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The Canadian company that wants to become your daily Ritual

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It seems that every day there’s a new “must-have” app on the market. Most of them are flash-in-the-pan fads that end up getting deleted pretty quickly.

But some are the real deal, and that certainly seems to be the case with Ritual, the homegrown app that’s sweeping the office lunchtime scene.

So, what is Ritual? Think Uber Eats or Foodora but without the delivery. It’s geared toward people who live or work in downtown urban areas where there are lots of restaurants within walking distance. You order your food on the app, the restaurant starts prepping your order, and the app tells you when to start heading over to pick up your food.

When you arrive, you just grab your order from a designated zone in your chosen restaurant. The app has been a hit in several Canadian cities and is now poised to make a splash in the U.S.

We sat down with Ray Reddy, the CEO and Co-Founder of Ritual in their Toronto office:

Yahoo Canada Finance: What is Ritual?

Ray Reddy: Ritual is an app that lets you order coffee and lunch from all the best spots in your neighbourhood. With the click of a button, coffee and lunch is ready for you on arrival, and it makes picking up coffee and lunch a 60-second experience. It’s super fast and there’s a great rewards program built in.

YCF: Let’s go back to the beginning, where did the idea for Ritual come from?

RR: The idea of Ritual was really fluid over time. I spent four years at Google and I led the product team for mobile commerce during that time. Local commerce is a very very large space, the vast majority of commerce still happens offline. So there’s a lot of interest from big companies, it’s one of the last things that really hasn’t shifted to digital. So there’s been a lot of focus on how to make that shift happen, all the way from payment products, loyalty products, to a number of different startups, a lot of different things.

But if you think about it, very little has changed. The way that you transact with local businesses has really remained the same for the last 20 years. In some cases, we’re still collecting those punch cards in our wallets, that’s a loyalty program that a number of businesses use. So the observation there was that the products themselves are actually pretty good, the challenge was really one of coverage. The analogy I like to use is, if you had this magical credit card that helped you skip the line, have your coffee waiting for you right when you get there, but it only worked in one of 20 places around you, you wouldn’t use that credit card. And so it came down to what I call a coverage problem.

So there’s great apps, and great technology, but it doesn’t work everywhere. The reason for that is most companies have tried to go very broad. The space is just so big that it can almost feel like boiling the ocean. Our approach that was just very different here was to focus on smaller areas but get incredibly high coverage. So we focus on neighbourhoods, not cities. We focus on getting 60, 70 per cent coverage. So what’s really unique about Ritual is the product is great, but the more impressive part is that it feels like it works everywhere, and that’s really what’s caused the success we’ve had today.

YCF: Why is it called Ritual?

RR: We really focused on this everyday behavior of people. One of the things we really believe in for consumer products is that frequency drives habit. When you think about everything that’s on the first screen of your iPhone, those are the things that you use almost every day. So we believe if you couldn’t build a product that you don’t use every day, it was unlikely to be successful. And that’s really why the entry point has been things like everyday coffee and lunch. It’s really one of the few things that people transact on a daily basis. And that’s really what Ritual is. It’s about taking the everyday things that you do go from routine to something special.

YCF: So, how do you go from idea to an app that people can download onto their phone?

RR: You just roll up your sleeves and start building it. Between me and my co-founders and some early engineers that we brought onboard, we were able to build a prototype of the app really quickly in about four or five months. I’m a big believer in launching something really fast. The first product we put out was almost embarrassing. But if you’re not slightly embarrassed by your first product, it probably means that you spent too much time polishing it.

We’re really big believers in putting something out really fast, get feedback and iterate really quickly. It was really basic, but it did the basics of what we expected the product to do. Even though the app was not pretty, it proved the function and it proved the value and people started using it and they loved it, and we just kept making it better and better every week and every month. And really, we’re still on that journey. Ritual is still far from perfect and we just focus on making it better every day.

YCF: How much did it cost to get the app off the ground?

RR: In terms of cost to build an app, it really varies. We raised just over $2 million in seed funding but it didn’t cost that much to get the app off the ground. It’s hard to put a number on it but that gives you some sense of what it takes.

YCF: How many users do you currently have and how many cities are you operating in?

RR: Ritual has hundreds of thousands of users. We’re in seven cities. [Editor’s note: Ritual is currently available in Toronto, Chicago, New York City, Los Angeles, Washington D.C., Boston and San Francisco.]

YCF: How many restaurants are signing up and how often are you adding new ones?

RR: We very recently crossed 2,000 and that number will probably double in the next few months.

YCF: The Wall Street Journal recently reported that you secured $43.5 million in a new round of funding, so what are your expansion plans, where do you go from here?

RR: So, we raised that to really focus on expansion and growth of the product. It’s about going from the seven cities that we’re in right now to the next 50. So that means focus on North America and probably also expanding into Europe in the future. And that gives us enough capital to take what’s working in seven cities and try and get it into 50.

YCF: It looks like the target audience is the office lunchtime crowd. Is that where you want to focus? Are you also looking at targets like families picking up dinner? Where do you see your users coming from?

RR: The target audience is actually pretty broad. It’s people who spend money regularly on food and drink from quick service restaurants (QSR) generally. Because we focus on dense, urban metros, it tends to focus on office workers, however we see that a lot of the neighbourhoods we’re in are mixed use, there’s commercial and residential. The majority of our orders are daytime coffee and lunch, but we do see a lot of evening and weekend volume as well from people who happen to live and work in a Ritual neighbourhood.

YCF: How does your company make money?

RR: Ritual makes money by taking a transaction fee on incremental sales that we drive to restaurants on our network.

YCF: There’s no added fee for the user?

RR: That’s right, Ritual never charges fees. The end user always pays what the menu price is. That’s a core belief of ours. We have to make the world more convenient without making it cost more.

YCF: Do you have any plans to move in to home delivery?

RR: We have no plans to do traditional delivery. What we do have, which we very recently launched, is an interesting product that allows teams to pick up for each other. It’s called Piggyback. In effect what we’ve created is almost a peer delivery network inside of offices. So if someone’s going to pick up a coffee, a teammate can just Piggyback on that order and your teammate can bring two cups of coffee back instead of just one. And we’re seeing this work really, really well. It already is starting to make up almost half of all orders. It’s allowing us to have the convenience of delivery without the cost associated with it.

YCF: Do you think there’s an IPO in your future?

RR: Certainly in the long future, that’s definitely the long term goal. We’re trying to build a large, global company here. But I think there’s multiple rounds of private financing that will get us there.

YCF: What is the biggest mistake you made in this whole process?

RR: The part we got right was understanding that coverage was important, I think something that we didn’t quite understand was the importance of the pickup experience in-store. We initially just believed that staff inside of stores would just figure it out. And with enough demand and order volume, things would just sort themselves out. We realized over time that wasn’t really going to work. There’s real training required here and because of the turnover required in QSR staff, we really needed a program to ensure that our stores were able to deliver the right experience to our joint customers with this new way of ordering and picking up food. It really is something quite different than what happens in stores today. There’s many elements of that. In some cases in food courts, we actually have to change the design of how stores are laid out. Some stores now have 50 to 60 orders waiting for pickup at lunchtime and their counters aren’t really big enough. We’re actually starting to look at what is the future of a food court, thinking about pickup shelving.

YCF: What’s your best piece of advice for young entrepreneurs that are just starting out?

RR: Just do it. You can spend a lot of time trying to analyze things and I meet a lot of people who are trying to de-risk things by doing them part time, but the learning I’ve found is that number one, these things are hard. Unless you’re willing to give it 110 per cent, it’s almost guaranteed to fail. If you want to do something like this, take the plunge instead of trying to do it as a project on the side. And also, it’s not about success or failure, it’s really about the learnings. If you do something like this for a few years, the learnings you get are incomparable to working in a big company job. It just puts you that much ahead in terms of maturity and everything else. There’s no substitute for actually just doing it.

YCF: Other than Ritual, what is your must-have app?

RR: Google Calendar. My days are pretty crazy, I would be totally lost without it.

This article was originally published Dec. 2017. It has been updated Aug. 2018.

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