How Munchery Works: Comprehensive Business and Revenue Model

How-Munchery-Works

What is Munchery?

Munchery is an on demand food delivery platform delivering cooked meals to customers at their doorstep in major cities of USA. Having a unique business model, Munchery is an online marketplace that lets users order quality food prepared by professional chefs.

Munchery’s business model has been applauded by many entrepreneurs as the platform lets anyone order a meal been cooked by well known chefs of the city at an affordable price. To facilitate the process, Munchery has kitchens at various geographical locations and hires part time chefs to cook their respective delicacies. The daily menu keeps on changing which makes users keep coming back to the platform. By applying the sharing economy concept to home-delivered, fresh meals, Munchery has made many delicious options possible for its customers.

Founders, Funding Received and Facts

Munchery was founded on 1st April 2011 and has received a total funding of $125 Millions in just 4 years of its existence. Here is a funding chart of Munchery along with some facts about the company. All data in this section is as per August 2015.

  • Founders: Conrad Chu, Van Tran and Tri Tran.
  • Serving Cities: New York, Seattle, Los Angeles and San Francisco Bay Area.
  • Munchery Valuation: $300 Million.
  • Company Headquarters: San Francisco, California.
  • Munchery Revenue: 10$ per annum as per last year

Munchery_timeline

 

Munchery has been able to increase their revenue many folds year upon year and has been able to attract some well-known chefs to prepare meals which hit new sales records. The more the sale for a chef’s meal, the more he earns, but I’ll talk about the core business and revenue model of Munchery in the coming sections. Before moving to get insights into the revenue model of Munchery, let’s understand Munchery’s value proposition and customer segments.

Salient Features of Munchery

  • All meals are made by professional chefs.
  • Munchery has contracted workforce to deliver the meals.
  • Menu keeps on changing daily.
  • Munchery has special gluten free meals and even special meals for kids.
  • Chefs can set their own menu which is reviewed and rated by users.
  • In year 2014, Munchery delivered its millionth meal.
  • Munchery served approx. 5,000 meals per day as of April 2015.

Value Propositions

– Own Kitchens

– Visiting celebrity chefs

– Experienced resident chefs

– Part time workforce for deliveries

– Daily changing menu

Munchery’s 3 customer segments explained

The entire business model of Munchery revolves around the following 3 customer segments.

Users:

  • Users have an app from where they can select a meal from the menu and order it.
  • Users pay online for the order.
  • Users have the option to rate and review chefs and their meals.
  • Ability to schedule orders in advance is also available where a specific date and time can be chosen.

Chefs:

  • Chefs can create their own menu.
  • They have an option to work as a resident chef or just part time.
  • Munchery gives excellent recognition to its chefs.

Delivery Persons:

  • Munchery has part time delivery persons who work in the evening hours and deliver meals to customers.

Munchery Business Model Canvas

To give you a better understanding of how Munchery works, we at Juggernaut have created this Business Model Canvas which includes Munchery’s value propositions, customer segments, revenue model and other important factors.

Munchery-Business-model-canvas

The 4 step model about how Munchery works

  1. Chefs prepare meals in Munchery’s kitchen.
  2. These meals are listed on the online platform along with chef info.
  3. Users order meals and pay online.
  4. Meals are then delivered to users by delivery persons.

How Munchery earns revenue

Munchery hires professional chefs to cook meals and then sells these meals to users through its mobile app and web application. The business and revenue model of Munchery seems to be quite simple but there are a lot of things involved.

Let’s understand some common expenses of Munchery:

  • Kitchen space rent / lease
  • Salaries of permanent staff
  • Payments to chefs
  • Payments to delivery persons
  • Groceries and other raw material for meals.

According to researchers, Munchery earns around 15% to 20% from the cost of each meal. If we get into calculations than the fact that Munchery serves over 5000 meals a day in a city will help you get some real numbers.

How Munchery finds chefs

A business model like Munchery might fail without professional chefs. The only reason for users to become returning customers for any particular food platform depends on the quality and taste of prepared meals. In such a scenario, Munchery has always been on the forefront to hire celebrity chefs by paying them good amount of money.

Some factors which lead to well known chefs being attracted to Munchery include:

  • Chefs are paid really well. In some special cases, Munchery shares a percentage of revenue generated from a particular meal sales with the chef who made it.
  • Apart from payment, Munchery gives dish credits to the respective chef helping them earn name and fame.

A good payment, less number of working hours, freedom to prepare own meals and the opportunity to earn a good name and fame automatically attracts the top chefs to work for Munchery instead of a 5 star restaurant.

How Munchery finds customers

  1. Social Media
  2. Word of Mouth
  3. Digital Marketing including Internet ads.
  4. Promotional offers

The low prices of meals and the awesome taste with a perfect on-time delivery is the main factor that makes Munchery users into returning customers.

Key problems and Solutions

Just like any other meal delivery platform, Munchery faces challenges and problems in their business operations. For any platform to be successful, the arising problems have to be solved with the best approach. Let’s go through some basic problems being faced by Munchery.

Kitchen Location: The biggest issue being faced by Munchery or one which can be faced by any meal delivery platform that prepares meals, is the location of their kitchen. In order to serve city residents, Munchery wants their kitchen to be centrally located but the residents living nearby have criticized Munchery for environmental issues. Residents of the area complain about fish smell, waste material, parking problems and a lot of activity in the street.

Munchery’s head had a meeting with residents and listened to the problems being faced by them. He made sure to comply with the residents and solve their problems.

We suggest that any platform based on meal delivery having its own kitchen should choose the kitchen location somewhere away from the residential area with adequate parking space. For all their further expansions, Munchery has taken care of this particular aspect.

Chef Retention: For a company which delivers meals cooked by professional chefs, it is very important for them to retain the best chefs. Munchery has solved this problem in an excellent way. Apart from good payments, Munchery gives recognition to chefs and the freedom to prepare their own meals.

On Time Delivery: Meal delivery is a time specific thing and in order to make customers happy, it is essential to deliver food on the promised time. Instead of expanding to breakfast or lunch deliveries, Munchery has mastered on time deliveries for the dinner time. Meals are prepared by the evening and sent to various city areas for deliveries. Whenever a customer orders a Munchery meal, the nearest delivery guys gets a notification and delivers meal immediately. This has made Munchery deliver meals within 20 to 25 minutes.

The Future

Food industry is one such industry which has integrated very well with technology and have offered customers a quick and easy way to order meals. However, with a unique business model, Munchery is leading the innovation. With their own kitchens and celebrity chefs, Munchery has given a new model in this vertical. The number of growing customers and the recent funding of $85 Million say it all.

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