A Minnesota entrepreneur is taking the the deep-discount group-purchasing business into consumer health in what he describes as the “gluten-free Groupon.”
When J Scott Pitonyak was diagnosed with celiac disease two years ago, he took up a gluten-free diet, which is the only known treatment for the disease. But he was alarmed by how expensive it was to eat out and buy specialty foods.
That’s where My Gluten Free Deals, which will offer weekly coupons to restaurants and companies that serve or produce gluten-free food, comes into play.
This is his first business, but Pitonyak is no stranger to being his own boss ’ he’s been working independently for 12 years as a sales and recruiting contractor in the IT industry. He’s starting small by targeting just Twin Cities restaurants for the first deals to be offered through his website, which will launch in the next month. But he eventually plans on making the deals applicable nationwide.
“I figured I’m doing this research already for my own personal self, so I might as well expand it into something that can help other people,” Pitonyak said.
The good news for Pitonyak is that his niche audience has already amassed. Celiac disease affects more than 2 million people in the United States alone, and as many as 1 in 20 Americans may have some non-celiac form of gluten intolerance. In these people, gluten – a protein found in wheat, rye and barley – sparks an immune system reaction that damages the lining of the small intestine, making them unable to absorb critical nutrients from food.
“Food companies and restaurants also know these numbers,” said Rita Hopkins, executive director of the Celiac Disease Foundation. “They know there is a growing market and they have the opportunity to contribute to the health-mandated needs of a growing constituency.”
Added Pitonyak: “There’s been a rush to all these group selling sites. It’s a hot industry, and I’ve seen a movement toward more of a specialized market where companies are enjoying that experience working with more of a niche player.”
The bad news is that Groupon – and to a certain extent the group-buying business model – is facing significant criticism. Groupon itself has slashed the valuation of its upcoming IPO from $30 billion to about $10 billion (and some think that valuation is still way too high). Plus, there’s an increasingly loud cadre of critics who think Groupon does not work as a scalable business, and that the daily deals business as a whole is rotten.
But the jury is still out on the industry. Part of the uncertainty is due to the fact the daily deals industry is extremely young. Also, it’s packed with scores of Groupon imitators and, as a result, is almost completely chaotic.
If there is a niche group that could embrace its own personal Groupon, it may be Celiacs (and others who have embraced gluten-free eating as a trend). They have flocked the Web in the form of blogs, Twitter hashtags and Facebook communities. Already, more than 300 Facebook fans have given My Gluten Free Deals the thumbs up, and Pitonyak says he’s beginning to see the possibility for partnerships for his currently self-funded venture, which has only been under development for a few months. He said he’s been busy generating buzz about the company at events like Tech Cocktail’s Minneapolis startup mixer, which he presented at earlier this month.
Because even trace amounts of gluten can cause a reaction in people with celiac, companies and restaurants that want to put the gluten-free label on their products must follow strict procedures to avoid cross-contamination. Combine that with the cost of less-traditional, non-gluten ingredients, and you get much more expensive products.
Packaged Facts’ most recent Gluten Free Food and Beverages report estimated product sales more than doubled over the last five years, reaching $2.6 billion in 2010. A separate Datamonitor report projected the gluten-free products market to reach $4.3 billion within the next five years. And the National Restaurant Association’s What’s Hot in 2011 survey of more than 1,500 chefs found that gluten-free and allergy conscious foods were among the top 10 trends of the year in the restaurant industry.
After Pitonyak begins sending out weekly deals, the company will roll out a location-based iPhone app that will identify gluten-free friendly restaurants for celiacs who are out and about.
Then, the next step is likely putting together a gluten-free guide program. He imagines connecting with food or healthy-living bloggers across the country who would help compile information on the restaurants and stores in their areas.