With many restaurants forced to rely entirely on the delivery and takeout business during the pandemic, there’s been a lot of discussion about whether the industry can survive while paying hefty fees to delivery platforms like Uber Eats and Grubhub.
Lunchbox, on the other hand, is a startup that allows restaurants to build ordering experiences on their own websites and apps. Today, it’s announcing that it’s raised $20 million in Series A funding.
CEO Nabeel Alamgir knows the industry well, having served as Bareburger’s CMO — a position he rose to after starting out as a busboy at New York City chain’s first location. He told me that he isn’t expecting restaurants to abandon third-party delivery platforms. But if they can handle more online orders themselves, they’ll make more money while also maintaining a direct relationship with their most loyal customers, for example by offering them personalized promotions.
“You don’t want to lose a customer to these marketplaces,” Alamgir said. “You should be on these channels, but you should also invite your customers to order from you directly.”
That’s why Alamgir founded Lunchbox with Andrew Boryk and Hadi Rashid last year. He said that it took them more than 100 days to build ordering systems for for their first customers — which put them ahead of other restaurant ordering platforms, but they’ve been working hard to speed up that on-boarding process, which is now down to 44 days.
And next year, he’s hoping to move to a self-serve model, which would make Lunchbox accessible to small, independent restaurants, not just the chains and restaurant groups like Bareburger, Clean Juice and Fuku that it currently works with.
The startup says that when a customer starts working with Lunchbox, it usually sees a 30% increase in sales. And the startup’s own customer base has grown 925% over the last year.
Alamgir also noted that Lunchbox allows restaurants to embrace new business models, like delivery via cloud kitchens. In fact, one of Lunchbox’s partners is Ordermark, which just raised $120 million as it moves to a cloud kitchen model. The startup has also been experimenting with autonomous delivery through partnerships with Sodexo and Kiwibot, and it recently partnered with sbe to create a “virtual food hall” where diners can combine food from different restaurants into a single order.
Alamgir predicted that as investors look at new restaurant businesses post-pandemic, one of their key questions will be, “Can we open this on the third floor [where the rent is more affordable]? Can this be a delivery-only experience?” At the same time, he’s not suggesting that those will ever fully replace the in-person dining experience.
“The outfit and the mindset you have when go out to eat is different from when you eat at home and watch Netflix in your pajamas,” he said. “Those different kinds of dinners, and with off-premise dining, there’s an opportunity to innovate significantly.”
The round was led by Coatue, with participation from 645 and Primary Ventures, as well as chef Tom Colicchio, Behance founder Scott Belsky, former Venmo COO Michael Vaughan, HelloFresh founder Bryan Ciambella, Planet Hollywood founder Robert Earl and Girls Who Code founder Reshma Saujani. Coatue’s Rahul Kishore and Bennett Siegel are joining Lunchbox’s board of directors.
“Local businesses have been hard hit this year, but we think Lunchbox can help enable these businesses to move online, engage with their customers digitally, and build back stronger than ever,” Kishore said in a statement.
According to Alamgir, the new funding will allow Lunchbox to bring on more restaurants, improve its product (one of his big goals is to become agnostic next year with regards to point-of-sale systems) and to expand the team.
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