Delivery Service Helps Restaurants Expand Reach and Profits

Caviar, a rapidly growing food delivery startup, has made a major difference for New York City restaurant Nom Wah Tea Parlor.
Caviar, a rapidly growing food delivery startup, has made a major difference for New York City restaurant Nom Wah Tea Parlor. An Rong Xu

Wilson Tang, the owner of the New York City Chinatown restaurant Nom Wah Tea Parlor, has no trouble recalling life before Caviar. The cab fare alone jogs his memory. “I don’t miss doing the deliveries anymore,” Tang says, laughing.

In the days before he partnered with Caviar, a rapidly growing food delivery startup, a large order—a rarity in itself—meant a personal visit from Tang. The owner of the popular dim sum fixture, which has been around since 1920, would pack up the order, hail a ride, and make the trip. “I didn’t have a choice,” he says. “I didn’t have a team of bicyclists waiting around.”

That, boiled down, is what Caviar says sets its service apart. Like many independent restaurateurs, Tang knew offering delivery service meant he would, simply put, need more staff: People to take the orders, and people to bring them to customers. When one of Tang’s friends, also a restaurant owner, talked about using Caviar, a service that handles the courier aspect as well, he realized the potential.

“At that point it was very new,” Tang says. “And their whole pitch was that they were looking for restaurant partners, not your run-of-the-mill restaurant, but a better restaurant. I said ‘I wonder if I fit into that category.’ I reached out to someone there and they took me on. It was just by chance.”

The profits have been stacking up. Tang says he’s had months where’s he’s tacked on $10,000 of additional income just from deliveries. That’s far removed from those personal delivery days, when he says takeout and catering orders made up “less than 1 percent” of his business.

And all Tang needs to worry about is packaging. Caviar tries to handle the rest, even sending in a photographer to document each menu item for the website and mobile app.

The search for effective take-out packaging has even led to another opportunity, Tang says. “I’ve been doing a little more branding. We put some money into getting stickers and stamps, and even catering bags, to facilitate these orders. Just so when this product gets to venues, we have it branded correctly so they remember us. The takeout container, when they put it in the fridge and take it out again, will have our sticker and our address and logo is on it.”

Tang says the cost, which differs by the restaurant, is a willing trade given the bridges it’s opened between Nom Wah and its customers. Tang explains that Caviar expanded a catering operation where there really wasn’t one before, and the service can transport his food to new areas of the city. He’s had orders come in that total as much as $2,000 a time. Meanwhile, the cost to the person ordering the food ranges from the starting $1.99 fee to $5.

“We went from nothing to where we’ve had months where we’ve done a couple of thousand, sometimes even $10,000 extra, in sales,” Tang says. “Who doesn’t want that? Especially when it doesn’t add to an already busy restaurant. We’re making the stuff throughout the day. It’s not extra stress that’s put onto the kitchen or the front-of-house staff. We’re basically able to maintain the same amount of staff to execute that amount of food.”

When Square purchased the San Francisco–based Caviar for a reported $90 million in August 2014, they poured in resources and ballooned the staff from 40 to 100 in six months. Caviar now operates in 11 states and services more than 1,000 restaurants.

Gokul Rajaram, the product lead for Caviar, says Tang’s experience is something he’s accustomed to hearing. “Some restaurants have even thought about opening new locations based on [their experiences] because they see demand for their food in farther-away locations. Our analytics will hopefully not just help them see the value of Caviar, but help them change how they take a look at business.”

On that note, Tang opened a Philadelphia Nom Wah location in March.

Even with the growth, Rajaram says delivery times have been cut more than 30 percent as technology and logistics have improved. Square also recently acquired Fastbite—another startup out of San Francisco—to supplement Caviar, enabling the company to offer “$15 meals in 15 minutes or less” at nearby restaurants.

Danny Klein

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