Despite the challenges of the pandemic, his company saw year-on-year revenues grow seven times higher in 2020
This is the story of Nabeel Alamgir, a 30-year-old Bangladeshi-American based in New York who believes he has the solution to help restaurants cut down on food delivery service charges.
In 2019, months before the pandemic, he brainstormed an idea amid people’s growing reliance on third-party platforms such as Uber Eats and GrubHub, which charge up to 30% commission per delivery, reports enterpreuner.com.
Once a busboy at the eatery chain Bareburger, Alamgir launched his online delivery service “Lunchbox” with the aim of helping restaurants reduce their dependence on third-party marketplaces. Before that, he had attempted two other startups.
Other than web and app design, Lunchbox also handles point-of-sale operations, online orders, marketing, loyalty programs, and data-crunching for restaurants.
Starting with a team of 10 in 2019, Lunchbox has expanded to a cohort of 160 employees and is on the lookout for more.
Over the next year, Lunchbox wants to extend the virtual storefront to grocers, liquor, and retail. The startup also has plans to go global next year.
Alternative to restaurant chains and ghost kitchens?
Unlike most marketplaces, which charge clients on a per-order basis, Lunchbox has a flat monthly fee per location for chain restaurants. “We help restaurants convert third-party sales, GrubHub sales, into first-party sales,” Nabeel explained.
Lunchbox clients include Bareburger, Clean Juice, Mexicue, Zaro’s Family Bakery, and Fuku. The focus is on chains that have between 10 and 100 restaurants.
“It is not just about saving money—it’s also a question of increasing margins,” he said, adding that restaurants make around a $25 profit for every $100 a consumer spends on Lunchbox, compared to $5 when the sales are through a third-party platform.
In an effort to reach smaller businesses, Lunchbox has partnered with the C3 platform and created CitizenGo, an app where people can order directly from ghost kitchens. Nabeel believes they have helped minority chefs broaden their customer base.
The app offers pickup options across C3’s network, which includes about 200 communities. Delivery is available in LA, Northern California, NYC, and Chicago.
Struggles at the start
Nabeel, who was featured on the Forbes 30 Under 30 list, moved to the US in 2005 at the age of 14. He started to work as a busboy at Bareburger to support his family.
He worked his way up the corporate ladder to become Bareburger’s chief marketing officer. In the process, Nabeel received firsthand experience with third-party delivery companies, observing their “predatory” practices and getting the feeling that customers were being exploited.
$20 million in venture capital funding
In 2019, Lunchbox secured $2 million in seed capital, after being rejected by 72 investors. A year later, it raised $20 million, the food tech industry’s largest Series A in history.
“By the time we went for Series A, I already had 100 investors we had built relationships with,” Nabeel said.
The money was raised in a week, he added.
The techpreneur, however, lamented racism in the venture capital space in the US.
“As a Brown person, I am not even considered a minority in tech,” he said.
Despite the challenges of the pandemic, his company saw year-on-year revenues grow seven times higher in 2020.
Training wannabe entrepreneurs
Nabeel supports FirstGeneration, a nonprofit organization that aims to build generational wealth, mobility, networks, and capabilities for immigrant and first-generation communities through entrepreneurship.
“If you want to please everyone, then go be a doctor. If you can take feedback and have thick skin, then go ahead [and be an entrepreneur]. That is what entrepreneurship needs,” Nabeel advised aspiring entrepreneurs.