OrderUp: Canton startup invests in ‘digital franchising’ to bring online food-ordering nationwide

OrderUp, the Canton-based startup that facilitates ordering food from restaurants online, faces stiff competition from such bigger, national companies as GrubHub and Seamless.
But in 2013, as OrderUp eyes expanding to cities across the U.S., its focus isn’t on competing directly with the reach of GrubHub. Instead, it’s working on setting up digital franchises—online food-ordering websites maintained by people in mid-size cities who partner with OrderUp, and then work with restaurants and take-out joints to offer meal specials and deals to hungry patrons who would rather place delivery orders online than by phone.

In other words, forget spending close to $450,000 to open your own brick-and-mortar location of your favorite fast-food restaurant. For $42,550, you can open your own business as an OrderUp franchisee:

• OrderUp handles all the technology: building and managing interactive menus and providing 24-hour call center support to restaurant owners.
• Franchisees sign up restaurants in their cities or towns, and work with the restaurants to offer promotions to customers.
• Franchisees then make between 10 and 14 percent on each order placed through a local OrderUp site, while OrderUp takes a cut of 5 percent of each order.

“Technology has allowed people to start businesses that are a lot cheaper,” said OrderUp co-founder and CEO Chris Jeffery. “Why hasn’t franchising adopted that? We’d like to believe that we are leading the way of … being one of the inventors of the digital franchise opportunity rather than the brick and mortar.”
Interested in being an OrderUp franchisee? Sign up here.
From its office on the fourth floor of the refurbished Broom Factory on Boston Street, OrderUp has spent the last year positioning itself to be that leader. As of last summer, it had signed up more than 1,000 restaurants in 30 locations and more than 400,000 registered users who order from different OrderUp-affiliated sites. Of his team, 12 of whom work from the Baltimore office, Jeffery said he has “never felt more confident” in them.
OrderUp recently hired Kristen Nilsen, formerly of LivingSocial, as the franchisee training and support manager. An additional 13 employees scattered across the U.S.—including Hawaii—staff OrderUp’s call center to ensure that online menus stay updated and online orders are processed correctly.

And while OrderUp has received some angel investment, the company has been bootstrapped and profitable since its founding in Baltimore in 2009 under its original moniker, LocalUp.
LocalUp was the second iteration of what the now 31-year-old Jeffery co-founded with fellow Penn State grad Jason Kwicien while they were still students. LionMenus.com, started 11 years ago on a budget of $3,000, was a first, successful effort at facilitating food-ordering online.
Once the pair founded LocalUp, LionMenus.com joined other company-owned sites based in Morgantown, W. Va., Charlottesville, Va., and Baltimore with EatBmore.com. Auxiliary sites, like MileHighMenus.com in Denver, Colo., and SBMenus.com in Santa Barbera, Calif., eventually came online—these were sites associated with the LocalUp brand, but managed by individuals in those markets.
“The original concept [was to] take this product and business model on a local level and duplicate it, but duplicate it through a [white-label] licensing model at first, similar to the franchise model we have now,” Jeffery said.
Starting up in Baltimore “happened by accident,” he said. Both he and Kwicien, a Baltimore native, wanted to be in an East Coast city that was easy to fly into and out of, but the higher costs of living and hiring in Washington, D.C., and New York City dissuaded them from setting up shop in those cities.
“Baltimore fit a good niche for where we were,” said Jeffery. “We’re a scrappy company—Baltimore’s kind of like that.”

As LocalUp slowly readied itself to apply its franchising concept on a national scope, the time came to rebrand the startup in 2012 to OrderUp.
“We knew at some point we were going to have this national brand,” said Jeffery. “We wanted to get a great name, and then make sure we had the capital to fund that franchise approach. This past year is when that time came to fruition.”
Annual revenue is up 55 percent over the last year, although the startup “can’t share revenue numbers just yet,” said Cullen Newton, the 30-year-old vice president of franchising.

• On the company-owned sites, OrderUp makes the same 10 to 14 percent commission as the franchisee-sites do on each order placed online.
• OrderUp’s Morgantown site alone brings in more than $17,000 in revenue, on average, each month.

But the success of the startup, going forward, will depend on the “vested individuals” Jeffery and his team recruit and hire to operate OrderUp partner sites as independent franchisees.
“Franchisees are making an up front investment that’s going to get them into the market, but what they’re really investing in is their sweat and their blood to make that market successful,” said Kyle Fritz, 28, OrderUp’s vice president of engineering.
After all, it’s the franchisees that sign up restaurants on sites like SBMenus.com (which will eventually be rebranded to feature OrderUp in its name) and negotiate meal deals and promotions with those restaurants. OrderUp takes care of the heavy lifting: building the interactive, online menus, providing sales and marketing training and supplying franchisees with call center assistance.
For now, OrderUp’s strategy is to attack mid-size markets—college towns and smaller cities—and avoid the major metropolitan areas that competitors like GrubHub routinely go after.
“Our distribution model allows us to get into the capillaries of the smaller markets, where it’s way, way, way more expensive for a top-down hierarchy to hire a sales force and hire support teams,” said Charles Martucci, 31, director of user experience.
As for OrderUp’s stay in Baltimore? Jeffery and his compatriots aren’t scheduling a literal or figurative exit anytime soon.
“I’m thankful that we’re here because it is an exciting time to be here in Baltimore. You see it growing … [and] not only is the market still wide open, but now we have the right team.”