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).
|Subscription Fees||ChowNow charges subscription fees to restaurants and food establishments that want to use its platform. These fees typically cover access to ChowNow’s software and services, including menu management, online ordering, marketing tools, and customer data insights. Restaurants pay these fees on a regular basis, often monthly or annually, depending on their subscription plan. The subscription fees are a recurring source of revenue for ChowNow.|
|Transaction Commissions||ChowNow earns transaction commissions on each online order placed through its platform. Restaurants pay a percentage-based fee for each transaction, which is a portion of the order’s total value. This fee covers the cost of processing payments and facilitating the digital ordering process. Transaction commissions contribute to ChowNow’s income with every order processed through its platform.|
|White-Label Services||ChowNow offers white-label services to restaurants and food establishments that want to integrate online ordering capabilities into their own websites and branded mobile apps. ChowNow charges setup fees, customization fees, and ongoing service fees for providing these white-label solutions. This service allows restaurants to maintain their branding while utilizing ChowNow’s technology.|
|Marketing and Promotion||ChowNow may offer additional marketing and promotion services to help restaurants attract and retain customers. These services can include online advertising, email marketing campaigns, and promotional features within the ChowNow app and website. Restaurants pay fees for these additional marketing services, which can help boost their online visibility and sales.|
|Data and Insights||ChowNow provides data and insights to restaurants regarding customer behavior, ordering trends, and sales performance. These insights help restaurants make informed decisions about their menu, pricing, and marketing strategies. ChowNow may charge fees for access to advanced data analytics and reporting services.|
|Challenges and Competition||ChowNow operates in a competitive market, with numerous online food ordering and delivery platforms available to restaurants. Staying relevant, attracting restaurant partners, ensuring a seamless user experience, and addressing concerns related to delivery logistics are ongoing challenges. Maintaining the loyalty of both restaurant partners and diners is essential in this competitive landscape.|
|Future Growth Strategies||ChowNow’s future growth strategies may involve: – Expanding Restaurant Network: Attracting more restaurants and food establishments to its platform. – Enhancing Technology: Continuously improving its software and user interfaces. – Market Expansion: Expanding to new geographic regions and markets. – Partnering with Third-Party Services: Collaborating with delivery and logistics partners. – Customer Engagement: Enhancing the customer experience through personalized recommendations and loyalty programs.|
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.
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.
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:
- Monthly ($199/month) – plus a $399 setup fee per location.
- Annual ($129/month) – plus a $199 setup fee per location.
- 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.
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.
- 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.
- 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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