- Investment sought:
- Equity offered:
CityMunch launched in 2016 with the goal of connecting restaurants and diners in real time. Any time customers are needed, they can be accessed at the tap of a smartphone.
Since then we’ve sent over 50,000 people through the doors of our restaurant partners - over 10,000 in the last month alone.
For restaurants, we aim to be a highly flexible, time-targeted offers platform. They can use CityMunch to get the word out, to drive sales, boost off peak hours, combat bad weather or reduce their end-of-day wastage.
For our urban customers, we’re a curated guide to which restaurants and lunch spots around you are offering a discount to tempt you in. It’s a chance to discover new places and save money at the same time.
We’ve grown at a rate of 29.7% per month since July 2017, and are live in London, Bristol and Manchester. Our first external investors were Just Eat, and we’re currently 17.3% owned by Seedrs investors.
CityMunch plugs a gap in the market, by providing a way for restaurants to instantly access an engaged customer base.
Restaurants are difficult businesses to run. They typically rely on consistently high customer volumes to pay the bills and turn a profit, and customers are fickle - a restaurant can be full one day and empty the next. Existing ways of communicating with customers on slower days are, in our opinion, limited - either in their effectiveness or flexibility.
CityMunch corrects for both of these. It’s effective by insisting that communication happens in a way that customers respond to - simple, unrestrictive discounts. It’s also flexible, in that offers can be created, published and edited instantly, meaning that restaurants can be responsive to hour-by-hour changes in demand.
Real-time offers are just the beginning. Predictive analytics, third party partnerships and in-depth customer feedback all feature in our roadmap to bring the restaurant industry up to date.
Substantial accomplishments to date
We’re immensely proud of our accomplishments so far, the most important of which are listed below.
Since launch, we have:
- Won the London Food Tech Week pitching competition (Oct 2016).
- Become the first startup on Just Eat’s Food Tech accelerator program (Nov 2016 – Jan 2017).
- Launched in Bristol (Dec 2016).
- Been called “the app that’s changing the way we use restaurants” by the Telegraph (Dec 2016).
- Raised £183,340 from 221 investors on Seedrs (Feb 2017).
- Launched the CityMunch Merchant Mobile App (March 2017), establishing a truly real-time connection between restaurants and our user base.
- Launched the CityMunch Slack Bot, enabling direct access to CityMunch deals through Slack.
- Launched in Manchester (October 2017).
- Hosted Food Waste Week in Manchester, drawing attention to the enormous problem of Food Waste and demonstrating how the app can be used to combat it (Dec 2017).
- Been downloaded 44,000 times, achieving app store ratings of 5.0 and 4.5 stars in the Apple App Store and Google Play respectively (as at Mar 2018).
- Grown by a factor of 5x in validated covers in the 6 months since July 2017 (to Jan 2018).
CityMunch’s business model is to charge restaurants per person they receive through us (a “Validated Cover”). We are focused on scaling the platform as our primary priority, and as such we offer 30 free covers per restaurant per month, creating a “freemium” pricing model.
We are exploring additional monetisation approaches, including:
- Charging restaurants for additional, paid services. As an example - our users could be incentivised, with vouchers, to fill in short feedback surveys on behalf of restaurants. This is a problem we’re in a unique position to solve at scale, especially for quick service restaurants.
- CityMunch Premium. We have developed a model where we charge firms for access to “Premium” CityMunch offers. This is in its pilot stages currently, with 44 firms trialling the product. We see enormous potential here. We’re currently in the process of onboarding existing restaurants to the Premium product to raise it up to a chargeable standard.
Use of proceeds
Please note that the Company has outstanding shareholder loans of £299,762. These do not accrue interest and will not be repaid from the proceeds of this fundraise.
Proceeds will be primarily used for growth and team-building.
- Growth: Our primary focus is continuing our rapid growth. Our future plans - including predictive analytics, offer automation, third party partnerships and customer feedback - all depend on significant scale to reach their full potential. Much of our fundraising proceeds will be invested in business development and marketing to expand our presence in our existing cities and achieve this scale. Realising this next stage of growth will allow us to raise a more substantial further round of investment at a valuation which makes sense for the business.
- Team building: Preparing for the next stage of CityMunch’s growth requires building out the skill-sets of the in-house team, both in tech and marketing. Specifically, we’re looking for a CTO who can build on the product we have and lay the foundations for our data strategy. We’re also looking for a Head of Marketing to help maximise our consumer engagement.
As platform business, we have two target markets - restaurants and customers. To grow, we must focus on use cases: pairing types of restaurant and customer types that we can connect at that point in our development.
Our early adopters vary from city to city. In Bristol and Manchester, students are a key target demographic - they’re tech-savvy, time-rich, cash-strapped and social. In London, the main initial pairing is grab-and-go lunches for young professionals. Concentrating on this high volume trade allows us to form a daily habit and build our brand.
A regular customer base allows us to move on from the early adopter use case. For example, our City lunch trade is helping us initiate a presence in dinners, breakfasts, more “sit-down” lunches and end-of-day stock clearance. 20-35 year old professionals in city centres still form the majority of our target market, but local residents, shoppers, young families and tourists are longer term targets.
Characteristics of target market
The UK restaurant market has grown in recent years - from £48bn in 2014 to an estimated £52bn in 2017. Across all Restaurants, Quick Service Restaurants and Pubs, 3.7 billion meals were eaten in 107,000 outlets in 2015.
British diners are price sensitive. The number one reason why people cut down on restaurant trips is that they’re trying to save money*. For people that are eating out more, 35% cite the availability of deals and discounts as one of their reasons.
In addition, there is a trend towards behaviours less constrained by social and economic norms. People in search of new experiences will happily switch between casual and fine dining. According to Sacla*, people now expect to eat out “any time, any place, anywhere”, in a trend they call the “deregulation of life”. CityMunch provides a way for the on-demand generation to eat out when it suits them, with deals which don’t restrict the restaurant experience.
*Sacla Report 2015 (“Eating Out Today and Tomorrow”).
Reaching new customers cheaply has been essential for us. We focus on word-of-mouth referrals to drive our growth - we have a zero-cost in-app referral scheme which has helped us reduce our overall signed-up user acquisition cost to £2. The most important aspect of this is proving our value to customers and thus winning evangelists, as shown by the email we were proud to receive below.
Other channels to market include:
Events: Through organizing themed campaigns, we aim to energize local influencers, restaurants and press to spread the word. As an example, in December 2017 we ran a “Food Waste Week” in Manchester, drawing attention to the wider issue of food waste, especially around Christmas.
Restaurant partnerships: Through working directly with key restaurant partners, we acquire customers through digital marketing and on-site collateral - including posters, stickers and cards.
Other: We team up with influencers, use digital marketing including social media, email campaigns and PPC advertising as support for our initiatives.
The market for real-time offers is still new. We believe that we’re well positioned, with a loyal user base and little in the way of what we see as direct competition in our core central London market.
In Manchester and Bristol, there are similar services operated by the Dealer and Wriggle respectively. In London, NEZ Fitzrovia and Dines are startups operating in a similar space.
Other alternatives include meal subscription services, which charge consumers a monthly fee for access to a set number of discounted meals. MealPal in particular have a significant presence in the London lunch market having raised substantial funding in the US. Our belief is that on-demand models, which don’t tie the customer down to a monthly subscription, will prevail in the longer term.
Dining cards (e.g. TasteCard) and voucher aggregators (e.g. VoucherCloud) are alternatives for diners looking to save money, but currently seem to service a different segment of the market (casual dining chains).