“It wasn’t the original plan but we couldn’t ignore it”: FoodByUs takes on $8b café sector

Ben Lipschitz

Ben Lipschitz, Co-founder, FoodByUs

The founders of Sydney-based startup FoodByUs have evolved their online homemade meal marketplace to provide cafés and wholesale food suppliers with a distribution solution that doubles as a matchmaking service.

FoodByUs was conceived by Ben Lipschitz, founder of footwear brand Flipsters, together with Tim Chandler, Menulog’s former lead developer, and Menulog co-founder Gary Munitz. It launched in 2016 as B2C marketplace, enabling people to order food from home-based cooks in their neighbourhood via the company’s website or mobile app.

With investment from Macquarie Capital, the founders have this week expanded their business offering with the launch of a B2B platform. The aim, according to Lipschitz, is to disrupt Australia’s $8 billion café sector by matchmaking coffee shops with wholesale food suppliers, while providing both parties with a ‘smart distribution solution’ that combines sales and logistics with an online order management system.

Lipschitz, who first spoke to Dynamic Business at the time of FoodByUs’ launch, caught up with the publication to discuss his startup’s new B2B platform, which experienced 65% month-on-month growth during its recent soft launch and is now available in Sydney, Melbourne and Brisbane.

DB: What is the elevator pitch for your new B2B offering?

Lipschitz: We’ve created an incredible online marketplace where cafes can order the best quality local wholesale food from one spot. Aside from handy features like GPS-trackable deliveries and text message ordering, it is the constantly updated range of suppliers that cafes love because it allows them to access the latest and best food. For suppliers, it’s a brilliant offer – FoodByUs provides a free-to-join sales, logistics and online order management solution which helps grow a supplier’s business while only requiring them to pay a small fee when a confirmed sale is sent through.

DB: What successes have paved the way for this expansion?

Lipschitz: Since our launch, last year, our consumer-facing business continues to grow nicely with around 15% month-on-month growth and over 700 approved makers operating across 3 cities. Importantly, the average review is 4.92/5 so quality of the food is excellent. There are special requirements for suppliers wishing to operate in our B2B wholesale marketplace, for example they need to have higher levels of capacity and need to be making food full time to satisfy the volume and reliability demands of cafes – think Oregano Scrolls or Raw Passion. Macquarie Capital have been a great investor and partner, they are well-networked, experienced in marketplaces and offer excellent strategic insights.

DB: Was it always the plan with FoodByUs to offer a B2B platform?

Lipschitz: This development was not part of the original plan but we could not ignore the growing number of calls we were receiving from cafes. The café scene has exploded in recent years with many owner-operated venues looking to differentiate themselves in the marketplace. While the level of service and type of coffee served is part of their point of difference, more and more cafes are using food to help lure customers back with unique offerings like vegan doughnuts or colourful croissants.

DB: Do you see the B2B offering becoming the main business focus?

Lipschitz: It’s difficult to say at this stage where things will land as many suppliers enjoy using the B2C platform to grow their brand awareness (which also helps wholesale stockists too) and that part of the business continues to grow. However, the consistent and growing demand from cafes means the B2B offering may well form the primary business over time.

DB: What excites the FoodByUs team about the café sector?

Lipschitz: Many things! The café sector is continuing to grow in both competition and diversity, with very few dominant players emerging. This means we are seeing many more owner-operators pop up who are incredibly passionate about their business and are really looking for an innovative solution for their food supply. Similarly, on the supply side, we are providing a great market entry for talented new suppliers while also helping to grow existing supplier’s businesses. It’s so exciting to deal with passionate business owners on both sides and offer a really innovative solution, especially in food which is something we’ve dealt with in the past and continue to love. The market reaction has been incredibly strong, with both sides loving that we’re (finally) bringing a modern twist to the distribution of wholesale food.

DB: What lessons from Menulog are being applied to FoodByUs?

Lipschitz: Menulog taught us some key elements of building a two-sided marketplace – making sure there is adequate supply and demand, easily and quickly matching demand to the right suppliers and of course building a great customer experience. Because of the team’s past experience we’re able to keep an eye on how to scale our solutions because we know some of the potential problems that can emerge down the road. At the same time, we’re careful to acknowledge that FoodByUs, like any business, has its own set of unique challenges. We try to look at the business with independent eyes and to not retrofit something that may have worked in the past to our current challenges.

See also: FoodByUs co-founder Ben Lipschitz on feeding the shareconomy, creating new ways to earn