Menu3 consultancy case. Menu3 is a startup based in UIUC that engaged in providing menu solutions to local restaurants.Pain point to solve: in communities like UIUC, there are lots of foreign students. Dining out is a frequent event. However, it is quite difficult to put a proper order because most paper menus here don’t have pictures. The individual customers especially foreign students in ethnical restaurants have no ideas what they are going to eat. Menu3 team build an augmented reality app that brings restaurant menus to life.What their problem is:As a startup, they are the first company to seamlessly integrate the existing restaurant menu with 3D models of food. They need to figure out their business model, both in the short ran long term.We established relationship with the young entrepreneurs in the social networking event and had a few meetings before we came up with our final suggestions. This also helped us have a better understanding of what they were doing and what they wanted to achieve.After several rounds of discussion internally, our consultant team believed Menu3 should first have precise position.About itself: 1, An Internet Startup, which means it need to make full use of networking effect2, Like other Internet life service provider, Menu3 should focus on improving individual customers in door ordering experience. If Menu3 can add enough value to attract individual customers to download their app and frequently use it in a large scale, it will have the negotiate power to the restaurant end.It is difficult to estimate a start-up company and help to find a brand-new business model. However, in other markets like China, there are some similar apps that may work in the same way of Menu3. In our study, we try to find some comparable and find out what ways they went and how they charged their customers, believing this will inspire us in some way. MeituanFirst started as an imitator of Groupon, Chinese Meituan Company now is pursing the largest IPO on Hongkong Stock Exchange.Meituan’s extension progress could be divided in to 3 parts. 1, Initiated and expanded among universities as a food deliver company. China has a 37 million university students population. Just like US universities, this is a good starting point. After gaining great around campus, Meituan grew its food delivery service to white collar circle. Another great step is getting into the in-restaurant business, which means the individual customers could use Meituan app to see the online menu and buy food through this app. It is not easy to make individual download your app and frequently use them, unless it is a high frequent purchase action like buying food or drinks. 2, Business model of Meituan. By now, the in-restaurant business has covered 2 millon food and drink stores in China, 3600 cities, with a daily order volume of 4 million. The major source of Meituan’s revenue comes from the commission fee. For each order through their app, Meituan would charge a commission fee ranging from 5%-25%. For large chain restaurant, they might charge a low rate; for those who don’t have strong negotiate power, they may charge a higher commission fee. The second part comes from the annual fee. Actually, at the beginning phase, restaurants were allowed to register and use their platform for free but a refundable deposit; gradually, when the restaurants began more reliable on their platform, Meituan started charging annual fees, first $500, then $800. 3, Client stickiness. In the midterm, Meituan successfully launched other low frequency services such as hotel, tourism, tickets to satisfy customers diversified needs. The end users don’t need to open any other apps to fulfill their needs of food, drinks, entertainment. These also became Meituan’s revenue sources. In 2015, on average, each user put 10.4 orders; in 2016, this number increased to 12.9; in 2017, it became 18.8. Among the first 10% of these orders, each user put 98 order through Meituan. 4, In the long run, Meituan megered with another food service gaint, Dianping, which gave it a wider customer base to compete with its rivals. Meituan cooperates with Tencent and brought Mobike, all of these strategies were aimed to provide access to more and more customers.5, Revenue structure. In 2017, 62% of Meituan’s revenue came from food drink deliverly, while the gross profit rate was 8%; in-restaurant, hotel and tourism consisted 32% of its revenue and the gross profit margin was 88%; the rest 6% of Meituan’s revenue came from new business with a gross profit rate of 46%. By studying Meituan’s case, we try to give some advice both in short and long term. First, focus on improving individual’s experience and gaining their recognition. Second, at the beginning phase, try to penetrate into as many restaurants as you can, and cultivate the stores loyalty. Third, don’t be eager to charge the business side until you get substantial negotiating power.
