Foodbomb unveils BNPL offer for hospitality supplies

Foodbomb founder Paul Tory. Source: provided.

Australian hospitality startup Foodbomb has entered the buy it now, pay later arena, offering hospitality businesses a 21-day credit for purchases from their suppliers at no additional cost.

The new BombPay BNPL offering is designed to integrate with the existing platform, and terms can be extended to 30 days once a business relationship is established, said Foodbomb founder and Paul Tory. SmartCompany.

Foodbomb is a marketplace for wholesale food suppliers, allowing hospitality businesses to order from various suppliers through a single platform. BombPay will now be available to approved businesses as a payment method.

Founded in 2017, Foodbomb won the first ever SmartCompany Startups Awards — then called the StartupSmart Award — at the Smart50 Awards in 2018.

Today, the Foodbomb marketplace is home to products from over 100 vendors and has been used by over 3,000 businesses.

In 2021, despite the disruptions in the hospitality industry, the startup saw 80% revenue growth, year-over-year.

BNPL for the hotel industry: Why now?

When asked why FoodBomb moved into the BNPL sector, Tory briefly replied, “we listened to our customers”.

Hospitality has been one of the sectors hardest hit by the COVID-19 pandemic, not to mention other challenges including the ongoing flood crisis.

“They come out the other side doing the hard stuff.”

In conversations with Foodbomb customers, two themes continued to emerge, Tory explains: labor shortages and cash flow.

With government support and rent relief ending, even as they are able to reopen, many hotel businesses are struggling to keep up.

At the same time, the lockdowns have been difficult for suppliers, many of whom are now struggling with their own cash flow problems. This has led to a shift in the industry that has largely gone under the radar.

“Suppliers have been the forgotten side of this equation,” Tory says.

“Many of our suppliers have restricted trading conditions”

Responsible access to capital?

BombPay is not the first to bring BNPL into the B2B sphere. In April of last year, industry heavyweight Zip launched its Zip Business offering, offering up to $150,000 in credit for all manner of small business expenses.

Foodbomb’s, however, is the first to focus exclusively on the struggling hospitality sector.

Any BNPL offer comes with controversy. Critics of consumer-focused products claim that they offer a line of credit that can quickly become expensive, without necessarily acting in the best interests of consumers.

A January survey from Reviews.org found that 27% of people who use BNPL’s services have paid late fees.

Tory points out that BombPay does not give out credit to companies “willy-nilly”.

Sites go through an application and screening process, and the startup works with a third-party underwriter to ensure sites are able to support these short-term loans.

The model also means businesses aren’t faced with a pile of bulky invoices at the end of each month, Tory adds. Instead, they can pay each bill within the 21 or 30 day period, or even set up direct debit if they wish.

If a business defaults on its payment obligations, Foodbomb will work closely with the affected site to establish a payment plan, the founder explains.

“We believe this is a fair model for both the vendor and the site,” he adds.

As technology plays more of a role in the hospitality industry — a trend only accelerated by COVID-19 — Tory says business owners are looking for new ways to optimize their operations.

Foodbomb has helped them do just that for supplies and shopping, he adds, and BombPay is an extension of that.

“I wouldn’t be surprised if we had imitators now.”