MAKING FOOD DELIVERY PROFITABLE

Lessons learned by STADIUM & Paperchase

Unit Economics Menu

Delivery Packaging

4 key areas to master your delivery business

pchase.com servedbystadium.com A little bit about STADIUM STADIUM specializes in corporate lunch delivery to offices in NYC

Daily Lunches Unique NYC Unique Office Visits Delivered Buildings Visits Unique Company Relationships 120 per day ~2,000 per day 75 per day 397 per week ~10K per week 247 per week 1,711 per month 2,628 ~42K per month 310 per month

Total Lunch Active Restaurant/ Total Individual On-Time Delivery Organizers Brand Partners Customers in NYC Rate (Office managers, hosts,) 149 78,918 99.3% 6,998 A little bit about Paperchase Paperchase helps restaurants make better decisions with data

Pre opening Cash flow Menu & profit Annual audit Book keeping budget and management and optimization package variance analysis consulting

Optimized staff Key performance Owner & chef Sales forecasting Investor reporting scheduling indicators analytics

Food & beverage Vendor & debtor Paroll & gratuity Monthly financials Bank costing reconciliation distribution reconciliation 4 key areas to master your delivery business

Unit Economics Menu

Delivery Packaging Designing a menu for delivery

Key ingredients

Travel-ability Transparency Portions Pricing Variety & change Create, curate, and eliminate Not all dishes will travel

Create delivery dishes from the group up

Modify current dishes to optimize for delivery

Eliminate what doesn’t travel

Examples of dishes that deteriorate during delivery

Tacos Certain pastas Open faced sandwiches Deep fried dishes Transparency - Portions Managing expectations is key

* these are recommended weights for entree sized portions Transparency - Serving temperature Managing expectations is key Pricing for delivery Individuals tend to be more price sensitive when getting lunch delivered

Price based on your audience

Individual paying ~ $12 pp “I am paying for my own lunch”

Company paid lunch ~ $15 pp Daily or weekly employer sponsored lunch programs STADIUM’s focus Avg. spend per diner: $16.75

Business lunches ~ $20 pp Client meetings, vendor sponsored lunches

*all fees and taxes included Balancing change & variety

• For customers to repeat order your food, a rotating menu is key. “new dishes”, seasonals, specials.

• Balance staples and new dishes • For larger groups to order, you need enough variety to satiate all tastes and dietary restrictions Experiment, collect feedback, and iterate

STADIUM’s ratings and reviews for restaurant partners

Collecting and iterating on feedback is key to perfecting a dish

Data here is only for illustration purposes 4 key areas to master your delivery business

Unit Economics Menu

Delivery Packaging Perfecting your packaging

• Research what’s available for your type of food. STADIUM has worked with 2,119 types of different containers.

• Perform test runs, and think outside the box. • Balance perception and reality • Extra large or a half empty container will make food portion look small Thoughtful packaging

Pack hot & cold Bio vs. Plastic Are the containers stackable? dishes separate Spill-proof? Depends on the dish This helps retain temperature. Tape or saran wrap the dish To avoid slides during transit Beverages, guacamole… When stacking, put heavy dishes at the Pluses for bio containers bottom Eco friendly On-brand Hot & cold Negatives for bio containers ingredients in the Is container large Lids don’t shut tight Moisture can cause issues Extra large container enough for mixing? same dish? Food will move around during transit and Consideration if dish needs mixing. perception will be “half empty” Poke conundrum Salads, curry w/ rice, ramen + broth Hot rice + cold sushi causes fish to deteriorate during transit

Cool rice before preparing dish Or use different containers

Add-ons are key Ventilation Greens in a hot dish? Dressing on the side Greens can wilt during transit. Condiments, Sauces, chopsticks, Preferred by most customers for salads Consideration for certain hot dishes dressings… Pack greens separate or serve at Remove any chances of “forgetting" ambient temperature or avoid greens 4 key areas to master your delivery business

Unit Economics Menu

Packaging Delivery If you plan to hire your own delivery staff know that…

Delivering $30 orders will NOT be profitable! Demand will be very Labor/staffing issues unpredictable will be a constant Labor + insurance costs far outweigh the source of frustration revenue Rainy/snow days will cause a surge Monday will be very different from a Average order value should be greater Sunday than $50 for economics to make sense

Refunds will eat into your profitability

Customer complaints about late deliveries, food not arriving at the correct temperature etc Which delivery platform(s) to partner with?

Image courtesy: CB Insights (STADIUM added) Different styles, different players Depending on your objectives, multiple partners can make sense

ORDERING CATERING STYLE GROUP ORDERING PORTALS Might not do the delivery INDIVIDUAL Individual dishes in bulk Cater2Me DELIVERY Zero Cater STADIUM EZ Cater ChowNow UberEats Doordash Seamless Caviar DELIVERY PICKUP POPUPS Grubhub FULFILLMENT Ritual Eat24 Fooda Relay MealPal

This is the landscape in NYC in Feb 2019 and by no means is this list exhaustive Evaluating partners

Does the service Do they cannibalize Does the service get expand my Do I need to hire my existing walk in or me orders during restaurant’s reach? delivery staff? catering business? downtime? Expanded delivery zone

Familiarity with Flexibility is key delivery protocol of Pricing and payment NO to exclusives! Company security buildings? relationships terms Landscape is constantly Insurance coverage changing Certificates of Insurance (COI) 4 key areas to master your delivery business

Unit Economics Menu

Delivery Packaging Key is to increase utilization of existing resources

Additional revenue from Assuming delivery revenue doesn’t affect in-store $10,000 100% delivery business

— Food cost -$2,500 25%

— Additional packaging -$500 5% cost

This would be non-zero IF you are hiring additional — Additional labor cost $0 0% people to support delivery/take out operations

— Other fees/costs -$3,000 30%

Key is to increase utilization of existing fixed resources Contribution margin $4,000 40% (rent, labor..) which would increase dollar profitability Delivery is tough

TechCrunch Eater

TechCrunch Quartz

The Spoon Quartz

CB Insights

New Yorker BUT delivery is also the future

Bloomberg Businessweek +MS

Is the kitchen dead? UBS estimates global could leap from $35bn dollars today to $365bn by 2030. It’s thanks to a convergence of the on-demand and sharing economies, and a combination of industrial, economic and demographic factors. Analyst Chris Grundberg explains the UBS Evidence Lab research, and considers whether the kitchen is dead. — Financial Times + UBS

Millennials are 3X more likely to order in than their parents — UBS Let’s tackle together

[email protected] | [email protected] How does STADIUM help your restaurant?

• Downtime utilization

• Steady, bulk volume. We buy $10,000 - $30,000 worth of food from our core restaurant partners each month. We expect this to reach $50,000 in 6 months.

• No cannibalization

• Plug into our network. 1,900+ companies in NYC. 78,000+ users in NYC

• We pickup & deliver. No extra delivery labor on your end

• Expand your reach. We deliver to all addresses south of 59th street in Manhattan

• Market your restaurant

• Continuous feedback so we all improve

• Analytics - Trends, benchmarking, ratings, reviews (coming soon)

servedbystadium.com/menu | [email protected]