Seamless CEO: Creating Value for Restaurants Isn’t a One-Shot Deal

UPDATE: 11:00 a.m. EST: Seamless announced earlier today that is is acquiring local restaurant directory MenuPages.

Seamless Web launched in 1999 as an overtime and weekend meal-delivery service for large financial and legal firms in New York City. But as mobile adoption came to the fore in the past couple of years, the company has evolved into “an e-commerce marketplace focused on the restaurant industry,” according to CEO Jonathan Zabusky. Earlier this year, the company has shortened its name simply to Seamless, and has built out a number of features to become a white label marketing platform for restaurants. The service currently extends to over 7500 restaurants, covering 27 U.S. cities and London.

Street Fight spoke recently with Jonathan Zabusky, Seamless’s CEO, about how restaurant delivery fits into the hyperlocal equation, and why he thinks platforms like Seamless ultimately can provide a lot more value to mom-and-pop restaurants than daily deals companies do.

Tell me a little about where Seamless is headed, and how you see restaurant delivery fitting into hyperlocal.
We’re clearly in rapid expansion mode, adding restaurants based all across the country in neighborhoods that we were previously not in.

New Yorkers work and live in close proximity, so our ability to serve them from the consumer perspective was pretty easy. But over the past couple of years we put out a local sales force where we effectively tripled our restaurant coverage around the country. And we endeavored to do that on a neighborhood-by-neighborhood basis. This is not something where we’ve got a team in New York looking through the Yellow Pages and signing up restaurants. We go by a much more detailed fashion in terms of which restaurants we want to bring on. We validate them across a bunch of different sources. And of course in all of our markets we’ve got feet on the street. In many cases, people speak multiple languages. We cover forty different cuisine types, so our ability to communicate is really important in developing trust in these communities.

It’s been a significant growth story. Twenty months ago, when I became CEO, we had 130 people.  Currently we’re well north of 200 and the plan is to get to more than 300 people over the course of the next calendar year. And we’ve made a substantial investment in our product. A year ago we were doing less than 1% of our business via mobile. On a given Sunday, which is a high point for mobile, we do close to 20% that way. It’s a fundamental change in how customers are seeing things.

What do you think local restaurants are looking for in online marketing?
Ninety percent of our restaurants are mom-and-pops. This might be people who started a business or got seed money from their family and community, and are in the kitchens making the food. These are not people who have any experience in marketing, let alone digital marketing.

They’re looking for a couple of things.  First of all, they’re looking for low-cost customer acquisition.  They’re looking for the ability to drive their dollars into the most cost-effective channel. Second, they’re looking for a way to put their best foot forward when they acquire a customer.

So we go in there and we say, “We’ve got over a million consumers using our platform and over 3500 corporate clients, many of which are some of the world’s largest companies. We’re going to drive you more business, and we’re going to do it in an operational fashion. But, by the way, we know that you’re very proud of your brand, we know you want to drive it as well. So, free of charge, we’re going to help you set up your own website.” At the end of the day, we have 7500 restaurants — of which more than half probably have their own website from us.

Are there elements of what you do that could be extended beyond restaurants to other retailers?
Let me give a frame of reference: If you narrow it down to just orders that are placed in advance — so we’re not talking about walking into McDonalds and placing your order and taking it to go, that’s not really in the script for us — we’re talking about a marketplace with twenty-five billion dollars. Our market’s huge. And it’s in the second or third inning, at best, in terms of its development, both in terms of consumer adoption — which is developing quickly — as well as all e-commerce channels. Restaurants are still in the early stages of adopting technology, and specifically the non-nationally-branded mom-and-pops.

So our focus is squarely on the restaurant vertical. We think our database of information that has been collected over ten years provides unique value to both consumers and restaurants. For consumers, in terms of helping them decide where to eat and what to eat. We know a lot about people, we know a lot about general preferences, we can draw connections among consumers that they wouldn’t be able to do in a scaleable fashion, similar to what the Amazons of the world do and the Netflixes of the world do.

So for near-term, I would say no, for long-term I would say of course anything is possible. Anything that’s applicable in the restaurant world is applicable to all sorts of small businesses, so there are lots of opportunities.

How do you see the daily deals space evolving?
I don’t know how the deals space is going to evolve, but I will say, a company like ours — that processes north of fifty thousand transactions a day, been in this business for ten years, and only recently started really building out with local marketing platforms that the restaurants can use to their advantage — we’re going to see a lot more innovation coming through those, through the transaction itself.

That’s mostly because of two things. One is you can do some really interesting things when you’re in a transaction — at an item level, at a bundling level, a pricing level — that the Groupons, the LivingSocials, the other guys can’t do, because the relationship that they’re establishing is basically just about customer acquisition, there’s nothing about growing a relationship.

Acquisition is just one of the things that we offer restaurants on an ongoing basis — whether it’s loyalty programs, whether it’s ongoing pricing and merchandising strategies, whether it’s the ability to inventory kitchen capacity that’s not being used, or ingredients that the restaurant has too much of; we have those relationships.  It’s not just a one-time “I want to attract a lot of customers.”

I think you’re going to see those in the deals space looking to break out and say, “Is this a sustainable model over time?  Are we creating repeatable value for restaurants? Or are we just going to have to keep finding new merchants to do something this one time and have them not come back?”

This interview has been edited for length and clarity.