Square Feasts on Food Pick-Up With Its Caviar Expansion and OrderAhead Acquisition

In an effort to cement its ties with restaurants, Square Inc. announced Wednesday it is adding a pick-up feature to its Caviar meal-delivery service and has acquired the OrderAhead restaurant pick-up service.

Both moves capitalize on the trend time-strapped consumers buying restaurant meals for consumption elsewhere, be it at home or in the office, through their mobile devices. They also represent a sharp turnaround for San Francisco-based Square, which two years ago shut down its own Square Order pick-up business after 10 months and had put Caviar on the block for a time last year, according to reports in the financial press.

But company executives talked positively of Caviar at Square’s fourth-quarter earnings call last week. Caviar, which Square acquired in August 2014 and is used by 3,000 local restaurants in about a dozen markets, represents an opportunity for Square to diversify its revenue sources beyond merchant-processing fees.

Square is launching what it calls Caviar pickup first in San Francisco and the nearby East Bay, Los Angeles, and Portland, Ore., with rollouts in Caviar’s other markets to follow later. Consumers can do pick-up orders from participating restaurants’ menus through trycaviar.com or the Caviar iOS app.

OrderAhead, meanwhile, is a prominent player in the mobile-phone-based restaurant pick-up business and is used by “thousands” of eateries, Square said without being more specific. Square did not disclose terms of the acquisition from OrderAhead’s parent company, Kinetic Farm Inc.

“OrderAhead’s expertise in improving the restaurant-ordering process for busy diners and businesses is a great fit for Caviar and our commitment to helping restaurants grow,” Gokul Rajaram, Caviar lead at Square, said in a statement. “This addition will accelerate Caviar pick-up and give more food-ordering options to diners across the country.”

A Square spokesperson tells Digital Transactions News that OrderAhead will operate unchanged for the next few weeks. “Eventually we plan to redirect OrderAhead customers to Caviar’s Web site or mobile app, where they will have the opportunity to easily place an order for pick-up or delivery with Caviar,” the spokesperson says.

Boston-based payments consultant Aaron McPherson says order-ahead and pick-up functionality makes Square more competitive with other payments providers, including JPMorgan Chase & Co.’s Chase Pay service. Chase Pay struck a partnership in January with Boston-based LevelUp, whose mobile wallet links to 5,500 restaurant locations nationwide for payments, offers, and order-ahead capability, plus another 2,000 in Boston for order-ahead only.

“Order-ahead and pick-up in store is a model that has worked well for the merchants who have tried it, and this is a way for restaurants who lack the scale and resources to develop their own app to provide this kind of service,” McPherson tells Digital Transactions News by email. “JPMorgan Chase recently added an order-ahead feature to their mobile wallet. This helps Square catch up in the area of order-ahead. Of course, we’ve always been able to do this by simply calling up and ordering over the phone, but having the menu on the phone itself streamlines the process.”

The new Caviar pick-up has no additional fees for diners, Square said. For delivery, Caviar uses independent couriers. Square charges restaurants a commission based on the total food order. Consumers pay a fixed delivery fee as well as a service fee based on the order amount.