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Platform business model enters online food ordering fray

The Cookie Dining debuts a platform business model designed to outcompete established rivals by offering real-time payment, lower commissions and analytics. It will have to grow fast to do that.

Gut instinct has launched more than one business venture, but for Marko Manojlovic, a Vancouver, British Columbia, programmer and entrepreneur, inspiration for a platform business model came from the pit of his empty stomach.

At 6'4" and 265 pounds, Manojlovic enjoys a good meal and is particularly fond of a local bakery's blueberry bread and specialty coffee. One day, Manojlovic was busy with projects and didn't have time to leave his office-apartment for a breakfast run. He decided to call the bakery to place his order, but no one answered his call.

"I was furious," Manojlovic recalled. "But the worst part: I was hungry."

Hunger gave way to an idea: an online service that would let customers order their favorite meals online from a variety of bakeries and restaurants. That notion solidified this month with the formal launch of The Cookie Dining platform.

Marko ManojlovicMarko Manojlovic

The platform lets customers order food via restaurant-branded mobile apps or websites. Users sign in to a restaurant's ordering system using their Facebook, Twitter, Gmail, Hotmail or Outlook accounts, Manojlovic said. When an order is placed, a Cookie-supplied printer prints out the order at the restaurant. The customer's credit card payment, meanwhile, goes through Cookie's payment gateway, which connects directly to a restaurant's merchant account and bank account. This enables the restaurant owner to receive the customer's payment in real time, according to Manojlovic.

The Cookie Dining platform is based on Microsoft technology, namely the .NET software framework and Microsoft Azure, which hosts the platform. Cookie developers code the restaurant apps natively for each mobile OS.

Platform business model: Onboarding challenge

The platform's biggest challenge thus far, however, isn't on the technology side -- an experience it shares in common with other platform businesses. Cookie's issue is getting restaurant owners to jump on the ordering platform.

"Owners are not that well educated when it comes to technology," Manojlovic said. "They don't understand quite where it is going with mobile apps and social media. Getting restaurants on board is a bit of a challenge at this point."

I think 50 [restaurants] is the bare minimum we need to sign per month in order to grow really fast.
Marko Manojlovicfounder, The Cookie Dining

Nevertheless, the company has sold about 30 restaurants on the platform. Twenty of those are in Vancouver and seven in Montreal. Expansion in the U.S. is underway, with a couple of restaurants ready to engage with the platform.

Cookie has a sales and marketing team to get the word out and educate restaurateurs. The company's roster includes three salespeople, one marketing person and three social media marketing people. That's in addition to Manojlovic, the company's founder, and a CTO.

The Cookie team has set a goal of signing at least 50 restaurants each month to populate its platform.

"I think 50 is the bare minimum we need to sign per month in order to grow really fast," Manojlovic said.

Differentiating from GrubHub, Just Eat and all the rest

As it aims for growth, The Cookie Platform faces competition from ordering portals such as GrubHub and Just Eat. The Cookie business platform model differentiates itself in a few ways, according to the company. For example, the platform doesn't charge restaurants a startup fee and has set its commission on orders at 3%; the company says its rivals pull in commissions of 10% to 20%.

In its 2014 investor presentation, GrubHub cited commissions of 13% to 14%, a rate based on a range of GrubHub commission rates. Just Eat, meanwhile, said its commission rate varies by country, with its operations in the United Kingdom, for example, charging a 12% commission.

"There is definitely still room for food ordering systems in North America," said Elizabeth Friend, senior analyst at Euromonitor International, a market research firm.

But Friend said the viability of a new entrant depends heavily on specific location -- city and state -- and the nature of its service offering.

"Delivery demand is growing quickly in higher-income markets all over the world, and that is expected to continue over the long term."

Manojlovic also pointed to the Cookie payment gateway, which lets restaurant owners receive payment instantly, as another competitive edge. Cookie also keeps customers on the restaurant's website or mobile app, as opposed to a third-party portal. This approach gives restaurants the ability to stay on top of their customers' spending habits and "connect a dollar to the name," the company stated.

While the Cookie platform may seem like a natural fit for small, independent restaurants that possess little in the way of in-house IT, the company's sales scope includes larger chains as well. Manojlovic said the platform can accommodate a restaurant with multiple franchise owners and different bank accounts. Such a business could use the platform as the online ordering system for all its franchises, but payments would be directed to each franchisee's bank account.

Next step for the online food ordering system

Ongoing innovation and continuous feature updates are hallmarks of the platform business model. In The Cookie Dining case, the platform is expanding on a number of fronts. A feedback manager, which will let customers rate their food and delivery experience, is scheduled for release by the end of September. Integration with Yelp, which posts customer reviews of restaurants and other businesses, is also slated for September.

Cookie is also at work on a point-of-sale (POS) system for in-store sales, Manojlovic said. Cookie POS v1.0 should be available for beta testing in December, he noted, adding that the idea is to unify "the whole sales experience for the restaurant."

Voice recognition represents another technology direction for Cookie. Manojlovic envisions a customer being able to talk to his or her smart watch to order a pizza. Ordering by Emoji is also on tap.

"Both of these features are in the development process," Manojlovic said. "[They] will be implemented in all ordering apps early next year."

The platform plans to expand in the physical realm. Cookie offers food order delivery services in Vancouver and plans to do so in other markets.

"We are actively looking for drivers," Manojlovic said.

Another meatspace issue for Cookie's platform business model: finding an affordable office to grow into. Lease rates in downtown Vancouver rank among the highest in Canada, according to Avison Young Inc., a commercial real estate services firm.

"We are trying to find a small office space," Manojlovic said. "Office space is very expensive. It is really hard [when] you are bootstrapping."

Next Steps

For advice on how to get your startup off the ground, here is a sampling of columns by our small-business expert, Bryan Barringer:

Don't ignore the benefits of crowdfunding

Personality counts when hiring for your small business

Revisit your strategic goals on a regular basis

Marketing your small business to the digital customer

This was last published in August 2015

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What makes a platform business model successful? Why do platform business models fail?
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The key to their success will be in the way they differentiate themselves from their competitors. Many platform businesses have realized that they don’t need to be just another vendor offering the same service, they need to be a new vendor offering an improved service over what is currently out there.
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Thanks for the feedback. Differentiation is certainly the key and, with platform business model, this differentiation must occur at both ends of the platform: the value creator providing goods/services via the platform and the consumer purchasing those good/services.One restaurant ordering platform, for example, is working on voice recognition for taking consumer orders via smartwatches, while offering its value creators (restaurants) POS devices for in-store sales, a streamlined payment gateway and Uber-like delivery services. 
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Excellent point. A platform who’s goods/services or outcomes are not being consumed isn’t going to be around for very long. I would rephrase my initial comment to say that they need to be a new vendor offering an improved service that is wanted over what is currently out there.
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Tough to enter such a crowded market where others have failed or struggle by on hair-thin profits. If Cookie Dining does indeed find a new business model for such finicky buyers (surrounded by a plethora of choices) it'll be interesting to learn their secrets and see if their ideas can be repurposed. 
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