Square's Food Delivery Service, Caviar, Launches Its First Mobile App

December 5, 2014

 

After shutting down its wallet app, Square is trying a new route to connect with consumers

 

Earlier this year Square purchased Caviar, a San Francisco-based startup that lets customers order food. Caviar is like Seamless, in that it connects customers and restaurants for easy ordering. It builds on that model in a way Seamless has not by constructing its own delivery network, adding that option for restaurants that don't want to create and manage their own couriers. Today Caviar, which was previously web only, is announcing the launch of its first mobile app, as well as expansion into new areas like Brooklyn, San Jose, Cupertino, and Sunnyvale.

 

As we've reported in the past, Square has two distinct sides of its business. It offers tools to merchants by managing their finances and inventory, helping them process payments, and tracking customer trends. That has become a massive business, reportedly handling $30 billion in transactions annually. The problem is that Square only keeps $300 million of that in revenue, meaning the company is not yet profitable.

 

The goal was always to leverage the success among merchants to build services that the average consumer would use, a business that typically has much better margins. But so far Square hasn't had the same kind of success with the consumer side of the business, killing its wallet app back in May and replacing it with an app for ordering food. With its purchase of Caviar, Square doubled down on ordering food as its best bet for finding consumer traction.

 

A recent report from Nicholas Carlson indicated that there were competing factions within Square, with one side pulling to focus on the more boring but already established enterprise business. CEO Jack Dorsey, on the other hand, is reportedly heading the faction that is still gunning to create a consumer facing brand. The ultimate direction Square takes may rest in large part on whether or not Caviar, it's biggest acquisition, finds mainstream success.

 

In some ways Caviar's business model resembles Uber. They go into a new city and train a bunch of contract workers, in their case, couriers to deliver food, not drivers to pick up passengers. The wrinkle is that unlike Uber, Caviar has a third side to the transaction. "We started out with one city two years ago. Last year we expanded to three. This year we'll be in 15," says Jason Wang, one of Caviar's founders. "Getting a three-sided marketplace - customers, restaurants, and couriers - is tricky. But we've found a way to make it work."

 

 

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