Ritual offers lower-cost service model to hard-hit restaurant sector

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Three weeks into the pandemic shutdown, Ray Reddy wasn’t sure if his food takeout app provider, Ritual Technologies Inc., would survive. Now, the CEO of what was one of Canada’s fastest growing startups is pitching Ritual as a way to help restaurants and cafés survive.

Since mid-March, the Toronto startup has quietly raised US$22-million from existing backers – believed to be at a lower valuation than its US$70-million financing in 2018 – cut half its staff and pulled out of continental Europe as sales fell. That will help Ritual sustain itself as its core customers – office workers in business centres – work from home.

“Everyone around the table saw this as not just, ‘Let’s fund the company to operate,’ [but] ‘Let’s fund them to innovate,' ” said Ritual director Steve Leightell, a partner with Georgian Partners, which led the last two financings.

Ritual has quickly built a new product, striking a partnership with the city of Toronto to help local food service providers move business online. It has also aligned itself with the growing backlash against expensive online delivery apps such as Uber Eats that cut into restaurants’ meagre earnings.

"There’s a lot of interest from restaurants in keeping 100 per cent of their sales” rather than paying online providers, Mr. Reddy said. “That’s what we’re talking about supporting.”

The new product, Ritual One, which launches June 8, is the startup’s “big bet” as it repositions itself for the times, Mr. Reddy said. Hundreds of food service providers have already signed up via the Toronto partnership, and Ritual is talking to other cities.

Before the pandemic, Ritual operated in 50 cities on four continents, serving 10,000-plus restaurants and cafes. Millions of people used its service, scrolling on its mobile app through a list of outlets within walking distance, then ordering and paying for takeout in advance. Upon arrival, they would skip the line, pick up and go. For local restaurants, it meant they could compete with similar services from McDonald’s and Starbucks.

If a customer signed up for Ritual through one restaurant, the company wouldn’t charge that establishment for subsequent orders from that customer. When the customer ordered from a different eatery, Ritual would charge 12 per cent to 15 per cent.

Ritual pitched itself as a convenience for customers and a sales channel for restaurants and cafés. Now, that “has crossed over to being a health and safety issue,” Mr. Reddy said. “People view that crowded lineup as a life-or-death situation, and view touching a PIN pad unnecessarily as something that might actually kill you.”

Ritual One’s pitch is that it allows establishments to take more control as customers flock to the internet to order. Ritual charges a monthly fee of $69.99 – although businesses that joined by June 1 get the service free for life – for easy-to-build websites where food providers can handle takeout and delivery orders themselves, offer loyalty programs and access Ritual’s marketplace app.

While many will still get high-fee orders from other delivery apps, they’ll also have the option with Ritual One to take orders themselves, paying only the going local courier rate, and not a per-transaction fee to Ritual.

“Many restaurants want to be able to do their own first-party delivery, especially now,” Mr. Reddy said. “Helping a restaurant maximize sales from first-party providers is the problem we’re trying to solve.”

Meanwhile, Ritual is offering to help property managers handle the return of office workers as physical-distancing concerns linger. Ritual offers a feature that notifies users when nearby co-workers order on the app; they can then “piggyback” their orders so one person picks up bags for colleagues. What Ritual once offered as a convenience it now pitches as a way to reduce elevator and food-court traffic.

“Ritual is going to almost become … a requirement in terms of how companies and property managers will advocate that their tenants access food courts,” Mr. Reddy said.

Brett Miller, chief executive of Montreal office-building manager Canderel Inc., said an offering such as Ritual “certainly could be integrated” into concierge apps for tenants it is testing. “If it reduces the flow of traffic in elevators [and in food court dining areas during the pandemic], that’s great.”

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