Bobby Brannigan’s original goal for his company Mercato was straightforward: build a tech platform to help mom-and-pop grocers like his own family get online and compete with the Walmarts and Fresh Directs of the grocery delivery world.
Several years and one pandemic later, and Mercato’s vision has expanded considerably. Independent grocers across 48 states in the US use the company’s delivery logistics platform, and CEO Brannigan says the company is now profitable.
Most importantly, Mercato has branched out to address food deserts through its Thriving Communities program. Thriving Communities partners with local governments and nonprofits to give underserved residents access not just to food but healthy, culturally relevant offerings. These foods are redeemable on SNAP and other food benefit programs.
This “Mercato Effect,” as the company calls it, gives those in need access to food while also creating jobs, keeping local grocers in business and circulating dollars in local communities.
“We see a world that’s shifting to the big chains,” says Brannigan. “But imagine retracting that and letting the community run their own food programs. To me, it’s a kind of a dream we’re trying to make reality.”
Below, Brannigan (BB) elaborates on that dream, how he got started and why local business matters more than ever.
AFN: What led you to launch Mercato?
BB: I grew up in Brooklyn, New York and my family had a grocery store there for 45 years. I grew up delivering groceries around the neighborhood until I went to college.
When I went away to school, I started an online textbook company that I grew over the course of a decade, and after I sold that company I went to my dad’s store and I saw everything was still in the stone age.
This was around 2014. My dad had no point of sale system, no social media and no website, obviously no e-commerce. I said, “I’m going to build you a platform to help you compete with the big chains in southwest Brooklyn.” We had recently seen [grocery delivery service] Fresh Direct driving around in our neighborhood. Other companies were also trying to deliver to the customers within our neighborhoods, so decided to build a platform for my dad.
As we started building the technology for my dad, we realized that it was pretty complicated. Why would we build this tech for a single store? Why not build it for all the moms and pops out there and help them compete with the big companies.
That’s when Mercado was born, in 2015.
AFN: What’s Mercato’s traction at the moment?
BB: Today we have about 1,000 stores on the platform across the country. We operate in 48 states. It’s really a turnkey platform that makes it very easy for a small grocer to get online.
We’ve created a library of every product that could possibly sell, around 1.5 million products. We integrate into all the point of sale systems to bring [stores’] inventory online, so that there is no work on their end to even build it. It’s fully automated.
For example, during Covid, we were taking stores online in 24 hours to address the needs of people.
We power delivery through leveraging third party networks. We have about a dozen delivery networks that we have plugged in that we facilitate delivery from.
AFN: How’d you go from grocery e-commerce to food accessibility?
BB: When Covid-19 hit, we encountered a lot of issues with food access. We spent a lot of time working with city government, particularly in New York City because that’s where we started.
The New York City EDC [Economic Development Corporation] came to us and said, “Can you help us bring more stores online in certain neighborhoods that lack access [to food]?” They classify these neighborhoods as food deserts.
We partnered with the New York City EDC and made it free for those stores to get online. We brought hundreds of stores online throughout the city. This was really important in that it addressed certain neighborhoods and certain choices of foods that weren’t available online, whether they were international stores or religious foods like Kosher and Halal food.
Then, the New York City EDC connected us with the Mayor’s Office of Food Policy. And they said it would be great if we could create a grocery subsidy program for people in need that gets sourced from local businesses and has all the choice that we offered, from international to religious foods.
We worked really closely with the New York City Mayor Office of Food Policy. We built a digital wallet program where organizations [e.g., government] could load shopping credits for people on the platform. Those credits would be limited to specific food categories. Then people could shop just like anybody else, without a credit card.
Users just go onto the platform to get their credit, receive more credits every month, pick the store they want to shop at, add items to their cart, and get their order delivered to their home without $1 coming out of their pocket.
This is extremely powerful.
Around 15 million or 16 million people are food insecure across the country. We can provide them with a specialized product that allows them to get healthy foods. That was really the second piece of giving them food access: helping them to get the healthiest products out there and not low-quality products that would ultimately get them sick.
We also built in incentives for them to eat produce, where they can get 50% off produce.
AFN: Why is the mission important to you personally?
BB: Growing up in a community where my father had a business I saw that the community brought people together through food. I think there’s something really powerful there when you have stores that meet the cultural needs of their neighbors. It’s not just about calories.
The other part of it is that, as entrepreneurs, my father and I wanted to create a platform that enabled people to be entrepreneurs and be successful.
We see a world that’s shifting to the big chains. But imagine retracting that and letting the community run their own programs. To me, it’s a kind of a dream we’re trying to make reality, and it’s actually happening because the local governments are seeing the powerful flywheel of letting the stores in the neighborhood power the platform through our technology.
AFN: What’s the long-term goal for you and Mercato?
BB: There are all sorts of programs that offer access to food, but it’s very fragmented. There are big federal programs like SNAP and WIC, there are city contributions and also health insurance companies and also grocery subsidies through healthcare.
Our aim is to create a frictionless experience for people so they can get all the options for healthy foods through a platform and delivered to their home.
Government is one part of it, but the other part of it is actually partnering with food pantries and giving them the ability to participate and source food from the grocery stores.
But really the main goal here is this economic development flywheel of helping local businesses, providing better food access through giving choice, and then creating local jobs.
AFN: What are one or two challenges you’ve faced?
BB: Covid-19 was the challenge of a lifetime. Our business grew like 1,000x in five weeks, and we went from 15 people to 85 on the team. The hardest part was getting people up to speed and training them on how to understand the platform. The other problem was adjusting after Covid: bouncing back after riding the tsunami.
There was an abundance of funding in 2021 and even 2022, and then it just dried up. One of the challenges was moving from rapid growth to profitability — and we achieved that. We went from being really aggressive and raising significant amounts of money to shifting the business to profitability. The past two years, you had to be quite the acrobat as an entrepreneur as business went up and down with Covid.
AFN: Any advice for other startups out there?
BB: The number one rule in businesses is never run out of money. Make sure you’re managing your cash well.
Also, know who your customer is and work very closely with them. You can’t not talk to the customer in this economy and expect to win. You have to build to their needs and focus on building an amazing product for them.
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