Snackpass might have started on college campuses, but it's not just for college students.
So says co-founder and CEO Kevin Tan, who believes that the food ordering app's focus on pickup with a social element will appeal to all kinds of consumers.
That is why the company is using a recent $70 million funding round to expand beyond its proving ground of college campuses and into big cities like New York and Los Angeles, where it will have access to more customers and restaurants—and go toe-to-toe with the biggest players in on-demand food.
Craft Ventures, the early-stage venture fund that led that Series B round, also wondered whether the app, which started at Yale and has since expanded to more than a dozen schools, was built only for the campus bubble.
"From what we saw and understood, we don’t think it is," said Bryan Rosenblatt, partner with Craft. "Data showed us that even when campus wasn’t in session, [the app was] seeing increases in usage."
Indeed, Snackpass says that about 15% of its users aren't students. And students who graduated and moved away were continuing to ask for coverage in their new town, Rosenblatt said.
“Part of the bet is that this goes beyond college campuses and is something that exists everywhere,” he said.
The app is distinguished by a gifting feature that allows customers to share meal credits with friends after each purchase. Customers can collect those credits and cash them in for free food through what is essentially a built-in loyalty program. (They can also use them to hatch and accessorize an in-app baby chicken with their friends.) Those features make Snackpass different from any other tech platform in the restaurant space, and create an ecosystem designed to generate repeat business for restaurants.
"Our thesis in a nutshell is that it’s fundamentally rational and optimal for the merchant to give every customer some form of incentive to share with friends, to basically do a referral," Tan said. "Right now, most purchasing is single player, so there’s a huge opportunity there to make the system better for both merchants and consumers."
Another difference is that Snackpass is focused primarily on mobile-based pickup.
"Despite delivery dominating all the headlines, the broader takeout market is still several magnitudes larger," wrote Adam Valkin and Johnson Yang, partners with venture firm General Catalyst, in a blog post explaining why it invested in Snackpass. "Providing a similarly seamless but lower-priced takeout channel can be extremely complementary."
Of course, mobile pickup has become a standard offering from most tech suppliers. "But that’s why we really focus on adding that social layer," Tan said.
That viral element is another thing that helped sway investors.
"One of the things the really struck me was seeing people on Twitter and Reddit talk about Snackpass with the level of passion they have for the app, which is kind of funny and kind of different, but really spoke to the experience," Rosenblatt said.
As it moves into new markets, Snackpass will maintain its hyperlocal approach, starting by building up its restaurant selection in dense neighborhoods like Manhattan's East Village and then growing from there.
It's not unlike its strategy on campuses. And it's still adding those too, some of which are in large cities—"very in our sweet spot," Tan said.
"We’re not straying too far away from the nest," he said. "We’re just setting ourselves up so that we can organically expand."