That First Move Can Be a Doozy: Why Peach Expanded to San Diego
Seattle-based Peach makes its debut in San Diego today, and therein lies a tale.
The question, “Where do we expand first?” can be one of the hardest decisions confronting an early stage tech company looking to rapidly scale its business beyond the hometown market.
Peach, founded in early 2014 by three ex-Amazon software engineers, began in the crowded food tech sector by taking a slightly different approach to creating technology that handles orders for take-out food delivery.
Instead of creating a comprehensive Web and mobile app platform for online orders like many of their competitors, the Peach team focused solely on processing weekday lunch orders, using an SMS/text-based ordering system that is simplicity itself. The company partners with restaurants that provide workplace lunch deliveries under a revenue-sharing agreement.
Peach keeps the process pretty basic. Users indicate a preference for vegetarian, light, or meaty fare when they register. Every weekday, Peach sends a text message at 9:30 am to its users that offers a single lunch offering, with a message that says, “Reply YES to order.” A restaurant partner fulfills the order and delivers the featured lunch. To vary the menu, Peach rotates the restaurants among its users each week.
There are no delivery fees, but to optimize costs, Peach currently arranges deliveries only to corporate offices or office buildings that have at least 50 Peach-registered users. So far in San Diego, Peach has struck deals with such restaurants as The Taco Stand in La Jolla, Deli Llama in Hillcrest, and Sushi Hana in Rancho Penasquitos.
As Peach marketing chief and San Diego advance man Andrew Bleiman explained to me, “Our whole value proposition to restaurants is they’re going to do the food delivery, but we’re going to guarantee at least 20 meals a day they can deliver to different places for over three months.”
In other words, Peach provides restaurants with takeout order processing and food logistics services. The startup’s analytics technology also enables Peach to predict the volume of orders for its restaurant partners three weeks in advance.
Bleiman said Peach has grown rapidly in Seattle, and the team spent the past year or so refining their business model. The decision to expand became a priority at the end of 2014, and Peach selected San Diego earlier this year.
“We chose San Diego because of the concentration of medium-to-large tech firms in Sorrento Valley and surrounding areas [that] weren’t within easy striking distance of great lunch options,” Bleiman said.
While the Peach team considered bigger cities, such as Los Angeles, San Francisco, and Chicago, Bleiman said a variety of … Next Page »