How Our Managed Marketplace Creates a Win-Win-Win for the Restaurant Industry
For too long, the restaurant supply industry has been broken.
Restaurateurs have felt the pressure of a consolidating food market, meanwhile local and regional suppliers and farmers have been left to fend for themselves. National chains have dominated the landscape, while diners demand locally-sourced ingredients.
The whole thing has been a mess.
When we launched ChefHero, we set out to fix these problems. But, beyond that, we also just set out to help make people’s lives better--to help grow their business and invest in their community.
How the Managed Marketplace Works
ChefHero is a marketplace for the restaurant supply industry.
A marketplace business is any company that doesn’t sell goods and services directly, but instead facilitates the transaction between a buyer and a seller.
There are three types of marketplace businesses:
Lightly managed marketplaces
Unmanaged and lightly managed marketplaces are platforms that connect buyers and sellers, but don’t necessarily provide a lot of oversight about who or what gets sold.
ChefHero is the third kind--a managed marketplace. We take things a step further.
We carefully control access to the market, responding to needs in real-time. We closely curate the buyers and sellers that are allowed on the platform in order to balance supply and demand. But, most importantly, as a managed marketplace, our platform helps both buyers and sellers have a better experience while also growing our company.
Unlike other types of marketplaces, we can only be successful if we create value for everyone.
This is what we call a win-win-win.
Creating a Win-Win-Win
The other types of marketplaces have no true “North Star”—whether the sellers make a profit or the buyers get a good deal is just left up to the market to decide.
ChefHero’s model is different.
In order for us to be successful as a company, we need to create a win-win-win scenario. Our platform needs to create a win for sellers, a win for buyers, and a win for our business. Otherwise it doesn’t work.
We take this commitment seriously. It’s at the core of everything we do.
From an economic standpoint, this means that we need to actually shift the entire restaurant supply market in order to capture the value that’s created. We need to enable restaurateurs and chefs to cut costs, while at the same time increasing the revenue that’s generated by suppliers in our network. Only then have we actually created value that we can turn into revenue.
So, that’s what we do--here’s how we do it.
How Restaurant Owners and Chefs Win
First and foremost, our platform is built to help restaurants make sense of ordering supplies. What has traditionally been a chaotic and stressful process is easier with a unified platform and a roster of reputable suppliers all at your fingertips.
We can break down the win for buyers on the ChefHero platform:
Increased market transparency
Lower prices through economies of scale and efficient demand/supply matching
Less food waste with on-demand ordering from local and regional vendors
Each of these, on their own, can be a huge deal for the day-to-day operations of a restaurant. But, combined, they create an entirely new experience. Buying food and supplies is streamlined and efficient--and the on-demand ordering reduces costs and eliminates waste.
This can add up to thousands of dollars in savings--plus the whole process is just way easier.
How Restaurant Suppliers Win
In some marketplaces, in order for the buyer to win, the seller has to lose. In the case of ChefHero, that’s not so.
Many restaurant suppliers are often muscled out of their local markets by big, national distributors. Even larger, regional companies can struggle to compete as the industry consolidates. In 2016, for example, the 19 largest suppliers with annual revenues over $100 million saw a 50% increase in sales versus 2015. Meanwhile, many smaller businesses were either purchased or shuttered.
So, how can ChefHero help?
Direct access to hundreds of buyers
Built-in sales team
Guaranteed order payments
In other words, we help local suppliers compete in a difficult market. We help them reach more customers and sell more product. In addition to that, we reduce the risk associated with accounts receivables and billing, giving suppliers greater control over cashflow, forecasting, and strategic planning.
How ChefHero Wins
It’s no secret that ChefHero is a business. So for us to provide this service to both parties, we also need to create a win for ourselves.
This happens by achieving scale.
For every purchase made through our platform, ChefHero generates a small amount of revenue. But we have to do it in a way that doesn’t burn the buyer or the seller just to line our pockets.
This means we have to create market efficiency. Our success is entirely dependent on us creating a win for both the buyer and the seller while leaving enough to keep our lights on.
Our goal isn’t to be a middleman. We are building a platform that enables open market transactions to take place in real-time, all over the U.S. and Canada. We’re making the industry run more smoothly—creating value in the economic sense.
But, most importantly, we also help to democratize the restaurant supply industry as a whole—more options, better service, and better prices.
This is the thing that’s really exciting about the business. As we grow, we help more businesses grow, too. Each time we roll out in a new city (hey Chicago!), we get to help new restaurateurs expand and hire--we get to connect them with local suppliers and even local farmers.
We’re bringing the restaurant industry together for the better.
When everyone wins, we win.