Bethesda, Md.-based local restaurant discount app Spotluck—the recently crowned winners of DC Inno’s Tech Madness competition—are a savvy company worth watching in the future. In less than two years’ time, Spotluck has grown to more than 60,000 users and is currently partnered with more than 300 merchants in the D.C. area, said CEO Cherian Thomas
Thomas founded the company from his basement in 2014 with CFO Bradford Sayler, who at the time worked as a corporate lawyer in downtown D.C.
“We solve the reoccurring (and global) problem of figuring out ‘where to eat?’ We focus on the independent restaurant industry which is a $140B marketplace in the U.S alone. Although there are several players in mobile coupons, reservations, loyalty etc. there are none that create a win-win business model where both merchants and users are happy,” Thomas explained in an email.
Spotluck has developed an app that centers around a game of chance. By tapping a simple, brightly colored spinning roulette wheel within the app, users can unlock promotional deals for local restaurants. Those deals can be easily adjusted and activated based on buyer demand and other features by merchants.
Users and merchants each have a different looking Spotluck app with unique controls—the model, is somewhat similar to Uber and more specifically, the ride hailing company’s dynamic pricing model which dictates price based on demand, supply and area.
“The app is viral, it’s fun and it’s easy to understand. People get it,” said Sayler.
On the merchant side, these clients are given an analytics and easy advertising platform to understand and post deals (digital discounts/coupons).
Part of this system enables the restaurants to understand which meals are attractive to users and where those users are originally coming from to visit their business. And because everything is local (or neighborhood based), the marketing is collaborative and reaction-able. This sort of information, Thomas said, is also critical for an industry that is looking for simplicity and cost savings from their software vendor.
“For a long time, I always thought that the pricing model was messed up in the restaurant business … I don’t think you should be paying the same amount for a meal in a restaurant on a rainy Tuesday evening as on a Saturday at 7 p.m., demand should help establish pricing,” said Thomas. “That’s the general model I think we are moving closer to across the board anyways, whether it’s in malls or online … Amazon is already doing it.”
The Spotluck app is available on iOS and Android. If you search dining on the Apple App Store, Spotluck shows up in the top 3 results alongside OpenTable (acquired by Priceline for $2.6B) and UrbanSpoon (acquired by IAC for ~$50M).
According to its co-founders, Spotluck nearly doubled in downloads each quarter of 2015 and they predict continued strong traction into 2016. According to Thomas, the number of merchants on the platform has grown by 7x since the beginning of 2015.
With a new sales force being hired, Thomas said the team is signing about 50 restaurants per month.
So, how does Spotluck’s revenue model work?
Well, the merchants pay $1 for every diner that Spotluck brings to their establishment and there is also a $150 fee for a restaurant to sign up. Installation and set up for new merchants takes just a matter of hours, said Sayler.
“The SPIN is essentially for both sides. On the merchant side, it protects bigger discounts by making them exclusive (which creates true pull). On the user side, it provides a fun way to decide where to go eat and makes restaurant discovery a more efficient process (compare to long/painful restaurant deal directories—you spend a half hour searching and then end up going to your regular spot anyway),” Thomas told DC Inno.
At the moment, Spotluck operates in the D.C. area exclusively, though, Thomas and Sayler revealed to DC Inno that the company’s first expansion city will be Philadelphia.
In the coming year, the Maryland company plans to grow its East Coast presence, with operations in 3 to 4 major cities. The team of 16 will grow to about 25 people.
Spotluck has raised roughly $2 million in seed funding to date. RANK Capital, a Texas-based VC firm, led that seed round. Thomas declined to disclose revenue figures for the company.