Beijing – China’s restaurants are the most recent newcomer to the country’s e-commerce boom. Most young shoppers are used to ordering their pizzas online or downloading coupons through branded apps, but the arrival of generic take-out and delivery apps is making waves.

Xue Yang, an office worker in the city’s Central Business District, is a devoted user of Meican, one of the first take-out apps. At lunch, she connects through the app to browse through neighboring restaurants before settling on a small Cantonese restaurant. The food will arrive during her workday.

“I got sick of going out to get lunch during peak work hours. That’s when one of my colleagues recommended this app. It checks your location and recommends all the restaurants within a kilometer,” she said. “With a couple taps I can get anything sent to my office without losing work time.”

The adoption of online take-out by office workers and students has captured the attention of international investors. Ele.me, a start-up named for its similar pronunciation to “are you hungry,” raised $80 million from venture capital firms such as Sequoia Capital, Matrix Partners and Dianping.com after angel investors offered $2.5 million in seed capital at the end of 2013. Meican similarly attracted $10 million from Nokia Growth Partners during its second round of fundraising.

The monetization of online visits through offline business has gained traction in the past 12 months. However, whether “online to offline” is an innovative business model or a buzzword is disputable. Take-out orders may be one of the first big tests.

Compared to traditional online catering players like McDonald’s, KFC and Pizza Hut, the new model benefits both dinners and restaurants in a profound way.

“Location-based take-out offers vibrant and convenient choices for individuals – especially office staff who are too busy to have a meal,” said Wu Hao, CEO of Line Zero. “The aim of online-to-offline transactions is to bridge the information gap between customers and physical merchants and place them into the “digital ecosystem of urban consumption.”

The digital ecosystem also benefits small and localized players who have been long excluded by international chains. “Online-to-offline ordering decreases the expense of rent and other services, which is opening the dining market to more creative start-ups,” Wu said.

“Another advantage of the new model is that restaurants can learn more about their customers,” said Zhang Yuxin, an analyst from 36Kr. Similar to Amazon’s recommendation system, take-out app platforms use guessing algorithms to make suggestions based on users’ past orders. The data on dinners’ tastes makes it easy to push out customized promotional information.

But for all the platforms offer to the restaurant industry, take-out apps have disadvantages.

“When a meal is delivered late, users are unhappy because the dishes and rice might become cold. Finding a way to standardize delivery times is the most difficult aspect, especially with Chinese food, where multiple dishes within an order have to be stored and delivered at different serving temperatures,” said the manager of one local restaurant.

Ele.me has attempted to address the problem by building its own fulfillment center, but these cost are ultimately passed on to customers.

Moreover, observers say the particularities of Chinese dining culture may impede the industry – especially an aging user base that is more accustomed to phoning in for take-out or delivery. Source: beijingtoday