Startup Experiment — HoodyFoody, Lunch from Food Trucks, Part 2— The Beginning

This is part 2 of the series on HoodyFoody.

Today’s post I will cover

• Origin of the idea
• Validating if it’s an underserved customer need
• Estimating the opportunity

The idea —

Gautam and I often discuss problems we see with users in our daily observations. He works in Bellevue downtown and mentioned about the long wait times at food trucks during lunch.

We hypothesized that working professionals in the area —

• Have limited time to get their lunch — usually between 12–1pm
• Like to eat at food trucks as a change in the regular local mundane options
• No one likes to wait in long lines
• Food truck business is hard to make money and truck owners could use some help with automation for taking orders.

Before we jump into building things we wanted to do more research.

Validating underserved customer needs

What we were thinking was a two-sided marketplace for lunch from food trucks. Our two personas were

• Truck owner — with the operational person part of the food truck team, creating and managing order tickets.
• Working professionals in the downtown areas who would prefer to have lunch from food trucks.

We had to gather information from both these personas. We were leaning more towards truck owners for our supply anyway.

Research included —

• Competitive analysis — Existing solutions
• Food truck business model
• Food truck daily operations and needs
• Working professional needs

First two were simple to research online.

Competitive analysis (Before HoodyFoody, we referred to ourselves as Street Chili )

Basic Compete Analysis

Food truck business model

This article really summed it up — http://archive.seattleweekly.com/food/960060-129/the-tough-economics-of-running-a

Food truck daily operations and needs

We spoke to food truck owners anywhere we could find them. Specifically, we went to a food truck festival in Seattle to do our research.

Before we went to talk to Food Trucks, we organized our thoughts and wanted to standardize the questions for all truck owners — We used google forms https://docs.google.com/forms/d/e/1FAIpQLScQ3LvxatBjGETwfLLOY40jNa-lJzN8pH2v8fH8V2MTRCFzow/viewform

We wanted one person to do the talking and another one to fill the form (take notes). We took turns.

Here is a sample audio of an interview with Mesob At the Curb. Recorded via iPhone audio and at a food truck festival, forgive the background noise.

Key outcomes after talking to food truck owners —

• Getting a location was a top pain point for Food Truck owners. The city does not give permission to park anywhere and serve food. Premium spots were expensive ~$125 per day and hard to come by — like Barnes & Noble parking lot in Bellevue downtown and lots close to Amazon offices in Seattle. Lease for a spot is generally for a year and if you lose it, it is very difficult to get it back. High demand.
• Some food trucks did not consider lunch time as their primary business. It was mostly a PR opportunity to get their name out. Prime business was serving at events.
• The cost of additional personnel for taking order was not perceived as painful enough. The window ticket organizer helped in different ways.
• Many businesses similar to us “tech guys” have tried to solve this problem and have failed at it. Some food trucks think it’s a fascinating idea but execution is very very difficult.
• Some trucks like to brag about the lines at their food trucks. So they did not perceive making customers wait as a major problem.
• Food trucks also like to brag about the turnaround time for orders. Many have solved it to minimize wait times.

Bottomline —

Food trucks did not see a clear need for a service like HoodyFoody. Most of them were open to trying it out, they are all entrepreneurs and always open for new things. Some of the food truck veterans did not want to work with us at all. They have seen many of us tech guys fail at this problem.

Working professional needs

Next, we wanted to talk to the paying customers — working professionals in the downtown areas.

We decided to talk to target customers in lunch time at food trucks in both Bellevue downtown lot and Amazon lots in Seattle SLU. We used google forms to organize the note taking — https://docs.google.com/forms/d/e/1FAIpQLSfKtA_8K17_bvI2-a1-9xaMtrqOIDpwUueDEI41McGQEzKYlw/viewform

For this, we followed a basic set of 4 questions —

• How important is knowing in advance what food trucks are near you?
• How important is the turnaround time for your food order?
• How satisfied are you with the current way of finding out what food trucks are near you?
• How satisfied are you with your current turn around time of food order?

This approach is based on Dan Olsen’s Lean Product PlayBook — validating under-served customer needs.

We ended up talking to 84 target customers. After collecting the responses and quantifying it, here is the opportunity matrix we landed on —

HoodyFoody — underserved customer needs.

The surveys demonstrated that

• Yes, it is very important for customers to know what food trucks will be in the neighborhood and be able to pre-order the food.
• However, given the current means of ordering, they have figured out their hacks to not wait in line — like, they would come in non-peak hours. Or dedicate extra time to wait in line. Or sometimes just don’t care about the long lines.

In summary — this was an important problem for users, but given that they were somewhat satisfied with their current workarounds, it would be very difficult to change user behavior. It will be a competitive space. Not a slam dunk opportunity like Uber — where it is important for users to get a cab on time and users were VERY dissatisfied with the current workaround to hail a cab.

We figured that if we had a compelling service with the high-quality product we could convince users to use HoodyFoody.

We were prepared for a tough battle.

This was a fair bit of user research. Next we wanted to quantify the business opportunity.

Business opportunity

There are several ways to quantify the opportunity. I found product canvas to be simplest means to present the business case —

First versions of HoodyFoody Business Case

We were being very optimistic in projecting the opportunity.

We would charge $1 per order to customers as a pre-order fee.

4 food truck per lot, ~400 orders served by them. If we get 50% of these orders via HoodyFoody = $200 per day profit. We hire operational person @$15/hr for 3 hours daily. So a net profit of ~$150 per day. 20 working days — $3000 per lot per month. Awesome. Scale to 5 lots in Seattle = $15000 per month per city. Scale to 10 metropolitan cities = $150,000 per month in USA. Awesome. 1.8 Million annually.

The dream of being self-employed was suddenly in the line of sight…damn…let’s execute!

Part 3 will cover how we hacked to release and where we got lucky! Next weekend.