proved to be a success with a further seven restaurants opening over the next few years.

However, Webb witnessed firsthand that online ordering was problematic. At the time, the only viable option for a restaurant business was to join a platform such as Grubhub and surrender 40% of every order. 

Chains such as Chipotle and Domino’s realized this early and spent vast amounts of money on their own direct order systems. However, for smaller players, this was simply not feasible.

Sensing there was a chance to do something about it, Webb quit his finance job in 2010, moved to Los Angeles, and founded ChowNow with Eric Jaffe.

After convincing the owner of a sandwich place in LA to beta test their new technology, Jaffe placed the first order on the ChowNow platform in 2011. The platform was an instant hit and expanded into multiple states thereafter.

Webb and Jaffe made a deliberate play for to establish themselves in Chicago early on. Not only was it the home of Grubhub, but the pair figured it was full of restaurants who were tired of paying Grubhub’s commissions. They were ultimately correct, and it would not be long before ChowNow was available in all 50 states.

In mid-December 2020, ChowNow surpassed 100 million takeout orders and claims to have saved restaurants more than $400 million in commission fees.

In addition to an app and website, ChowNow restaurants can also enhance their online presence with branded products, marketing assistance, and customer memberships.

Value Proposition

• Empowering Restaurants: ChowNow provides restaurants with a comprehensive platform to manage online ordering, pickup, and delivery services. By offering customizable solutions tailored to the unique needs of each restaurant, ChowNow empowers businesses to increase their online presence, reach new customers, and grow their revenue.
• Branded Ordering Experience: ChowNow enables restaurants to create a branded online ordering experience that reflects their unique identity and strengthens their brand presence. This customized approach helps restaurants differentiate themselves from competitors and build customer loyalty by delivering a consistent and memorable ordering experience.
• Customer Engagement Tools: ChowNow equips restaurants with a suite of customer engagement tools, including email marketing, loyalty programs, and promotional campaigns. These tools enable restaurants to connect with their customers, drive repeat business, and increase order frequency by offering personalized incentives and rewards.
• Streamlined Operations: ChowNow streamlines restaurant operations by providing intuitive order management and fulfillment tools. From receiving orders to preparing and dispatching them for pickup or delivery, ChowNow’s platform simplifies the entire process, saving time and reducing errors for restaurant staff.

ChowNow revenue generation

Unlike many similar services, ChowNow does not receive a commission on food orders.

Instead, the company makes money via subscription, setup, and order fees. 

Let’s have a look at each of these in more detail below.

Subscription and setup fees

ChowNow charges a subscription fee for access to the full product suite. This includes takeout ordering, restaurant delivery, curbside ordering, QR code dining, email marketing tools, branded apps, and the ability to create customer membership programs, to name a few.

Setup fees vary from restaurant to restaurant but typically cover the cost of point-of-sale system installation, tablet issuance, or the creation of branded apps and websites.

There are three plan options here:

1. Monthly ($199/month) – plus a $399 setup fee per location.
2. Annual ($129/month) – plus a $199 setup fee per location.
3. Two years ($129/month) – plus a $199 setup fee per location.

The company also charges a fee of 2.95% plus $0.15 for every order it facilitates to cover the interchange fees incurred by Visa and Mastercard.

Order fees

ChowNow also charges order fees on its Order Better Network, which connects client restaurants with a sizeable list of ordering traffic channels.

These include Nextdoor, OpenTable, TripAdvisor, Yahoo!, and Yelp.

The order fee for this service is 12%, but the restaurant can essentially have this fee waived if it adjusts its menu prices to compensate.

Revenue Model

• Subscription Fees: ChowNow generates revenue through subscription fees charged to restaurants for access to its online ordering platform and related services. Restaurants pay a monthly or annual subscription fee based on the features and functionality they require, such as branded ordering, customer engagement tools, and order management capabilities.
• Transaction Fees: In addition to subscription fees, ChowNow may also charge restaurants a per-order transaction fee for each online order processed through its platform. This fee typically covers payment processing costs and may vary based on factors such as order volume, order value, and additional services requested by the restaurant.
• Setup and Integration Fees: ChowNow may charge restaurants setup and integration fees to onboard them onto its platform and customize their online ordering experience. These one-time fees may cover expenses related to software configuration, menu setup, branding customization, and integration with existing restaurant systems.
• Optional Services: ChowNow may offer optional services or add-ons to restaurants for an additional fee, such as advanced reporting and analytics, premium customer support, marketing consulting, and promotional campaign management. These value-added services provide restaurants with additional tools and resources to enhance their online ordering capabilities and drive business growth.

Marketing Strategy

• Direct Sales and Outreach: ChowNow employs a direct sales and outreach approach to acquire new restaurant clients. This strategy involves proactively reaching out to potential restaurant partners through targeted marketing campaigns, cold calling, email outreach, and in-person meetings to introduce them to ChowNow’s platform and services.
• Referral Programs: ChowNow may implement referral programs to incentivize existing restaurant clients to refer new businesses to the platform. By offering rewards or discounts for successful referrals, ChowNow encourages its satisfied clients to advocate for the platform and help drive new customer acquisition.
• Partnerships and Integrations: ChowNow may form partnerships and integrations with complementary businesses, such as point-of-sale (POS) providers, restaurant associations, and industry influencers. These partnerships help expand ChowNow’s reach, increase brand awareness, and create opportunities for collaborative marketing initiatives and co-promotions.
• Content Marketing and Thought Leadership: ChowNow leverages content marketing and thought leadership initiatives to position itself as an industry authority and educate restaurant owners and operators about the benefits of online ordering and delivery solutions. Through blog posts, whitepapers, case studies, and webinars, ChowNow shares valuable insights, best practices, and success stories to attract and engage potential clients.

Distribution Channels

• Online Presence: ChowNow promotes its platform and services through its website, social media channels, and online advertising campaigns. These digital channels serve as primary distribution channels for reaching potential restaurant clients, driving website traffic, and generating leads through targeted messaging and promotional content.
• Sales Team: ChowNow employs a dedicated sales team responsible for prospecting, qualifying, and closing new restaurant clients. The sales team utilizes various channels and tactics, including outbound calling, email outreach, virtual demos, and personalized sales presentations, to engage with potential clients, address their needs, and onboard them onto the ChowNow platform.
• Referral Network: ChowNow leverages its existing network of restaurant clients, industry partners, and satisfied customers to generate referrals and word-of-mouth recommendations. By nurturing relationships with key stakeholders and incentivizing referrals, ChowNow expands its reach, builds credibility, and drives new customer acquisition through trusted recommendations and endorsements.
• Events and Trade Shows: ChowNow participates in industry events, trade shows, and conferences to showcase its platform, network with potential clients, and stay updated on industry trends and developments. These in-person engagements provide valuable opportunities for ChowNow to connect with restaurant owners and operators, demonstrate its solutions, and generate leads through face-to-face interactions and relationship-building activities.

Key takeaways:

• ChowNow is a food ordering platform connecting local restaurants with online customers. The company was founded in 2011 by Christopher Webb and Eric Jaffe after Webb realized smaller restaurants could not afford to develop their own order systems.
• Unlike its competitors, ChowNow does not charge order commissions. Instead, it charges a monthly subscription fee that gives full access to its product suite. There is also a setup should the restaurant want to open a new location.
• ChowNow charges a 12% order fee on orders that occur via its Order Better Network, which helps restaurants open digital storefronts on high-traffic sites. 

Key Highlights

• Founding and Purpose: ChowNow is a food ordering platform founded in 2011 by Christopher Webb and Eric Jaffe. The company’s mission was to address the challenge smaller restaurants faced in developing their own online ordering systems due to cost constraints.
• Revenue Model: Unlike many competitors, ChowNow doesn’t charge commissions on food orders. Instead, it generates revenue through various fees:
  • Subscription Fees: ChowNow offers a subscription-based model with three plan options: Monthly ($199/month), Annual ($129/month), and Two Years ($129/month). Each plan comes with different benefits and features for restaurants.
  • Setup Fees: In addition to subscription fees, ChowNow charges setup fees for services like point-of-sale system installation, tablet issuance, and the creation of branded apps and websites. The setup fee varies depending on the plan and location.
  • Order Fees: ChowNow facilitates orders through its Order Better Network, connecting restaurants with various online ordering traffic channels like Nextdoor, OpenTable, TripAdvisor, Yahoo!, and Yelp. The company charges a 12% order fee for this service. However, restaurants can potentially waive this fee by adjusting menu prices.
  • Transaction Fees: ChowNow charges a transaction fee of 2.95% plus $0.15 for every order to cover interchange fees from Visa and Mastercard.
• History: Christopher Webb’s initial investment in a successful restaurant, Tender Greens, made him aware of the challenges in online ordering for restaurants. Seeing the need for a cost-effective solution, he teamed up with Eric Jaffe to create ChowNow. The company launched in 2011 and quickly expanded to multiple states.
• Strategic Expansion: ChowNow strategically entered the Chicago market, home to Grubhub, aiming to attract restaurants tired of paying high commission fees. This approach proved successful, and ChowNow eventually expanded its services to all 50 states.
• Impact: By December 2020, ChowNow had facilitated over 100 million takeout orders and claimed to have saved restaurants more than $400 million in commission fees.
• Product Suite: ChowNow’s platform offers a suite of features beyond basic online ordering, including restaurant delivery, curbside ordering, QR code dining, email marketing tools, branded apps, and customer membership programs.
• No Commission Model: ChowNow’s distinct approach of not charging commissions on food orders set it apart from competitors. Instead, its revenue comes from subscription, setup, and order fees, providing an alternative for restaurants looking to reduce their online ordering costs.
• Online Presence Enhancement: Beyond its core platform, ChowNow supports restaurants in enhancing their online presence through branded products, marketing assistance, and customer membership programs.

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