Five Guys is an early advocate of OLO’s online and mobile ordering system (image courtesy of FiveGuys.com)
In my story on How To Pitch To The Press I promised to unveil the pitch I accepted from the hundreds of stories marketers were pushing from the Money2020 event in Las Vegas last week. Here it is. The PR agent is Tracy Aiello, from Denver. Unlike the hundreds of friendly, insistent, repetitive and even mind-numbing pitches I received, Tracy’s message was short and went straight to the point. Even better, she used the content of my own recent articles to show me exactly how the story she was proposing would fit. She was right.
Interestingly, Tracy’s client, OLO, is taking the same approach to customization with the online/mobile ordering technology it provides for the 150-plus fast and casual restaurant chains it works with so far. With the trademarked catchphrase “Skip the Line®” the company’s ecommerce platform allows customers to order and pay for takeout food in advance from their phones. When the customer arrives, they walk directly up to the counter or park in the specialized spots to pick up the order that’s been prepared in advance, just in time.
And just like Aiello’s custom pitch, the OLO app uses data from customers’ prior orders, Amazon style, to recommend the add-ons that are likely to be meaningful to the person at hand. The strategy is working: brands using the recommendations report average increases in ticket size of 25 percent. Accuracy of orders is also vastly improved. Customized orders are welcome and easy as the customer enters the request from their device (rather than speaking it into a phone or a speaker) and the order moves directly into the POS (Point of Sale) system.
Customers pay in advance through methods that are remembered and embedded, saving additional time at pickup and saving restaurants thousands of dollars that are otherwise lost on takeout orders people phone in or submit online and never arrive to retrieve. The function amounts to big money: For popular Five Guys restaurants, for example, the pay-in-advance feature is helping to combat food waste losses of $10,000 per store per year.
Noah Glass is Founder and CEO of OLO
This week I had the chance to spend time with OLO’s Founder and CEO Noah Glass (no, not the Twitter co-founder, he is adifferent Noah Glass) in the company’s Seaport Village headquarters in New York.
At age 32, Glass has been working on his venture for the past 8 ½ years, since the time “before phones were smart” he relates. He views himself as a Messianic founder with a mission to change the model for customer engagement in fast casual dining based on power available through every individual’s mobile device.
Glass knows restaurant customers: “Did you know that a loyal retail store visitor will come 1.5 times a month?” he asks me. “But a fast casual restaurant customer will come to a business 4-5 times in a month. For a coffee store, a loyal customer comes 15-16 times in a month, sometimes even more than once in a day.”
Weekday habits are interesting, too: “The healthiest food choices are popular on Monday and Tuesdays. Flavorful food dominates Wednesdays and Thursdays. By Friday and Saturday, it’s burgers, fries, pizza—the restraint is over and anything goes.”
Typical “unhealthy” fast foods are most popular during the holiday season, Glass says, when stress is high, schedules hit overload and consumers are making commitments to themselves to return to healthier eating at the first of the year.
New York Magazine has called OLO “Fandango for Food”. As to the idea for OLO, Glass told me what had inspired him:
“In 2004, I was living and working in Johannesburg, South Africa. Many of my friends and business associates were accessing the Internet through early smart phones. I also learned of the rise of prepaid airtime becoming a currency people would use to barter for goods and services, peer to peer.”
At the time, it was possible for customers in South Africa to transfer purchased airtime among users, which led to the spontaneous creation of a new market for mobile banking. The prepaid airtime was irresistible and the fact that it was transferable made it suddenly also desirable as a currency of exchange in townships and elsewhere. People could pay for service such as a haircut with 15 minutes of airtime, for example. The commerce power of the mobile device—and the rise of mobile Internet access—was a phenomenon too rich to ignore.
Glass returned to the U.S. and launched OLO in 2005, as an ecommerce platform integrated directly into customers’ POS systems to ensure optimum speed and accuracy of service. It also caught the eye of legendary ISP and private carrier entrepreneur David Frankel, of early-stage venture fund Founder Collective, the seed investor in companies such as Uber and AirBnB.
Frankel immediately saw the vision of OLO and invested the company’s initial $500,000 in funds. He also participated in the company’s recent Series B round of $5 million in funding that includes strategic investment from PayPal (PayPal is increasingly eager to find ways to engage in commerce that is not conducted entirely online. OLO fits that bill.)
Frankel also provided Glass and his start up team with mentoring advice and remains an active member of OLO’s board of directors today.
Two years prior to OLO’s founding, Glass had completed a degree at Yale in Political Science and had received an early acceptance to Harvard Business School as a senior. Then he showed Frankel a prototype of the OLO offering. Frankel was silent for a moment, and then said something to Glass that in hindsight is profound: “Do you have the passion for this project that would make you willing to quit your job and withdraw from Harvard? If you do, I’ll invest your first $500,000.”
Glass quit his job and withdrew from Harvard. Frankel invested the money in 2005.
Current OLO Customers
“This has been a long term mission,” Glass tells me. “In a startup arena like this, eight years is the equivalent of decades.”
Glass and team spent the time improving the strength of their product and conducting full integration into leading POS systems, a differentiation that makes OLO’s approach to restaurant-based ecommerce unique. However, the rapid pervasiveness of smartphones coupled with consumers’ increasing desire for convenience and customization is providing the company with hypergrowth fuel. For example the ability to order products like ice cream cakes online at any hour of the day (even when the store is closed) is becoming a particularly strong ticket, Glass notes.
“It took us six and a half years to go from zero to our first million users,” Glass says. “Then it took just one year to go from one million to two. Now it’s taken just six months to move from two million to three million.”
With its recent round of $5 million in funding the company has doubled in size and with 150-plus restaurant chains on contract, Glass believes the available market is 20x the company’s current installed base. Regardless of OLO’s outcome, his company serves as a best practice case study in understanding a segment’s customers and providing them with surprise and delight. His team is also validating the greater available powers of mobile.
Glass says he has no plans of re-applying to business school. He’s on his way to completing an entrepreneurial case study that is entirely his own. An Amazon model for food? For the customers currently registered with OLO or via the company’s affiliate relationship with GrubHub, smartphone ordering is proving to be a tasty proposition so far.