ChowNow provides food delivery online, allowing customers to take orders from local eateries and have their food orders delivered straight to their house’s front door!
In comparison to Just Eat and Deliveroo, it’s relatively new as it was founded in 2010, ChowNow has since grown into one of the leading North American catering platforms. ChowNow now has a partnership with more than 22,000 restaurants under its platform.
How does ChowNow make money? ChowNow earns money through monthly or annual subscription charges, setup costs along with charges for orders made through the Order Better Network.
Business Model of How ChowNow Make Money?
ChowNow provides food delivery online, allowing customers to take orders from local eateries.
The company, in contrast to other delivery services like DoorDash, is unique in itself by not imposing excessive charges that could be up to 40 percent. In actual fact, there is no percentage cost in any way.
ChowNow serves any type of food you can imagine, such as pasta, Vietnamese BBQ, Korean, Mediterranean, Cajun desserts and sushi, Indian pizza, and much more.
In addition to accessing ChowNow’s food delivery marketplace, ChowNow has also developed several other services for its partners in restaurants.
This, for instance, includes its order system that allows restaurants to be automatically listed on several platforms, including Google, Snapchat, or Yelp, and the points Of Sale (POS) system as well as the capability to develop membership programs, among others.
Customers looking to place orders for food items can do so through the mobile app of ChowNow that’s available on Android as well as iOS devices.
Subscription Fees
The majority of the money that ChowNow earns is from subscription fees it charges restaurants in exchange for gaining access to its products.
Restaurants can choose to pay the monthly, annual or two-year fee. The monthly plan is priced for $199 per month. The annual one is $139 per month. Meanwhile, the two-year plan amounts up to $129/month (with the last two plans being paid in advance).
Additionally, ChowNow does charge 2.95 percent plus $0.15 per order that is facilitated. But, it is used to pay for charges for interchange imposed by payment processors such as Mastercard or Visa.
The cost of a subscription grants customers access to many items, including the ChowNow marketplace (where they can post their options for food) and websites ordering, branded apps as well as automated email marketing tools as well as the ability to develop membership programs for customers, a dedicated Restaurant Success Manager, as well as much other.
When ChowNow started its journey, it strategically positioned itself in opposition to other marketplaces for food online. In the beginning, these platforms were charging astronomical fees and made it difficult for restaurants to run.
The effects were evident during the coronavirus epidemic where the majority of a restaurant’s orders were made via platforms. The restaurants would then be unable to pay for every order that they get online.
One of the main factors behind the creation of ChowNow was the development of its own app for marketplaces. The company first started in the year 2010, the process of installing and testing new apps was an opportune routine for users.
When “app fatigue” began to set in it was less likely for consumers to download the dozens of apps for food delivery. Instead, they stayed with the handful of apps they were familiar with and were confident in.
ChowNow has been further adapted to the anticipated level of convenience by cutting relationships with other companies, including DoorDash that now make food delivery services for restaurants on their behalf (all without the need for high costs).
The most significant benefit of ChowNow’s model of business is the longevity of its product. Once a restaurant has begun to benefit from its ecosystem, including the POS integrations and numerous apps, it’s likely to stay the course.
In the end, like other traditional SaaS company, ChowNow tends to lose cash on customers for the beginning, however it will recoup the initial purchase after a few months or years.
Setup Fees
In addition to the subscription fees, ChowNow also imposes a one-time setup charge. This cost, which is equivalent to $199, is paid to help cover the costs of installing its tools.
This entails setting up the point-of-sale system and the distribution of tablets, or the development of the restaurant’s application and website (if required).
Order Fees
Additionally, ChowNow does in fact charge fees for specific orders. The fees are applicable to orders that are made via ChowNow’s Order Better Network that the company launched in October 2021.
Order Better Network Order Better Network allows restaurants to connect to over 12 different options for delivery and takeaway.
Examples of partners include Hilton’s rewards program, OpenTable, Yelp, TripAdvisor, Google, Snapchat, and numerous others.
ChowNow costs 12 percent on each order that is processed by the network. If clients opt to activate its Profit Protector feature that automatically alters the menu price according to the network’s individual rules charges, they are charged.
ChowNow Funding, Revenue & Valuation
According to Crunchbase reports, ChowNow has raised $64 million in 9 rounds of Venture Capital financing.
Notable investor names comprise Upfront Ventures, Tiller Partners, Catalyst Investors, 3L Capital, among others.
Since ChowNow is under private ownership, ChowNow is not obligated to release its revenue or valuation figures to the general public.
How Did ChowNow Begin? The Company Timeline
ChowNow is headquartered located in Los Angeles, California, and was established in 2010 by Christopher Webb and Eric Jaffe.
Webb started his professional career during the beginning of 2000s, when he was just 19 and working as an analyst for Bear Stearns. After three years of work, he decided to relocate in New York to play in the big leagues . He joined Lehman Brothers as an associate.
In a way, the bear Stearns as well as Lehman Brothers eventually became the models for the huge financial crisis that began in the year 2008.
Webb in the aftermath of Lehman’s bankruptcy was in search of a new job. He was then recruited by RBC to work as an equity trading analyst. There he would work for the next two years.
Webb eventually got bored from living the New York City lifestyle and decided to relocate back and settle in Los Angeles. Additionally, Webb was itching to create a company that was his own. A lot of his family members were entrepreneurs for the majority of their lives. This proved to be a great source of motivation for him.
But one of his primary issues was coming to a viable idea. During his Wall Street tenure, he had always been fascinated with and traded in tech stocks, in particular Software-as-a-Service (Saas) businesses.
A speculative investment it would end up being the basis that ChowNow was founded. In 2006, as he was at Lehman his mother called him in Los Angeles, saying that she had spoken with one of the founding partners of a beautiful restaurant.
The founders had their own plans of expanding their business , but were not able to raise the funds to make it happen. The restaurant that was opened turned out to become Tender Greens, which is now a chain with hundreds of locations across America.
Webb as well as his entire family was one of the first investors in the business that gave them the first-ever seats in how these enterprises are managed. Webb noticed his belief that Tender Greens, like many of its competitors were not able to meet the requirements of creating an customer experience on the internet.
Restaurant owners from New York, which he was able to meet through the years, would share similar tales. And to make matters worse the platforms that were already in place like Grubhub and Seamless provided extremely clunky user experience (on top of the high charges they charged).
With the issue in the back of their minds, Webb and his co-founder Jaffe began to develop a system that would enable restaurants to create an online presence across various platforms, while also being capable of processing orders via its own website (a concept Pizza chain Domino’s had invented).
Between 2010 and 2011, they worked on developing the product and promoting it to their initial set of consumers located in Los Angeles. When they joined an artisanal food establishment within Los Angeles in late 2011 the word spread among restaurant owners. was quickly spread, allowing them to take on many new customers not long afterwards.
In the beginning, ChowNow was offering a software solution that allowed restaurant owners to create their own ordering applications on Android and iOS and be in a position to accept orders using the Facebook Ordering App. Furthermore, they’d receive an iPad to interact with customers and keep track of orders.
In January 2012 they were able fund their initial funding round worth $1million participating of Launchpad LA, a local startup incubator program. The product was launched in March of 2012 at the National Restaurant Show in Chicago
A year later, just after the seed round this team managed secure another $3 million of Series A financing. The company, at that time was on track to open the 1,000th location. After six months, the group took the decision to increase their investment by another $1.19 million in order to take advantage of the increased interest of this restaurant delivery industry.
At the same time, Grubhub and Seamless had announced plans to join forces to become the leading company for online ordering of food.
ChowNow was able to achieve success in the growth of its product line. In the past, it established an in-house marketing company that could help customers increase their customer base through the mobile-based ordering platform. It could make use of its customized CRM system to develop specific promotions and offers that are based on the customer’s preferences.
Continuous improvements to its products like the inclusion for Apple Pay, Yelp or Android Pay, allowed ChowNow to secure yet another round of capital. In March of 2015, investors put in an amount of $10 million to ChowNow’s business. By the time its clientele was growing to more than 2000 restaurants across North America.
Over the next few years, ChowNow continued to double up on the things that worked before, which was to assist its restaurant partners by offering an ever-growing array of products. In August ChowNow, for example, announced a partnership with Google’s Business profiles. This allowed restaurants to take orders via ChowNow’s Search engine.
This enabled ChowNow to expand to over 8000 restaurant partners as of October of 2017. In the same month, it received the sum of $20 million through Series B financing from investors like Catalyst Investors. Just a few weeks prior, ChowNow had unveiled its own marketplace appthat will offer meals from all its restaurants partners.
Even in the face of delivery services such as DoorDash, Postmates along with Uber Eats, the company could hold its own. This was due to the fact that it usually targeted a different set customers. Instead of targeting the small eateries which didn’t have its own delivery service the customers it targeted were usually smaller restaurants that had their own drivers.
In the midst of a raging food delivery market that led to an UberIPO and a $700 million fundraising effort from Postmates, ChowNow was able to announce yet another round of capital. In May ChowNow was able to raise $21 million from several of its prior backers which is usually a positive indication (as supporters are pleased with what they’re seeing and wish to support the company for the foreseeable future.).
ChowNow’s business model and its distinction from other platforms also put ChowNow into danger, but. In February of 2020, Grubhub issued a cease-and-desist notice to ChowNow because it claimed that it charge commissions as high as 40 percent. The company claimed that the claims have been “highly overstated” and “materially false”.
ChowNow is, with its goodwill, did not back to its previous position and said it would fight any legal issues that come it towards it. One month later, however ChowNow was probably dealing with the least of their concerns.
The coronavirus pandemic resulted in a national locking down, also brought the restaurant industry came to a standstill. Fortunately, as more information became aware of the possibility of transmission this virus could cause, establishments started to open again with the help of online platforms such as ChowNow.
ChowNow increased its efforts to take advantage of the rapidly growing online traffic by announcement of a partnership in April 2020 with Instagram beginning in the month of April, 2020 which will allow users to make purchases directly on the social media platform. The company also launched membership plans for restaurants.
At the end of the year ChowNow was able to reach the mark of 20,000 partner restaurants (of which an additional 8,000 were added in the year 2020) and processed orders worth $2 billion in the year 2020 all by itself. The company also added 100 more staff, in large part from competitors who fired them at the start of the epidemic when it was at the height of its uncertainty.
Through 2021 ChowNow was on a expansion path. To attract more restaurants ChowNow even refunded charges for the first couple of months for restaurants who decided to join.
Over 500 people work for ChowNow that operates from close to 12 offices in North America.
ChowNow earns money from annual or monthly subscription fees, set-up fees and charge fees for orders through their Order Better Network.
