Munchery's Business Model and Marketing Strategy | Founder of Munchery, Tri Tran

So in this space, there are literally hundreds, if not thousands, of companies.

We basically lose track of keeping track with them after a while.

But there are a number of categories they fall into.

The one you seem to allude to would be ones where they deliver food from local restaurants or something like that. There could be a bunch of these, right? It started with Seamless and Grubhub, and then now Postmates can get you a burrito from Chipotle.

Yeah.

$8.

$8 burrito, but they charge you $8 for delivery.

So after you eat that, like, you know, you couldn't get that before, so it's great that you can now get it.

But after you eat that, you feel a little gouged that you're like, I don't want to do that again anytime soon.

So it's not a daily habit.

When the company does not make the food, they have very little control on the margin of the food, and therefore they have to charge you a very meaningful delivery fee. For us, it's $2.95 flat delivery fee, for example, which for most people, it's much smaller than the item that they're purchasing. And regardless of the number you order, you get it for that price.

So yeah, there are a lot of companies that does that.

That's one thing. And it's because of that delivery fee.

And it depends on what you get.

I mean, if you get something from an inexpensive place, it can cost $5, $8.

And we're working on our menu to even get more price affordable than currently.

It used to be $25 a meal, by the way, when we first started because the volume was so low. But now the volume is so high that we have purchasing power and we leverage a lot.

The other thing about getting food from restaurants, restaurants cook in what we call à la minute cooking I mentioned earlier, but we also call that internally subscale cooking. That means you have 2 customers who walk in, you got a chef or a line cook in the back of the kitchen firing up 1, 2 pieces of, let's say, salmon or a piece of steak or whatever they cook for you at that moment. Ask that restaurant to make 1,000 of that.

Yeah.

Piece of steak or hamburger or whatever, they're going to do that 1,000 times over.

We don't do that.

We have ovens that you can buy from Germany or a lot of different brands like this. It's called a combi oven. It can cook 500 pieces of salmon in one shot. It has a probe. The recipe and what temperature to cook at is downloadable from Wi-Fi or the internet that our chef can load in, so there's no mistake of us setting that temperature incorrectly or something like that. And it cooks exactly that temperature and it shuts it down. Perfectly. So no undercooking, no overcooking, and it's perfect every time. So the labor for us is much more efficient than a restaurant cooking. These things allow us to bring a lot of the price point down for the customer and make us— I think comparatively, you get the single piece of fillet of salmon or whatever that I mentioned earlier, in a restaurant would cost you 2 or 2.5 times that from what you get from us.

But yeah, you can go out there and get something really inexpensive like some fried noodle or something from a Chinese place and it might be $8.95.

And we're at that price point. A lot of entrees from the $9 to $12 price point.

Hi, my name is Vivek and my question is, I see your company as a premium super niche online restaurant. Why didn't you choose a model where you are an Uber for restaurants, Uber for food? Why didn't you open up a platform for anybody to be a chef and anybody to be a customer?

Great question.

Thank you, Vivek.

Munchery has always been having these following 3 priorities internally. It's quality, then convenience, then price. In that order. I don't flip it around. There are plenty of opportunities and companies that does, let's say, convenience first. Or you've seen the price first model, right?

Walmart is a great example for price first. There's nothing wrong with doing any other way, by the way. I'm not saying anything wrong with convenience first, like Uber would get you your food in— Uber Eats gets you the food in like 5, 10 minutes or something like that.

But quality isn't their highest priority.

Okay, they don't make the food.

They have no control on that food.

It sits in the car until you order it and then they bring it to you. And they're trying to keep the food warm and all that, which again, I have something fundamentally against that. I think that just results in very limited kind of food that you can cook in that format. And then if it's—

you know, the thing I learned about food is the safe temperature zone for food, to keep food safe, is either under 40 degrees Fahrenheit or above 140 degrees Fahrenheit. If you're trying to keep food warm around 120 degrees Fahrenheit, do you know what happens?

It burns.

Not only just the overcooked stuff.

Bacteria. Bacteria.

It's a haven.

It's like, you know, 120 degrees is like party on, dude, kind of thing.

So yeah, we're really sensitive to that. We don't want to make sure— like, we want to make sure that the quality of the food is amazing, it's captured, and we want to make the food because we want to control what the menu is. There's nothing wrong with getting food from local restaurants. We just fundamentally believe it also doesn't scale.

Because of that whole subscale cooking that I mentioned to you earlier.

The restaurant cannot do this at the kind of volume we have today.

So actually, I hate to say it, but half of the question has already been answered. But I was just wondering if you could expand on customer retention and how to create those habits and get people really engaged in the food that they're eating.

We're still working on customer retention.

I mean, that's always the challenge for, I think, any ecommerce business anyways.

We—

what we want to do is make it into a daily or weekly habit. I mentioned earlier how difficult it is for people to break from their existing dinner habit. Yes, that's a challenge. But once you get them to try us, and what we notice is on the third time, by the third order or third delivery that they get from us, the percentage of those people who stick around is sky high.

And in fact, they order even more often than they first did the first 3 times.

So make it such a good experience. And most of the time, it comes down to the food, by the way.

If we're 5 minutes late but the food is fantastic, they're almost willing to forgive that. Especially because we notify them early if we're We're going to run behind. We see all this, right? We can see on a huge map and alert which driver is potentially running behind. And so we know their path too, so we can reach out to customer directly. But yeah, it's all about great food, good service. We screen and hire every one of our delivery team members. They're W-2 part-time employees. We're like the first who did this, and now a bunch of companies are like shifting over. And we're like, whoa, great. You know?

Making sure that experience is amazing from end to end. From the moment they discover you, every touchpoint, right?

This is the classic— what Steve Jobs might say about marketing. Marketing is a dumb word. To him, it's more like making sure every touchpoint the customer has with you and your product or your service, whether it's digital or physical in our case, it has to be fantastic. And then hopefully, That makes people come back. And yeah, building habit after 3 times for us is when it makes a huge difference.

Thank you very much.

Yep.