Professional Food Critics Beware: Dinner Lab Gives Restaurant Review Power to the Masses
Dinner Lab is shaking up the culinary industry, offering unique and personalized food experiences to the proliferating foodie population.
For better or for worse, it seems that Instagram feeds today are being dominated by one subject even more than babies and sunsets: food. People, especially urban young professionals, are finding their inner “foodie” at an accelerating rate and not only feel compelled to share their experience with their social media followers, but also to provide their feedback on the experience on popular review platforms like Yelp and TripAdvisor. Dinner Lab’s business model has found a way to institutionalize this obsession with feedback and leverage it toward providing talented chefs the opportunity to test concepts and perfect their trade, while simultaneously providing a distinctly unique culinary experience for the food-obsessed generation.
Founded just over four years ago, Dinner Lab, a membership-based supper club, event catering business, and now restaurant crawl host, has quickly established itself as the largest culinary events company in the world.(1) Through effective innovation of its membership model, expansion into complementary, yet diversifying business lines, and an acute focus on collection and application of data, Dinner Lab has effectively aligned its business model and operations and is poised for growth.
Business Model
Dinner Lab began as an intimate late-night dinner in the New Orleans neighborhood of founder and CEO, Brian Bordainick, and quickly expanded into weekly events for 75,000 members in 31 U.S. cities.(2) This core business model works similarly to traditional supper clubs with some innovative variations. Dinner Lab rents a unique space like an art gallery or rooftop anywhere in the city and has a chef curate a five course meal with drink pairings. Each meal has a different menu and different chef, typically a talented sous-chef seeking to test his or her culinary style and gain exposure in hopes of ultimately opening his or her own restaurant.
The traditional offering required interested customers in any city to buy a membership for an annual fee of $100 – $175.(3) This allowed the member to receive weekly emails providing the planned menu. When interested in an event, one simply bought one or two tickets for prices ranging from $50 – $80 (including all food, drinks, and tips) and showed up to the secret location revealed the night before the dinner.(3) Upon arrival, diners are provided comment cards that allow them to rate each course and provide qualitative feedback on particular likes and dislikes. Proving its agility in pursuing growth, Dinner Lab recently modified this model to offer an additional free membership. Under the new tiered system, paying members will still have first access to dinner and exclusive events, but non-paying members may still buy tickets to individual dinners if they do not sell out.(4) The model will allow people to trial the experience before committing to being a paying member and allow the company to monetize excess supply in an efficient manner.
Dinner Lab has also made some recent innovations to its business model to better leverage its core competencies. In summer 2014, the company added catering services to its portfolio, allowing consumers or business to hire a Dinner Lab team for private events.(5) The company can use its diverse network of culinary experts to accommodate menu preferences and serve formats of all types. The business already represents 20% of Dinner Lab’s revenue stream and represents a strong potential growth channel as well as an effective marketing tool.(5)
In early December 2015, Dinner Lab deployed a portion of a recent infusion of $7 million in investor cash to execute a strategic acquisition of Dishcrawl.(6) While not a direct competitor, Dishcrawl operates in the culinary experience space, organizing and selling tickets to restaurant crawls in over 250 cities in the U.S. and Canada.(6) The acquisition gives Dinner Lab access to more customers interested in food experiences (Dishcrawl’s membership base was 80,000 at the time of acquisition) and diversifies the company’s offering away from strictly sit-down events.(2)
Operating Model
Dinner Lab’s unique operating model centered on technology, human capital, data, and efficiency, effectively complements its core business in many ways. The company rebuffs the traditional lack of attention to technology in the restaurant industry and conducts and tracks all of its pre- and post-event operations online, tailoring its value proposition to each customer similar to companies like Netflix.(7) Users join online and create a login for the Dinner Lab website. Each member’s unique profile tracks events scheduled, dietary restrictions, guests, credits, and favorite cities. The site is clean, simple, easily navigable, and customized by city. All communication is executed via email and the DinnerLab.com platform. The payment process is fast and convenient and eliminates the need for cash exchanges on the day of the event as the ticket price is all-inclusive.
This model allows Dinner Lab to constantly have real-time data on demand for events and adjust accordingly. For example, often if a dinner sells out quickly, the company immediately knows to add a second seating to better monetize an event. In addition, the data allows the event team to plan for dietary restrictions ahead of time which reduces unforeseen variability during the dinner. Dinner Lab is hyper-aware of the importance of technology in scaling its business model and plans to use resources from its latest round of funding to further develop its systems.(5)
Operations for the events themselves are also specifically designed to maximize value for the firm. As the restaurants are “pop-up” style, the company does not require significant capex to procure a space. Instead, a simple daily rent payment is made, allowing the company to remain nimble and allocate its cash toward other assets like employees and technological infrastructure. Dinner Lab employees have become operational experts while executing events, diligently addressing the needs for parking, electricity, and equipment in a diverse range of settings.(7)
Similarly, the deliberate design of each dinner or catering event as a single or double seating with a fixed menu allows Dinner Lab to deliver a consistent experience with little variability. The company can accurately plan its inventory and human capital needs as the number of meals is predetermined. Servers can handle more diners each since everyone is on the same schedule. Additionally, almost all materials used are recyclable, minimizing the need for traditional restaurant resources like bus boys and dish washers. Operations in the kitchen are also extremely efficient given the predictable timing of the event. Chefs can batch their mise en place as well as their cooking and employ an assembly-line type process for plating meals. Finally, the minimal time commitment required for servers in each city minimizes the need for full-time employees in this function.
Dinner Lab’s focus on capturing and utilizing data is perhaps the most important factor for maximizing value in its business lines. The comment cards provided to diners translate to massive amounts of insights that have the potential to improve chef performance, better plan events and menus, segment and target members, and even add an additional revenue stream through consulting or deals with third parties. Additionally, Dinner Lab’s wealth of data on consumer preferences already amassed insulates it from potential competitors interested in entering the market.
Dinner Lab’s robust data bank also complements its new business lines, specifically private catering. By having knowledge about what the best performing dishes have been and who made them, Dinner Lab can much more effectively serve the needs of clients with very particular requests. For example, Brian Bordainick was recently quoted saying “We did a wedding recently where the bride wanted shrimp and grits. Using our data, we got to see the last 15 Dinner Lab chefs who made shrimp and grits and which was the highest-rated one. That’s the ability to deliver.”(8)
Dinner Lab’s Data Strategy (Source: Entrepreneur):
While Dinner Lab remains a young company with much runway for growth and development, its strategic focus on efficient and innovative operations will allow it to scale quickly and profitably. Besides the fact that several investors evidently agree, it is clear that the company has established a lean operating structure with attention to detail and quality. Additionally, the recent elimination of the paywall and acquisition of potential members via Dishcrawl will bolster growth and economies of scale. Dinner Lab has debunked the decades old rules of dining that dominate the restaurant industry and will continue to capture share as diners seek innovative, personalized, and unique culinary experiences.
Sources
(1) Tepper, Fitz. “Dinner Lab Raises A $7M Series A To Expand Its Social Dining Club.” TechCrunch. TechCrunch, 6 Aug. 2015. Web. 05 Dec. 2015.
(2) Perez, Sarah. “Culinary Events Biz Dinner Lab Buys Competitor Dishcrawl, Will Launch “Bar Crawls For Restaurants”.” TechCrunch. TechCrunch, 2 Dec. 222015. Web. 05 Dec. 2015.
(3) Segal, David. “Hey, Chef: Next Time, Skip the Fennel.” The New York Times. The New York Times, 30 Aug. 2014. Web. 05 Dec. 2015.
(4) Stone, Madeline. “One of the Coolest Underground Supper Clubs Just Became Free to the Public.” Business Insider. Business Insider, Inc, 20 Oct. 2015. Web. 05 Dec. 2015.
(5) Clifford, Catherine. “120,000 Miles Later, Dinner Lab Lands a Fresh Round of Funding.” Entrepreneur. Entrepreneur, 06 Aug. 2015. Web. 06 Dec. 2015.
(6) Clifford, Catherine. “Dinner Lab Scoops Up ‘Food Crawl’ Startup Dishcrawl In a Push to Get More Customers.” Entrepreneur. Entrepreneur, 03 Dec. 2015. Web. 06 Dec. 2015.
(7) Lopez, Adriana. “Dinner Lab: Social Dining Startup Grows In Popularity As ‘The Mysterious Bar Patron'” Forbes. Forbes Magazine, 18 July 2013. Web. 05 Dec. 2015.
(8) Daley, Jason. “Data-licious: How Dinner Lab Used Feedback to Improve Food and Conversation.” Entrepreneur. Entrepreneur, 12 Mar. 2015. Web. 05 Dec. 2015.
Thank you Christy for this interesting post on Dinner Lab. It was great to understand how their lean (outsourced) operating model has helped them scale rapidly. Since no parameter is fixed – location, staff, cuisine and chef are always different, there is a lot of variability in their process and it becomes difficult to create a standard meal. Currently, this works fairly well for Dinner Lab as their format removes customer’s expectations out of the equation. Before their first experience, customer’s do not know what they should expect. Hence, as long as Dinner Lab does not compromise quality and remains customer-centric, they would be able to keep customers satisfied and loyal. However, what happens if a customer gets a unsatisfactory meal once? How would Dinner Lab use its’ data to get the customer to eat with them once again?
Great post Christy, many thanks! I am convinced that this model will capture more share thorugh innovative, personalized, and unique culinary experiences going forward. When reaching scale, it will be key to standardize certain processes related to food safety (if they haven’t done so already). A single food scandal can ruin your business or reputation, but risk can easily be mitigated through standardized training and microbiology testing.
Great post Christy! I really enjoyed learning about this business. At first I thought it was very similar to something back home called Cube Tasting Kitchen, which does 6-10 small courses each paired with a specific wine. However the business model is clearly much more evolved.
The most interesting point for me was how they effectively achieved value creation for both parties i.e. for the the up and coming sous-chef as well as the patrons. I also found it fascinating that, on a psychological level, have also tapped into the “cool” factor with the pop up, undisclosed venues where everyone wants to feel like they belong to a movement of some sort.
I would love to see them extend the customer experience further, perhaps by doing culinary themed evenings or incorporating some sort of theatrical component to the meal (e.g. along the lines of Opaque, the dark dining restaurant in San Francisco) or even charging a small premium for one off special events where famous chefs make guest appearances.