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Business Model of Caviar Explained

By Tanvir Singh 3rd November 2020

Are you familiar with this feeling when you want to treat yourself with your favorite food, get lost in the warmth and happiness that food brings in your system, without worrying about the delivery? But then disappointment creeps in because the food is too good to be delivered. Next time should you encounter this feeling; Caviar would be your go-to app. Know about Caviar Business Model.

“Caviar: Get delicious bites you want at your doorstep!”

What is Caviar?

Caviar is an on-demand food delivery platform that provides food delivery from the best local restaurants promptly. What makes Caviar stand out is that it marries food with tech. It leverages data and tech to make deliveries more efficient. Customers can order via web or apps, and after payment is processed, customers can even track the status of their order. It allows its customers to get deliveries from the finest top-rated Yelp restaurants, and many times, Caviar is the only way to order from those places. Trust Caviar and get even the most elusive delivery available at your doorstep!

Business model

Caviar Salient Features & Facts

Caviar was founded by Jason Wang. The genesis of Caviar dates back to 2014 in New York. It has partnered with over 2000 restaurants spanning 17 different cities. The acquisition of Caviar by Square for $100 million is a famous one. This was one another specimen of pure-play of tech investing in the food business. Since then, Caviar finds its place in the Square’s full suite of tools for business. Six months into the acquisition and Caviar witnessed tripled order volumes and doubled internal team size.

Caviar Business Model: Value Proposition

Since the beginning, Caviar has positioned itself as a fancy food delivery start-up. Caviar promises to deliver quality partnerships and offerings. Moreover, Caviar’s platform architecture has generated value by aiming at a niche market. This helps Caviar in garnering a colossal mass of customers even with very few restaurants. Caviar focuses on exclusivity to multi-homing to create more substantial network effects with its users.

Unlike its competitors, Caviar business model prefers a small selection, offering around a single vendor per cuisine. It is the value proposition of “hype” restaurants that attracted a very distinct customer base willing to pay a premium to be able to fetch delivery from these assorted exclusive restaurants. Caviar integrates technology with data analytics to provide a seamless experience to its users and customers as well. Caviar also employees its own pro photographers to ensure customers get to see the exotic sight at its best. Again this is something that no one else is doing.

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Caviar Business Model

Caviar has a two-sided model. On the one hand, it helps the customer in getting the desired bites timely at their doorsteps, and on the other hand, it provides restaurants with access to its delivery fleet and customers. It enables them to earn additional sales via incremental orders. The success of this business model requires an optimum balance between both these sides.

Caviar vies to bring the best food to customers from across the country, whether dining for a few or over hundreds, and for that, it partners directly with restaurants. Caviar works with over 400 food partners, and these partners include food trucks, well-established restaurants, and catering companies. The strong and unique relationship with partners is the ingredient of Caviar’s success. Most of Caviar’s partners aren’t even available on other courier options, which in turn makes Caviar the first and only choice for customers. 

Caviar Business Model: Operations

Caviar makes massive investments to sustain meaningful coverage of restaurants and efficient delivery capabilities. Restaurants need to garner a minimum rating of 4 on Yelp to participate in the restaurant onboarding process and garner a deal with Caviar. Basis past trends, Caviar then sends photographers and employees for menu sampling. These ‘foodie’ employees conduct the taste test, pick the dishes that cleared the test, and then add them onto Caviar’s website. This way, the company has built up a vibrant menu from the finest, top-rated restaurants.

The other side is the delivery side. Caviar has its own fleet of independent contractors or ‘food messengers’ to deliver orders rather than relying on the restaurant to do so. Caviar has its own websites and mobile apps. Those websites and apps are aesthetically pleasant and quite user friendly to navigate. This helps Caviar in providing its customers with the smoothest user experience.

Revenue Model

Caviar makes money from a mark-up (approximately 20%) on the price of food, service, and delivery fee. Earlier, the courier fee worked at a flat-rate system and had no confinement on order size, which incited many start-ups to order in huge volumes. Clearly, this strategy worked wonders for Caviar as the bulk orders enriched Caviar with cash flow essential to growing. Now the Caviar has switched to a dynamic model which ranges from $1.99 to $6.99, a distance of delivery being the factor basis on which price is decided. This fee, along with a flat 18% service charge on the bill, is what that provides Caviar enough to cover its costs.

How Caviar works

Caviar’s goal is to increase revenue without incurring an upside on its overheads. Caviar focuses on having more and more revenue with limited costs. This is being translated into reality via efficient marketing, ordering & delivery networks of Caviar.

Caviar has made ordering a convenient and wonderful experience for its customers. Order requests mostly are in the form of single orders or what is famously known as ‘Caviar for Teams”. Caviar also provides the option of scheduling orders in advance. Square even provides the customers with the option of splitting the bill for their deliveries. There’s something called shared charts where a group setting is batched into one single order for convenience. Delivery is also made efficient as restaurants receive real-time orders digitally. Once cooked, the Caviar delivery contractor takes care of the delivery. Customers get to track the journey of their meals all throughout.


How & why Caviar became successful

The secret of the success of Caviar lies in the fostering of its partners, namely: restaurants, caterers, and food trucks. The success of the business and operational model translates into fascinating numbers that Caviar achieved. From 2012-2014, the company orders saw a 500% YOY growth, and the company witnessed about 80% of its orders to be repeat orders.

Then acquisition by Square happened, and the numbers only increased. Acquisition, access to new markets, pleasant websites, and availability of mobile app bolstered order volumes. Caviar managed to reduce food delivery time, and currently, it aims to expand its reach as far as possible. It always has its eyes on the $1.6 trillion food market opportunity. Caviar goes one step ahead and ensures the best of customer service along with delivery speed. Customers receive their packages along with smiles. Entanglement of all these facts is where the secret of success of Caviar is embedded.

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