- Snackpass, a social e-commerce platform for restaurants, has secured a $70 million Series B funding round, led by Craft Ventures with investors ranging Postmates founder Bastian Lehmann to celebrities like the Jonas Brothers, according to a press release sent to Restaurant Dive. This round pushes the value of the company to over $400 million, TechCrunch reported.
- The funding comes less than two years after the platform landed $21 million in funding. The startup has surpassed 500,000 users in 13 college towns, according to a press release.
- Snackpass will use its latest cash infusion to increase the size of its teams, particularly sales and engineering, as well as expand to more U.S. markets, including New York City, Los Angeles, Miami, San Francisco, Chicago, Washington, D.C., and Austin, Texas.
Unlike some of the major third-party aggregators like DoorDash and Uber Eats, Snackpass' service is primarily focused on pickup and aimed at eliminating restaurant lines (and cashiers). While it also integrates with delivery, 90% of its business is pickup — a strategy pulling in its target demographic of college-aged users, who aren’t as willing to pay hefty delivery fees. The social e-commerce company's approach is clearing resonating with consumers and investors as its users have grown exponentially in the past year alone and funding comes in from deep-pocketed companies and celebrities.
Snackpass also looks to differentiate itself with restaurant operators, who can see delivery commission fees as high as 30%. Snackpass commissions, however, start at 7%. With lower fees, pickup is more cost effective for restaurants, some of which have even raised menu prices to offset high delivery costs. There is also a bigger customer base with pickup, which has the largest off-premises order share in the industry, ending 2020 with 46%, according to the NPD Group. Comparatively, delivery makes up about 11%.
There is a lot of runway for market and platform growth for Snackpass. There are about 750 metro and micropolitan markets in the U.S. that boast a college or university. CEO Kevin Tan told TechCrunch that Snackpass has 80% penetration with students in its 13 existing markets, with the average customer ordering more than four times a month.
On the functionality side, the platform does not integrate with any specific social apps even as social commerce explodes. eMarketer forecasts U.S. retail social commerce sales will increase by nearly 35% this year, to $36 billion, accelerated by the pandemic.
Social commerce's potential isn't likely to fade considering social media's vast and expanding audience. In 2020, there were nearly 4 billion people actively using social media in the world, an increase of nearly 11% from 2019, and an increase in users of 93% in five years.
As such, more brands are paying attention to commerce capabilities for social media. Yum Brands, for example, recently acquired Tictuk Technologies, which specializes in conversational commerce and integrates with channels like Facebook Messenger and WhatsApp. Domino's has offered Facebook Messenger ordering for several years.