A Sacramento startup with an Uber-like app is raking in new customers and closing in on a big venture capital deal – thanks to a recent tweak in its business plan.
The company, Requested, was launched in March with what its founders thought was a killer smartphone app for the dining industry.
It permitted users to peruse a list of local restaurants and then “request” discounts of up to 20 percent during off-peak times. Participating merchants would simply respond with a “yes” or “no.”
The start was promising, with thousands signing up to give it a try, said Sonny Mayugba, a co-owner of midtown Sacramento’s Red Rabbit Kitchen & Bar and a serial entrepreneur who came up with the Requested idea.
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But he and his partners soon found that people weren’t actually making reservations.
“We had a leaky boat,” said the 45-year-old entrepreneur. “For every 10 people who walked in (to try the app), nine left.”
The problem, the Requested team concluded, was the app was too cumbersome for consumers, and merchants weren’t that happy with the back and forth of price negotiations.
That led to a new version of Requested, launched Aug. 12. It has merchants offering up specific discounts for same-day bookings during slow times. Customers can check out the deals and book instantly without any haggling.
We are driving butts in seats, which is what every merchant wants.
Also fine-tuned was Requested’s Uber-like feature that allows customers to register a credit card with the company, then show up and have their meals (and a tip) charged automatically so there’s no waiting around for a bill and credit card processing when diners are done.
“You can just take off,” Mayugba said. “It’s really fast, really streamlined.”
Since the launch of the new system, customer use has increased by 50 percent or more each month.
Significantly, 90 percent of new users are completing deals. “It totally flip-flopped,” Mayugba said of the former “leaky boat” phenomenon.
The 65 participating Sacramento-area restaurants have been vetted by Requested to make sure they are mostly clustered near the downtown-midtown area, have high Yelp ratings and are independently owned.
Restaurateurs pay nothing to be included on the app but they give Requested about 10 percent of the bill – minus tip – for any meals initiated through the app. (Requested picks up the credit card processing fees.)
“We make money only when the merchant makes money, and that’s the ultimate value equation,” Mayugba said. “We’re saying, look, we live and die with your success.”
Restaurant owners seem pleased with the results so far. Danny Fung, co-owner of Orchid Thai, said the app has met the main goal of bringing in new customers during the slower times of the day but it also has other benefits.
The reservations usually include pictures of Requested users so he and his staff can greet them by name.
Fung also uses the app himself and simply likes the information it provides about participating eateries.
“If you’re out and about and maybe don’t know where to go, it helps you make a decision,” he said.
Requested was able to raise about $1 million in two early financing rounds. That was for the prototype, proof of concept and bringing staffing to its current level of nine.
A new “seed” round, set to close early next year, is getting attention from venture capitalists in the Bay Area and will help finance an expansion into the East Bay in April and a move into a third market, as yet undetermined, late next year, Mayugba said.
“Now that we have a flywheel that turns, we want to get it spinning,” he said of the product rollout, which he hopes eventually will go nationwide.