The restaurant ordering app market has a new local competitor that’s giving restaurateurs a piece of the pie.
FoodUp formally launched its takeout ordering service last month, with nearly 20 restaurants signed on as users.
While it was founded in Richmond by software developer Phu Nguyen, FoodUp is owned by the operators of five of the restaurants that use the service and is organized as a co-op. The owners are Gee and Toula Suleymanian (Greek Taverna), Jaynell Pittman-Shaw (Maple Bourbon), Trieu Tran (Pho Thien Phat 2), Walter Guevara (Perlas Pizza) and Wenky Chen (Little Asia).
They bought the company from Nguyen for an undisclosed amount and Nguyen now works for the company as COO. Nguyen said the ownership group receives a dividend of company profits.
FoodUp is a tweaked and rebranded iteration of a restaurant delivery startup Nyguen founded a couple years ago called Foode.
Nguyen said he had to pump the brakes on Foode after he received a cease-and-desist letter from a Fredericksburg restaurant of the same name. At that point he decided to rebrand and further tinker with his concept. He introduced the co-op model as a new element.
“Rather than rushing to market, what I did was focus on the branding and focus more on the features to make the experience better,” he said.
He said the addition of the co-op format was inspired by outdoors outfitter REI, where he is a member. As he learned more about the ownership model, he became more interested in its potential to make for a more egalitarian company.
“The REI model was just the tip of the iceberg that got me to explore and understand more about what co-ops were. It’s really the social and economic aspects of that where the control is shared between members in addition to any of the profits,” he said.
Nguyen said he pitched the idea to the app’s initial cohort of restaurants to give them control over a takeout and delivery app.
“What better way than to collectively bring them together for a similar cause and similar mission,” Nguyen said. “The co-op model is something relatively new to the restaurant world, so it took some education. But once they understood what it meant to come together it was an easy, no-brainer decision.”
Nguyen was able to make believers of the Suleymanians, who own Greek Taverna. Toula hoped that FoodUp would provide an avenue to offer food to customers without the need to tweak prices to handle the fees of large delivery platforms.
“We found it a good thing to be a part of because at just our restaurant alone, we’re with four delivery companies, three of which are the big guys in the game right now. When Phu said it was local and we could be part owners, it makes us feel better about how we’re pricing our food to the customer because we’re not going to lose as much,” she said.
Fees charged to restaurants vary among national delivery apps but can be as high as around 30 percent. Doordash and UberEats both offer tiered packages that charge delivery fees of 15 percent to 30 percent to restaurants, per their websites. Those companies’ pickup commissions are 6 percent.
Restaurants pay FoodUp a one-time $500 membership fee to join. Nguyen said the company is still tinkering with its fee structure for customers and is planning to introduce a flat 50 cent service fee per pickup order. Restaurants keep the money they make through the platform, Nguyen said.
FoodUp has plans beyond Richmond and beyond takeout. Nguyen said Richmond is a pilot market for the app ahead of a potential expansion of the concept to out-of-state markets. He also plans to expand into food delivery.
FoodUp joins other local food delivery services ChopChop (which earlier this year merged with LoCo Richmond) and Quickness RVA.