Summary
Food delivery in the US has been a booming business. It is also an immature industry that has been fraught with challenges as business models for many undercapitalized business have proven futile.
And frankly many of the largest operations are only being propped up by large financing rounds that are hiding the poor economics of the on-demand food delivery market.
This is what makes the ToGoBox value proposition so intriguing. This team has created a way to pool orders together for more efficient delivery logistics and in the process create a more efficient delivery business model. Do they have what it takes to win?
We sit down with the Co-Founder & CEO to find out. Check out the entire discussion below…
Funding Round Details
Can you tell us about your background and how you came to found ToGoBOX?
When I was in college, I saw many food delivery services come to market like Foodler, OrderUp, GrubHub and UberEats. They are just expensive and don’t fix the logistics model, which is difficult to solve for in the one-to-one on-demand delivery world.
I saw myself and many other students being hesitant about ordering from them after seeing $10 Pad Thai turning into $17 at the checkout page. Something just hit me, which was, “why not “pool everything?” for my colleagues because we had lack of food options nearby.
For those that don’t know, what is the ToGoBox Solution?
Theoretically, it’s simple but requires an extensive control. We milk-run deliveries to students. With my partner Glenn, we accepted on-demand first come first serve pre-orders from students through the Facebook page.
We posted daily menus from a few restaurants and accepted confirmations thru comments on the post. Payments went thru venmo. We also allowed students to pick up orders by visiting the restaurants.
We ran it for the semester and decided to incorporate after researching and seeing lots of potential of our business model and its concept. We shifted our audience to corporate offices who had locational disadvantages that have limited options around. We started with Virgin Pulse and Brown Physicians and we have been providing ToGoBOX service for 12+ months.
This logistics solution we developed allowed us to waive tips and “pooling” delivery fees for them.
In what cities are you currently operating?
We started ToGoBOX in Providence and our clients include the likes of Virgin Pulse, Brown Physicians, Verizon and more. Recently, we signed an agreement with a private investor to operate in Princeton, New Jersey area where we already acquired some prospects, restaurants and offices.
How do you plan to grow the business from a geographic perspective?
I occasionally receive emails and phone calls asking expansion to other cities such as Los Angeles, Seattle, and Dallas. We are a scalable business; however, as I saw many food service startups fail due to being over-funded, which led them to expand exponentially without proving their sustainable concepts, we are making sure to take our time to focus on our customers day-by-day to ensure we deliver value and create long term relationship.
What is your business model ‘aka’ how do you make money?
Delivery charges from customers. Reliable commission from the restaurants. We learned that restaurants are in a loophole affected by other delivery platforms nationwide due to steady growth of food delivery market. UberEats and GrubHub charges are between 18% to 35%.
As average wage is increasing annually, restaurant owners suffer from those ridiculously high commissions. We are not saying we charge exceptionally low commission fees; however, we allow the restaurants to sell a greater volume of product in just 30 minutes compared to all open hours.
Would you say you are a B2B or B2C business?
It depends on the size of companies. We have been B2B; therefore, we were stubborn to only provide our service to large companies. However, when we realized that there are lots of demands of our service from of all sizes, we are offering B2B service for companies under 300 employees with no cafeterias and with a large flexibility.
Companies can work around their budget to either just pay for the service, not the food, incentivize the cost of the food, or provide 100% perks to their employees.
It’s awesome to hear that the founders discovered the business was viable just by testing it on campus during college. It proved that the pooling mechanism of their business could actually prove valuable.
And now they are off to the races trying to build a real business in a crowded market with a unique value proposition, which we happen to like. To get more details on this Deal To Watch, check out our rating report HERE and be sure to invest HERE!
