How FoodByUs grew its supplier network from 200 to 2200 in less than 12 months

We’re living in a digital-first world, and tech startups like FoodByUs know how important it is to stay at the forefront of technological innovation.

But is tech the most important aspect of a tech startup? According to co-founder Ben Lipschitz, it isn’t. Instead, the real secret to success is knowing your customers.

Lipschitz went into partnership with co-founders and ex-Menulog executives Tim Chandler and Gary Munitz in 2016 to launch FoodByUs, the ‘one-stop procurement shop’ for SMEs, connecting restaurants, cafes and caterers with thousands of wholesale food and alcohol suppliers.

By using the FoodByUs online marketplace, independent venues can search and compare thousands of products, and are able to see transparent and consistent pricing without the need for credit applications or the purchasing power normally reserved for much larger businesses.

Since its launch, FoodByUs has already scored many impressive feats, including a $10 million Series A raise; 40% year-on-year annual revenue growth; and — at the time of writing — a team of 65 staff, with a goal of growing to a headcount of 100 “ASAP”.

FoodByUs isn’t only celebrating its own wins, however.

In the past three years, the startup says it has also helped independent restaurants and cafes across Australia save close to $16 million in costs and nearly 3 million hours that would have been spent ordering stock, along with delivering $53 million in value to its suppliers.

Lipschitz tells SmartCompany Plus that although implementing new tech is all well and good — and has helped FoodByUs itself grow exponentially — the most important aspect of business is knowing what your customers want and need.

Key takeaways

1. There’s never a “right time” to launch something new, whether it’s a business, product, or new system

2. When building your product, be flexible. Recognise it may change from what you initially expected, and for the better

3. Tech will help get you customers, but knowing your customers is what will win them over — and keep them coming back

Locked down, yet up and away

The hospitality sector was undoubtedly one of the hardest hit during the pandemic, and as a hospitality provider, FoodByUs was well positioned to figure out what the industry both wanted and needed.

Considering it managed to grow its supplier network from 200 to 2200 during the pandemic and is already gearing up for a Series B funding round later this year, it seems fair to say FoodByUs hit the nail on the head.

Lipschitz says that COVID-19 and ongoing lockdowns helped hospitality venues learn that adopting tech can “really save their business”.

More and more businesses were willing to adopt a digital approach when foot traffic came to an end, and take certain processes online to save time, money and resources.

FoodByUs itself is partnered with numerous technology partners to allow for these seamless, digital transactions, including Xero, where it allows all invoices to be automatically pushed through FoodByUs to the accounting software.

And while Lipschitz is unable to share exact figures from the past 12 months due to conditions with private investors, he does say that since January 2022, FoodByUs has been growing its revenue by 30% month-on-month.

“I think the fact that we’re [increasing] 30% month-on-month already should indicate what we can do when we don’t have a lockdown.”

Looking forward to January 2023 — and life without lockdowns — Lipschitz says the team would like to see triple the growth from January 2022, at “the minimum”.

Giving power to the customers

It hasn’t just been hospitality venues that recognised the importance of adaptation during the pandemic.

Startups like FoodByUs realised a need for change too, which is why in November last year it introduced a new feature allowing customers to upload their own suppliers to the marketplace platform.

By giving customers this “power”, as Lipschitz puts it, to use their own supplier choices rather than those FoodByUs had already partnered with, the platform has been able to grow its supplier base 10-fold.

“One big learning we’ve had is that if you want to be a ‘one-stop shop’, you really have to have everything available,” he said.

“It’s no good showcasing [only some suppliers], when a venue wants to use their particular favourite”.

Now, businesses can search the “very easy interface” to find suppliers and, if their preferred supplier isn’t there, they can upload the details themselves.

Building such a user-friendly addition to the marketplace didn’t come easily, and Lipschitz says the team had been thinking about the option all throughout 2021, where it took about six months to code.

The team then opened access to the new system to a small pocket of the network, in order to test out bugs and other interferences to the user journey.

“Now we’ve opened it up to everyone.”

Know your customers

Launching anything new during the ‘unprecedented times’ of the pandemic was always going to be a risky move: whether a new business, a new product or a new tech feature.

So how did FoodByUs know it was the right thing to do?

“By listening to them,” Lipschitz puts it.

Lipschitz says that a lot of customers would tell FoodByUs that the idea of a one-stop-shop was great in theory, but they wouldn’t want to leave their fruit, meat, or vegetable guy because “he’s my cousin, or I have a 20-year relationship with them, or any other reason”.

Customers started asking why they can’t use the FoodByUs technology to order from such suppliers, and FoodByUs would consistently answer that it has its preferred suppliers, and customers need to use them.

“We had great suppliers, but we realised from the buyer’s point of view, they really do want that flexibility,” Lipschitz explained. So the team got started on the coding, and now FoodByUs is what it is today.

Sourcing consistent feedback has been pivotal, and Lipschitz says this has been achieved through a range of processes: surveys the business runs to its customer base; using internal data to see whether customers are using one section of the business’s offerings or all of them; and having sales representatives in constant communication with vendors.

So what is Lipschitz’s advice to other businesses wanting to innovate and improve their processes?

First, he says to be flexible in how you first develop the product, so that you can account for when you want to make changes like this.

Then, “follow the data”.

“Get feedback constantly, but then look into your data to see if any of the changes you’re making are actually getting the outcomes you want,” he said.

“It’s so easy to get lost with a very noisy customer or an anecdotal bit of customer interaction or experience, where you think ‘that’s the challenge with this business’ or ‘that’s the feature I need to build’.”

But marketplace businesses like FoodByUs deal with thousands of customer interactions every day, and while customer feedback is vital, Lipschitz believes data is the “only thing that can really give you objectivity” on what your business should improve.

“Otherwise you’re just going to get lost with the loudest voice out there.”