Meet the founder helping restaurants fight back against delivery appsView transcript
For Singaporean restauranteur Aaron "Carl Poppa" D'Cruz, delivery platforms went from avoidable to inevitable.
When the first platform approached him and his two local restaurants asking for 50% commission, he laughed them away. A few short years later, he found himself giving a smaller but still significant cut to other apps just to stay competitive. He had to mark up his prices to cover the platforms' cut His locals stopped coming in and started ordering delivery, and he had to charge his long-time patrons more for the same service. Poppa felt he was being held hostage by delivery apps that couldn't even make a profit despite taking more and more from his business.
A few years later, Poppa sold his two restaurants. But instead of enjoying a period of retirement, he got to work helping restaurants take their power back. He taught himself to code online and met a co-founder in Malaysia, and together they built Jam Pony, a delivery service that reimagines the model of the delivery app and aims to put the power back in the hands of restaurant owners. Jam Pony has found a local solution to a global problem, cutting down delivery costs for restaurants and customers by creating a service that co-exists with restaurants instead of latching onto their side. After just one year of operation, Jam Pony serves 500 restaurants in the Kuala Lumpur area and began a soft launch in Singapore this January.
But despite finding a model that works on a large scale, Jam Pony isn't like most startups. Poppa doesn't want global domination, and he doesn't want to become the next tech billionaire. "We're genuinely here to help, not to become the next Jeff Bezos," the company's website reads. Jam Pony is not seeking funding, and Poppa says he and the few others working on it aren't even managing it full-time. In that way, Poppa is the anti-founder, focused on creating a service in the true sense of the word, and unconcerned with exponential growth, venture capital and the cloud of buzzwords that dominate so much of the American tech startup ecosystem. Poppa spoke about the origins of Jam Pony, how delivery apps harm restaurants, and why he isn't interested funding.
From restauranteur to founder00:00:00
Business of Business: I would love to know your personal background — how you started with the restaurant business and what you saw that made you want to start Jam Pony.
Poppa: So just very briefly, I ran my own restaurant for 12 years in Singapore. And it wasn't until maybe 2015 or 2016 when the food delivery platforms started coming to market over here — it may have started a bit earlier in the US. And I remember the first company that approached us wanted a commission of 50%. So they were one of the earliest in the market, and they were asking for 50% of our revenue so I basically said “eff off." And then a couple of weeks later, they came back and they were like, “Okay, the lowest we can do is 42%.” And I’m like… no. So they went away.
Maybe a half a year later, more and more platforms started entering the market. Over here we have Panda, Uber Eats, and Grab Food. And more or less, they all started to charge a commission of 30%. So that became the norm. And like it or not, we had to accept it. And like I said in my tweet, we felt like we had no choice, right? We needed to stay competitive. So we signed up to all of the platforms, but I can't say it was ever a happy relationship. The sales reps [for the apps] come in and they wine and dine you and they promise you you'll get all this online traffic that will boost your revenue, blah, blah, blah. But it just wasn't the case. Because as we soon found out, we're literally just serving the same people over and over.
That business model is not something that could ever have a network effect. And what happens is, people are just going to the platform with the best discounts. And when the online orders started coming in, we recognized some of those names because they were regulars — people who used to come in every week or month are the same people ordering online, so it just became a zero-sum game. So that's the backstory. It was something that just never ever sat well with me.
How I got to building [Jam Pony] is I've always been interested in programming. This goes back to before starting my restaurant. I had just graduated from university and I was just messing around with code a little bit here and there, but I never really went very far with it. So my programming learning journey was kind of put on hold. So two years ago, I sold my restaurant — the one that I ran for 12 years.
Sorry to interrupt, but which one was that? I saw you owned two restaurants, is that right?
Yeah. I sold both of them at the same time, so you could say I'm sort of in a semi-retirement mode. And I took this opportunity to learn programming properly. And building this system [Jam Pony] was definitely quite high on my agenda — quite, quite high on my list of things that I wanted to do.
So something that was really interesting to me was what you said about there being no brand loyalty with these delivery apps — that the customers just want to go to whichever one is going to offer them the best deal. It makes me reflect on how I use these apps, and that's how I am. I use whichever one has the best deal for me, the end consumer, and how that's kind of a race to the bottom. Because eventually, restaurants are going to be charged a higher and higher fee to make up for those discounts.
You talked about how that made you very angry, and I would love to dive into that a little bit. How did it make you feel to interact with these businesses that are taking such a big cut of your delivery revenue?
I guess it's more of a slow-burning, seething anger. It's not like I could do anything about it. Because they're here. And everyone's on them. Everyone's got their apps on their phone. So what can we do? The best we could do was markup our prices to try and cope with these conditions. But then again, that's not fair to our customers. In the end, we felt like we were penalizing them. And no judgment on you — it's just human behavior. We want the platform with the biggest discount. But you're actually being charged more, because the restaurants have marked up their prices quite a bit versus their in-house price.
It never felt good because these customers are people that we have known for years, right? They're our regulars. We've watched their children grow up. We were just a small neighborhood restaurant, so we tried as much as we could to maintain our pricing unless we really couldn't help it. Like, let's say the supplier raises their prices, or the government decides to raise the service tax and stuff like that. That's when we increase our prices a little bit. So when the platforms came in and we had to mark up like 120%, it just felt really sucky.
Reimagining the delivery app business model00:00:01
I think that's a good time to transition into Jam Pony. What did what did you change? It seems like a very simple switch — you changed who you put the cost burden on from the restaurant to the buyer.
So can you talk about that? How did you decide to create a delivery service that wasn't going to make the same mistakes or have the same impact as the other big platforms?
So I think it's very simple. We're not here to become the next Jeff Bezos. That's not our ambition. We just want to help. And because I ran a restaurant myself, you can say that this is built for restaurants, by restaurants. We're on the side of the restaurant. At the same time, we thought about it for a long time — you can't just transfer the whole commission to the customer. That's not fair either. So we do a service charge. What we do is we charge 8% plus 50 cents. And about half of that goes to Stripe fees. In Singapore, Stripe takes about three-point-something percent plus 50 cents.
So half of your 8% charge goes to Stripe?
Yeah. We don't actually make much on this. We're not gunning for world domination — just enough to cover like server costs, software licenses and stuff like that.
"We don't want to be the ones that control everything. It doesn't sit right with us, you know?" — Poppa
The delivery fees also cost a little bit more than the platform's. But I actually made this a spreadsheet, and because the restaurants don't have to markup [their prices], at the end of the day, it actually comes up cheaper when you order direct. Even if the delivery fees cost more or you have to pay a bit of a service charge, I was surprised myself that at the end of it, there’s either no or very minimal difference to you [the customer] — or you actually start saving a few dollars. But the difference to the restaurant is huge. They actually are able to take back at least 22% more.
Let me give you a very simple example. A normal plate of pasta would cost like maybe $16 here. And if you want to mark it up in order to cover that 30% commission, you have to sell it for about $25. I don't know the prices in New York or anything. I'm just using example prices.
That sounds pretty similar to what happens in New York.
Okay, that's great. So for a $16 plate of pasta, you'd have to mark up to $25 to cover a 30-40% commission fee. But, who's going to pay $25 for [that pasta]? So the most you can mock up is maybe about $19. That's around the tolerance point of what people are willing to pay for pasta. And if you take away 30% from $19, even though they've marked up, the restaurant still gets back less than their original price. So this is how the platforms have been eating, eating, eating away at the restaurants.
So when you say that restaurants are marking up their prices, that's across the board, right? That's not just delivery — they're doing it in-restaurant as well to have to compensate?
I think some do and some don't. I can't speak for others, but for us, we had to increase our in-house prices because there are some delivery platforms that don't allow you to have different prices online and offline. Our workaround for that was to offer our regulars a 20% discount so they end up still paying the old prices. Of course, we knew all our regulars by face. So that is a huge workaround, which is completely unnecessary. [But] thanks to [the platforms], we had to come up with all these tedious and weird workarounds.
Let's talk about the early days of Jam Pony. How long has Jam Pony been around now?
Oh, we've been working on it for a year. We're operating in two countries: Malaysia and Singapore. We launched in Malaysia last October. And in Singapore, we've done a soft launch this January.
And how many restaurants are using the platform?
So in Malaysia, we have about over 500 restaurants lined up. In Singapore, we have five. We just started here.
Then why did you make the decision to start in Malaysia?
So I have a co founder who’s based there. We met on Twitter and we paired up. So the market is a lot bigger since it's a much bigger country.
For a year, that sounds like a huge success. I mean, 500 restaurants is a huge number of restaurants for something that you describe as not wanting to be the next Jeff Bezos and wanting to genuinely help. It sounds like you're scaling pretty quickly.
I'd say slowly. We're not funded, and we're not looking for funding at the moment. So we're just taking our time and doing this bootstrap thing.
So how many employees work for the company?
We don't have employees. It's just the four of us or three developers and one marketing person. We do have a bit of freelance help, people doing sales, things like that. But none of us are actually doing this full time.
What about delivery drivers? How does your relationship with them work?
What we do is we integrate with local courier companies. So it's like a third-party courier fleet.
So is Jam Pony directly paying these drivers for their work?
So basically, the customer makes the payment, and it comes to our Stripe account. From there, we pay the restaurant and we pay the driver.
A local solution to a global problem00:00:02
Of the four people that you have currently working on this, none of you are doing it full time. I would love to hear a little bit about them. Are they also from the restaurant world? How did you all come together?
So I'll talk about one other co-founder. His name is Wafiq from Malaysia, and his story was quite similar to mine. So at the height of COVID last year, lockdowns started to happen. And restaurants had to close at first. Then slowly they allowed restaurants to do delivery and takeaway. Wafiq has a brother who ran a food truck that eventually turned into three cafes. So when something like COVID hits and you have three cafes, it really kicks you in the balls.
"Delivery apps have to line the pockets of the board of directors. We're trying to see if there's a way to get funding in a more wholesome way that will let us stick to our principles." — Poppa
That's a great modern tech founder story.
What I want to talk a little bit more about is the idea that you’re not here to become the next Jeff Bezos. I found that really compelling. What is the mindset that you and your co-founder have in terms of growth and where the company is going to go?
One of the things we're really into is empowering people. So number one, we're empowering restaurants to be able to run their business the way they deem fit, because they know that business. So our software has a very flexible system and a lot of options, unlike what the platforms offer where you feel like your hands are tied behind your back. So number one, we want to empower restaurants.
The other thing is we want to empower people in their local towns or cities to sort of run their own Uber service, so to speak. And that's where we're slowly diverting our software to. Because we don't want to be the ones that control everything. It doesn't sit right with us, you know? Let's say you live in a small town somewhere that doesn't have the presence of all these platforms, right. But you have restaurants and you have drivers — people with vehicles, and you want to kind of tie them all together. That's what we're creating. That's the next step that we're creating, to empower someone like you to help the restaurant. Everyone can make a little something from this. I've always believed that the pie is big enough for everyone.
I think it's very interesting. Something I've written down here in my notes is that it sounds like a local solution for a global problem. You're trying to empower people to run their own restaurants or be good patrons of the restaurants that they like, because the delivery fees are making it more difficult to run a restaurant around the world. I find it to be a really interesting story. And I love the way that you met your co founder. I really appreciate the vision that you have for the company — that it's really truly a service.
Yeah, you get it. And I really love that you get it.
I think most other companies and founders in your position would see your progress and think, “Okay, we need to become huge. We need to get funding, we need to launch in as many different countries as we can.” And you've said that that isn't your goal. Is that something you'd be interested in pursuing in the future — looking for funding to scale even further?
It's something that we're still thinking about, because the problem with funding is that eventually, you'd have to report to the board of directors. It takes away a bit of the ownership and decision making. And from what I’ve seen, the reason why all these platforms have to charge so much here is — and I'm sorry to put it this way — but the main thing is that they have to line the pockets of the board of directors, right? To pay for the fuel for their Lamborghinis. So we were trying to see if there's a way to get funding in a more wholesome way that will let us stick to our principles.
Are you worried at all about another company copying the model and going bigger?
Not really. I think as long as they are there on the restaurant’s side and they can do the same thing we're doing — let the restaurant keep 100% of their revenue — then I'm happy. Because my main goal is to help your favorite restaurant stay around longer. That's my angle. It'd be a shame if a place that you've been eating at for the last 15-20 years had to shut down because of something like this. If someone wants to copy, then go ahead. I think it's for — what's the phrase? The bigger good? The better good?
The greater good.
The greater good, yeah.
Is there anything else that you want to say at the end here?
Just one thing: remember to support your favorite restaurant by going direct. That's all.