Why queue when there's an app for that?

Last updated 05:00 16/03/2014
YQ co-founder Mike Paranihi with Cargo Coffee owner Kristal Hale.

SMART DRINKING: YQ co-founder Mike Paranihi with Cargo Coffee owner Kristal Hale.

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Like many great plans, the idea for the YQ mobile app was hatched over a beer.

YQ, (a play on the words Why Queue) allows people to pre-order and pay for food and drink from their favourite cafe or restaurant with a click of their smart phone.

The system seems simple enough.

Downloading the YQ app, which is free to users, allows them to use their phone to look up the menus of participating eateries, select the items they want, hit the order button and have their food and drink waiting for them and already paid for via their credit or debit cards when they walk through the door.

In an age when time is money and people are often grabbing a bite on the run, 5500 users in Auckland and Wellington have downloaded YQ in its first year of operation and its founders are looking to take it to Australia.

YQ was conceived when co-founder Mike Paranihi and three of his mates in the IT industry were having lunch at an Auckland pub in 2010.

When one of them pulled out an iPhone4, which had just been released to the market, one of them mused that it would be great if they could order and pay for their their drinks over the phone, rather than having to queue.

Paranihi describes himself as part of the "Commodore 64 generation" who got his first computer as an eight-year-old and as an adult went on to build his career with IT industry giant Cisco.

But he dreamed of being an entrepreneur, if only he could find the right product and the right time to launch it.

Paranihi said the idea of the pre-ordering, prepayment app burned a hole in his brain for about six months, until he and another of his mates who had been at the pub lunch that fateful day decided to do something about it.

They started working on the concept and brought in a third partner and then took their idea to a family contact in the hospitality business to see if it had any legs.

He introduced them to a few more key players in the restaurant trade who thought it was a promising idea, so they started developing the product in earnest.

The system they developed is fully interactive between the consumer, the merchant and the banking system.

Merchants load their menus into the system, allowing the consumer to make their orders. When consumers download the YQ app, they register the details of the Visa or Mastercards they want to use for payment into the system, and can then start ordering. Merchants can receive those orders via a PC, tablet or their point of sale systems, and once they have accepted the order a confirmation email is sent to the customer and their credit or debit card is billed.

When the customer comes into the cafe, their order should be good to go.

Paranihi said the hardest part of the system to develop was the payment process, because it was essential that it was secure and couldn't be hacked into. That meant building partnerships with a specialist payment processing company, DPS Payment Express, and the major banks.

When consumers register their credit card details, that information is securely held by DPS Payment Express, not YQ.

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"We've integrated with them, we do not store any card details, they are a specialist payment company," Paranihi said.

The financial model requires merchants to pay a fee to sign up to the system and a commission on sales processed through it, while it's free to consumers. But Paranihi knew they'd need a reasonable number of merchants on board to get consumers to join, and the first 12 months after development work was completed was spent signing up merchants.

"I'm not going to say it was easy, but with a lot of merchants it was like pushing an open door," Paranihi said.

Many were waiting for something like YQ to come along, he claimed.

Its marketing plan relies on the merchants themselves to promote YQ to their customers, the rationale being that they will know the ones most likely to use it. YQ provides marketing support such as point of sale material and training.

When the app went live at the start of last year there were just 10 merchants on it. Now there are 118 using it or signed up to do so, spread around Auckland and Wellington.

The company now has five staff promoting the service and Paranihi said they are on track to have 300 merchants hooked up by this time next year and are also planning on expanding into Australia.

But the business has grown to the stage where they need to bring in outside partners.

Paranihi said that could involve bringing in new shareholders at some stage, but a more likely option was that the company would partner with potential competitors.

A number of companies had been planning to launch similar products, but were yet to press the go button.

Because YQ was already established and growing, a partnership arrangement may be a better way for them to enter the market, he said.

- Sunday Star Times

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