Apps on the menu: Customers develop a taste for ordering food digitally

The act of sitting down to enjoy a meal has largely escaped digitalization so far, but that’s quickly changing if a new round of funding for Toronto-based startup Ritual is any indication.

The company, which offers a mobile app that lets users order their meals at restaurants ahead of time, last week announced $43.5-million (U.S.) in Series B investment, led by New York-based Insight Venture Partners.

Ritual operates in Toronto, Chicago, New York, Los Angeles, Boston and Washington, and, according to The Wall Street Journal, will use the funding to expand into Seattle and San Francisco.

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Company founder Ray Reddy says the growth is proof that the restaurant industry is finally adapting to the same transformative forces that have engulfed the retail business.

“The way you shop has changed because of e-commerce,” he says. “Order-ahead is just one of the byproducts of food going digital. It’s very similar territory.”

Digitalization is indeed overtaking the restaurant industry, in several ways. On the one hand are order-ahead apps such as Ritual, which let users peruse menus on their smartphones and purchase items for pickup or consumption on-site. On the other are delivery apps such as Foodora and UberEats that bring orders to the customer’s door.

Combined, these apps are exploding in popularity, according to trend tracking firm NPD Group Canada. The “digital door” they represent has had double-digit year-over-year revenue growth, to $1.6-billion (Canadian) this year.

“Restaurants are recognizing this is a space they need to get into,” says Robert Carter, executive director of food service for NPD. “They’re starting to understand the competitive landscape is becoming more aggressive.”

The order-ahead component of the shift is being led by big chains, particularly Starbucks, which began testing the capability in some of its U.S. outlets in 2014. Widespread rollout, including to 1,000 Canadian stores, began in 2015.

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