Israeli startup sells timely takeout to US students

Daniel Almog and Udi Oster

Tapingo revolutionizes dining services on US campuses by learning students' habitual behavior, saving them precious minutes.

The first meeting between Udi Oster and Daniel Almog long before they started Tapingo, the app which changed culinary life on leading campuses in the United States was purely coincidental; a too-thin drywall set the stage for their friendship.

"We both served in Unit 8200, a place where they spend more on technology than on the building," Oster recalls. "There was one guy, on the other side of the wall, who spoke really loudly with an awful American accent. It drove me crazy. I started yelling at him to be quiet through the wall.

"He answered back and we began talking back and forth until we arranged to get lunch together that's how we got to know each other and became friends," Oster remembers.

The pair's service in the IDF's elite signal intelligence outfit, Unit 8200, served as the launching point for their idea as happens often with the illustrious unit, which has become an unofficial startup accelerator.

"We worked a lot with data and pattern recognition. We told ourselves that if everyone was going to the same places and buying the same things then we could use our knowledge in pattern recognition and build a system to do it much better," explains Almog, the startup's CEO, who was a lone-soldier in the IDF after making Aliyah at 22.

"If every day at nine in the morning I go to buy the same type of coffee, then I need to open an application that should just ask me if I want my regular coffee period. Without having to go through the ordering process anew every day," he adds.

"People simply don't see how habitual they are in what they do," claims Oster, "You think that you choose where to go and what to eat at a restaurant, but there is a very clear pattern for lunch you go to the same few restaurants near your work, and at each one there are one or two dishes you regularly order."

Almog chimes in. "In order to understand the patterns, the system must know what day it is, where you are, and the time. More than fifty percent of orders have been identified beforehand. The fact that we remember and identify repeat orders is part of the experience for our customers."

With the idea that pattern recognition can be combined with the notion that we mostly eat the same dishes at the same places, the pair decided five years ago to found Tapingo. They started working with Tel Aviv restaurants, allowing users to order from the app and receive their items upon arriving at the restaurant. But it didn't work.

"After two years we noticed a lack of users. We learned that people don't want to use Tapingo intermittently. They either want to use it every day or never," Oster explained. "We reached the conclusion that we needed to enlist all the restaurants for the app and not just ten percent. It wasn't enough it's the reason other companies don't succeed in the restaurant business even if they have a good idea."

The pair then decided to try their luck in the United States. "We had an advantage because we didn't have funds. Many companies, like Google for example, tried similar ventures, spent a lot of money and failed. We were forced to think of a solution precisely because we didn't have the cash to hire sales associates and market ourselves," Oster said.

Thus, the startup chose to focus on a specific target audience. "We decided on US colleges, because the college administration is responsible for all the dining outlets on its campus," he adds, noting that Facebook also spread through college dorms across America before expanding to the wider world.

How does Tapingo work?

The user searches for their choice of restaurant and dish. The app connects to the establishment which accepts and prepares the meal. The user then receives a text message when the dish is ready, at which point he or she arrives to pick it up.

Almog says "Our innovation is in 'take-out' the value we offer our users if the ability to sidestep the physical line in the restaurant. Most of the time that is the reason people start using Tapingo to skip the queue."

Success was right around the corner. After their first year of operations in the US with availability in 30 campuses Tapingo laid claim to 30 percent of all orders on campus. Today, nearly half of all orders are placed through the app.

Tapingo's success, however, has led to new virtual lines within the app, where users can see how many are queued ahead of them, how long it will take to prepare the dish, and use digital coupons and loyalty cards.

"We bring you the meal in two minutes instead of you having to wait ten minutes inside the actual restaurant and the restaurant gains not only because you ordered through the app, but also because it does not need to hire workers to take orders," Almog explains.

The benefit of the service is clear to any person who studied at university and remembers the crazy schedule. When you have only have a few minutes to spare between classes and need to hike across campus, there is no time to stop in line for a coffee or a sandwich ordering ahead with Tapingo saves priceless minutes.

Tapingo's service also offers analytics for the dining establishments which participate in the app. "If a café runs out of soy milk, it has the ability to send a notification to users who have already ordered, while future customers may choose a different type of milk. We can also conclude that if the business runs out of soy milk every day at noon, maybe the owner should buy more."

Other examples include different ways of using data to benefit the business, like extending the breakfast hours to drive sales or matching the amount of rice needed at the local sushi spot to the number of regular orders at the location.

Tapingo feeds hundreds of thousands of students and clears 25,000 payments per day. The startup operates in 100 campuses across the United States, with an average of ten participating restaurants per campus, with massive potential for expansion the US alone has some 5,000 colleges and universities.

The two founders, for their part, are already thinking of what's next and of expanding beyond the campus scene. "We will use our loyal student base to reach the restaurants which are near but not on the campus. Still, it is more important to us to reach every campus in the US in the upcoming year. It is much more efficient to acquire participating establishments on campus than restaurants off-campus," says Oster.

The team at Tapingo believes they are the best in the field despite the dozens of apps and services targeting how we order food from restaurants, like EAT24, which was founded by two Israeli entrepreneurs and sold to Yelp for $134 million at the beginning of the year.

Nor are they threatened by Uber's decision to launch a new venture, uberEATS, in select cities in America, as well as Barcelona. "I don't think Uber can challenge us in the food ordering sector on-campus," says Almog.

"It may seem like a simple idea," he adds, "many people have tried it, but we see the mistakes they make. People invest in the wrong things. You need to invest in how to build the business from both sides with the customers and the businesses. You cannot succeed in this industry without a long learning curve."

The pair is sitting in San Francisco but their hearts and Tapingo's heart are in Israel; nearly a third of their 60 employees work in their development center in Israel.

And what about the restaurant scene in Israel, where they tasted their first failure? "I am sure we will be back with the app. We are talking about it, but it is a question of when."

Published by Globes [online], Israel business news - www.globes-online.com - on July 23, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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Daniel Almog and Udi Oster
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