Adam Price had an epiphany while having lunch one day in New York City. As he looked out the window at midtown Manhattan at midday, he noticed dozens of delivery people whirring by on bikes. Each delivery person was from different restaurant. An engineer by training, Adam thought, 'what if I could build better software and take over the delivery side for many, many restaurants?' Homer Logistics, a b2b company doing delivery in a world of b2c delivery, was born.
What is Homer Logistics?
Homer is an outsourced delivery solution for restaurants. When you order food to be delivered by calling the restaurant or using a large online marketplace, like a Seamless, a GrubHub, or an Eat24, they send that order to the restaurant, the restaurant prepares and packages that order, and then Homer is in charge of taking that order from the restaurant to your location. We do that in a very efficient way by aggregating the demand across all the restaurants in that area and simultaneously coordinating those deliveries.
And restaurants specialize in preparing and serving food, not necessarily in the delivery business.
That's exactly right. The whole product market fit of what we're doing is the fact that running a restaurant and running a delivery business are two different skill sets. Restaurants are great at preparing and packaging and serving great food to their in-store customers. They're terrible at running delivery. And in big urban environments with growing consumer bases that want delivery and delivered products, especially in the food industry, restaurants are falling behind and they're really struggling with managing high volumes of delivery.
The Market Size:
There are high volumes of deliveries, so no better place than New York City, food delivery capital of the world.
Exactly. Food delivery has been flourishing here for a long time. It's starting to grow in a lot of other big cities, but New York has been a food delivery mecca for decades.
What's the general radius of places you deliver today?
It's limited to Manhattan right now. We're opening up new zones all the time that these restaurants are in and these concentrations of restaurants exist in. But we're in several zones in Manhattan, primarily in the Midtown area, where there's ultra-high volume of delivery. Manhattan sees 200,000 - 300,000 daily deliveries of food.
The Value Prop to Homer Clients:
There are several delivery only options in NYC. These are pretty high-end operations. Could these detract from people's willingness to want to get delivery from traditional restaurants?
Homer is a UPS equivalent for restaurants in this space. We're a third party logistics provider to these restaurants. We are enabling them to compete with other models. We are providing a level of focused logistics for existing restaurants to be able to use and compete with delivery-only restaurants like like Maple.
How did you get the delivery personnel to join Homer? What's in it for them?
Today at restaurants, they're treated incredibly poorly. There's no oversight. There's tons of turnover. It's a really bad relationship between restaurant owners and delivery personnel. Primarily because there's such high turnover, it's created general animosity that restaurant owners have towards the delivery part of their operation, and it permeates the whole culture there.
All of our delivery personnel are W2 employees. It's a big point of contention, do you classify somebody as an independent contractor or do you classify them as a W2 employee that's on your payroll? We are very interested in the efficiency of this business. How do you make all of this delivery take place in the most efficient way? The line that separates an independent contractor from a W2 employee is control. And we knew that efficiency was proportional to control. So we needed to control that workforce very tightly to be efficient. And so everybody is a W2 employee, but with that we get massive amounts of benefits in being able to train and educate and create a lot of culture and provide equipment.
Why NYC now and where will Homer go next? Internationally or stay in the US?
In the US. These consumer facing apps like Uber and Postmates and things that have done a lot of training to push consumers to expect on-demand services and products, have really spurred that behavior in a lot of markets. But New York has been established for decades, like you said. They've been running delivery here forever. It's a massive market here and I think you'd be silly not to start this business inside New York. It's just the most complex, highest volume, highest frequency market for food delivery. And whatever system you create here that works will work in those other markets because they're less complex. I don't think it works the other way around. I don't think you can create a system that works in a less complex market and try to bring it into a New York City, it will just fall apart. I mean the volumes here are just astronomical.
We look at Homer as a solution for restaurants anywhere because the fact that restaurants and delivery are two different skill sets, that's everywhere. That's not just a New York problem, that's a restaurant problem. Where we're profitable is big urban environments. So big dense cities where we can maximize our utilization of delivery people and where there's a real density of restaurants and population. So the next big cities for us are most likely Chicago, Philadelphia, little markets inside those cities that have similar densities to New York, to be honest.
Renny's book Entrepreneurs in the Midst: Stories from Founders, Creators, and Builders is available now.