When the COVID-19 pandemic hit North America, few industries were impacted as immediately — and profoundly — as restaurants. And Ritual, the Toronto-based order-ahead company that allows users to order in advance from restaurants and skip the line to pick up their meals, felt that impact.
As restaurants across the world were forced to shut down, Ritual reduced its staff by half, dropping from 365 employees to just 196 in April 2020, just a month after the pandemic struck. Ray Reddy, the company’s CEO, said at the time that Ritual’s “hearts go out to our merchants and their employees who have been affected by COVID-19, they serve as the life of the cities in which we operate. He added that it was “against this backdrop that we are taking necessary steps to restructure how we operate and put us on solid footing to continue to serve our customers, merchants, and neighbourhoods during this moment and the recovery to follow.”
“There were many digital companies who have benefited and had tailwinds from COVID,” Reddy said in an interview with BrainStation. “We weren’t one of them. Restaurants were certainly not one of them. So I think we … shared effects with them, and a bit of that shared pain too.”
That shared pain prompted Reddy and Ritual to rapidly pivot their business model, moving from serving restaurant diners to more strongly supporting restaurants themselves — a shift Reddy refers to as going “restaurant-first.” This began with a number of civic partnerships, including cities such as Los Angeles, Toronto, and the entire New York State, that focused on empowering local businesses with its Open for Business initiative. The new program, presented in part with PayPal, offered free delivery through a new platform, Ritual ONE. And while the pivot was born of a need to adapt, as well as a desire to support the businesses that had catapulted Ritual to its exponential worldwide growth, it ended up being a shift that ultimately kept Ritual itself afloat.
“I think, even though we found ourselves in a bit of a tough spot when COVID hit, at the end of the day, restaurants were in an even tougher spot,” Reddy said. “And we felt an obligation to help the ecosystem, [so] we went into a bit of a different mode.”
Light at the End of the Tunnel
Ritual’s return to the fore has been hard-won. In addition to the layoffs, the company ceased its ongoing European expansion. Ritual also sought new investment in June 2020 to maintain operations, raising $29.8 million which saw its valuation drop significantly. Reddy says this was not only difficult on him, as a businessman, but as a leader.
“The reality is, for some employees, it’s just not what they signed up for,” he says. “They didn’t, they didn’t want to spend 18 months of their career, you know, navigating a crisis. And there are others who joined us who are super excited to come in and help lead the charge and try to build better neighborhoods. It was a lot of change. You don’t know if you’re doing a good job or not. And I still don’t know, to be honest. I guess we’ll find out in six months.”
I didn’t know how to wave some magic wand to solve this problem. But I knew that we could help. And that felt like it was the right thing to do.
The launch of Ritual ONE, which saw the company expand its services from pickup to delivery — was originally a joint effort by Ritual, PayPal, and the City of Toronto. Ritual ONE was launched largely out of necessity as restaurants shuttered their dine-in brick-and-mortar operations. Another big factor for the shift to ONE? Since office employees were working from home, pick-up from office workers declined significantly. But the new model has a unique restaurant-supportive selling point: not only does Ritual ONE let restaurants host and process digital orders through their own websites rather than using a third-party delivery service, it is zero commission, allowing businesses to bypass the often hefty fees levied by those services.
“What I knew for sure is, our partners are hurting,” Reddy says. “I didn’t know how to wave some magic wand to solve this problem. But I knew that we could help. Ultimately, helping our partners in our ecosystem helps us in the long term. And maybe that’s simplistic or not very business savvy, I’m not sure. But to me, that felt like it was the right thing to do.”
“I think a lot of it was less calculated in terms of thinking about-you know-revenue models and everything else,” he continues. “It was just like, look, what can we do? How do we do our part?”
Reddy says Ritual was able to piggyback on a growing public sentiment that focused on supporting local, small businesses during the pandemic, which were at greater risk of closure due to a lack of existing online ordering infrastructure.
“If you talk to a retailer, for example, right, over the last few years, they don’t think about e-commerce as a way to grow sales. They think of it as like the lifeblood,” Reddy says. “If you’re not online, you’re sort of dead. But restaurants and most local businesses didn’t think about it in that way. ‘Support local’ used to be a niche cause. Now, it’s become very real.”
Steering the Ship in the Right Direction
With Ritual ONE, Reddy says the company has been able to shift towards a values-based way of thinking that prioritizes the success of its restaurant partners — not least of all because to hear Reddy say it, what’s good for the restaurant is good for Ritual.
Beyond Ritual ONE, the company announced in July of this year that it acquired AllChecked.in, a QR contact tracing platform that allows customers to check-in and log their contact information, in an ongoing effort to help restaurants keep their staff and customers safe, as more of them reopen to indoor dining. It’s another partnership that affirms Ritual’s commitment to the industry that, ultimately, keeps it afloat.
“I think it seems like a more nuanced point than it is,” Reddy says, “but it is really the case that if we help our restaurant partners be successful and grow the businesses profitably — with an underline on “profitably,” because growing unprofitably isn’t helpful — we will be successful.”
And, in Reddy’s mind, that’s how Ritual will get past the pandemic. Help the ecosystem, and the company will flourish.