During prohibition, people didn’t ask for whiskey, they asked for hooch. And to get it, they would slip into a speakeasy. But it wasn’t very easy: bottles would pass borders, exchanging hands as goods or bribe, before people got to pour their drink in a glass, sniff it, and take a sip. It was an extravagance reserved for those who could take the risk, and those, in the know.
In 2018, there’s an app called Hooch for the millennials in the know.
It may not bring the thrill of drinking illegally in a speakeasy, but it does the next best thing. The subscription-based drinking app, offers 30 drinks a month at partner restaurants for just $9.99.
How does it work: You need to pay $9.99 a month, or $99 for a year’s membership for one drink a night at a participating bar or a restaurant. You can come back to the same spot another night but you will get only one free drink per night.
Sounds like a scam? It isn’t.
The founders of this New York-based startup have it figured out.
The idea was conceived by Aleksey Kernes, a doorman at Hotel Chantelle in New York. A nightlife veteran, Kernes was familiar with what happened in a bar and often saw staff members hand over chits to loyal customers to redeem free drinks. Thinking about how he could reward more customers, he came up with the idea of a free-drink app.
He got Lin Dai, with a background in digital entertainment, to be the CEO and Jared Christopherson, with a background in social-media marketing, to be the Chief Revenue Officer. The three bootstrapped Hooch from Dai’s apartment in New York.
Kernes’ experience in the nightlife industry came in handy as the first ten partner restaurants, Kernes says, were friends. The initial collaborations made it easier to partner with more restaurants across the U.S. But, Dai says, the app was rushed from its beta stage when Time Out uncovered it as a part of its best drinking app in New York in 2015.
In 2016, the company raised a seed round funding of $1.25 million led by Blue Scorpion Investments. Later in 2016, the startup closed a larger seed round of $1.5 million that included celebrity investors like Russell Simmons, Chris Burch, Shaun White, Rosario Dawson among others. It also reportedly raised $4.5 million in 2017 bringing it to a valuation of $7.3 million according to Crunchbase. Today, Hooch is available in 10 cities from Hong Kong to New York.
In New York, they have partnerships with high-end places like Ladurée Soho, along with other more affordable restaurants, bars and rooftop decks. Hotel Chantelle, where Kernes still works, is also a client. Additionally, the startup is not even five-years-old yet and has acquired two of its competitors: Phoenix-based Tipsy and Flux in New York City.
The founders say that Hooch doesn’t charge its restaurant partners for featuring them, which means that all its revenue comes from its members.
Then how does the app manage these impossible rates?
Lin Dai has disclosed the rationale behind this: The wholesale price of liquor is approximately $25 a bottle, which produces 28 pours. This means that restaurants are not spending more than $1 (excluding labor) on each drink. And as nobody goes in just for one drink, the restaurant is making additional sales on each customer. The restaurant benefits as a new customer, someone who would have probably never walked in that door, has been lured in by a free drink and will, most probably, order more. Generally, Dai says, “the venue is risking $1 in marketing cost for a potential $30-$40 in additional sales”.
Suddenly, $10 for 30 drinks doesn’t seem as bizarre as it did. It’s just good marketing.
Generally, people eligible for big discounts and timely free drinks are restaurant regulars. They earn the free drink because of the bills they’ve already paid and time they’ve spent befriending the owner or staff at a restaurant. So Hooch’s $9.99 exclusive club may make it seem like it’s turning restaurant loyalty and patronship on its head. But the app is actually benefiting both the customer and the restaurant, equally.
For the customers: Apart from providing a variety of options to members at a low price, the app also remembers their choice of drink and tries to customise its offerings.
For the restaurants: The startup is not just bringing new customers but also providing them with smart data about choices to help them make better product and marketing decisions. It is potentially through the addition of smart data that Hooch will add more dollars to its account.
Hooch stays true to its party vibe when it comes to customer acquisitions. While finding customers online is important, Hooch organises multiple parties and events at various venues to stay in the limelight. Its celebrity funders like Rosario Dawson are often the A-listers in these parties. The New York-based startup has also cracked some envious collaborations. For example, Paramount pictures partnered with Hooch for its movie, Suburbicon and offered free Suburbicon martinis to Hooch members at 500 venues from October 27-29 2017. The movie released on October 27.
Recently, Hooch launched Hooch Black – an elevated $295-a-year, members-only experience. It gives members access to “curated events, a personal concierge, and up to 60% discounts at over 100,000 hotels and resorts worldwide”. Moving aside from its in-city cocktail party, Hooch Black also claims to provide travel benefits such as unbeatable rates at hotels around the world.
The club-culture has often been partial. But Hooch is winning brownie points for being an exclusive but non-discriminatory and affordable club. It recognises that millennials care about the experience and is, therefore, focused on building a community. With new developments and expansions every day, Hooch is making itself more and more relevant to the millennial party-goer.
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