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By LAUREN CLARK
Cronkite News

TEMPE –  Gil Schmitt said he has long struggled to get a steady flow of Arizona State University students into his ice cream and sweet shop on Mill Avenue.

Because he uses local ingredients and high-quality butterfat, students sometimes balk at the prices at Sparky’s Old Town Creamery in Tempe.

But Schmitt said he may have found a solution.

It’s an app called Hooked, which operates like deal promoter Groupon, but for millenials. The company launched last week in Tempe.

“It was going after a market that we really need in our business,” Schmitt said. “When college kids are buried into their phones, it seemed like the perfect way to meet them on social media.”

Hooked’s CEO said the digital platform provides a “win-win situation” for users and partners – cheap meals and snacks for college students, extra revenue for businesses. Once users download the app, Hooked uses their phone’s GPS coordinates to tell them about offers nearby.

“That’s what our app does, it enables local businesses to establish an effective mobile brand, connect them with college customers nearby, and most importantly, drive those students into the doors,” said Tim Rothwell, the co-founder and CEO of Hooked.

Rothwell and his co-founder, Brett Berman, developed the idea as college seniors. They were hungry and wanted to explore more restaurants near their Los Angeles campus, but they couldn’t find an online product to instantly check deals around them.

The duo discovered an opportunity to bridge two needs: Restaurants often face slow hours and need more customers – and college students are perpetually hungry and glued to their phones.

Through the GPS tracker on smartphones, Hooked provides users with promotional offers from eateries near them. Because the offers only last between 1 to 3 hours, the company said students instantly come through the doors.

The hope is students will return and become loyal customers, a term the app calls getting “hooked.”

The Los Angeles-based company has made strides on campuses across the country, according to its website. Starting in University of Texas at Austin in 2013, the app quickly spread to four other markets.

Tempe is among 10 college communities Hooked has targeted this fall. The others include Boulder, Colorado; State College, Pennsylvania; and Gainesville, Florida. Because Tempe is located at the heart of the largest university in the nation, Rothwell said it was an ideal community for expansion.

More than 1,000 users have downloaded the app in the Tempe area, with more than 55 participating restaurants, including student hot spots such as Slices, Firehouse Subs and Orange Table.

Rothwell said his company wants to add 30 to 40 business partners in the area.

Hooked also plans to lure additional users with a promotion: If it gets 2,500 downloads in the Tempe area by Aug. 31, restaurants will offer a week of free food to users.

Erin Huber, a sophomore at ASU, said she would definitely use the app.

“I would want to use it if I’m hungry, or if a place I really liked, like Fractured Prune or Olivio was running a discount,” Huber said.

Nationally, more than 1,000 businesses work with the digital company, from local hot spots to national brands, including McDonald’s, Dominos and Starbucks. While Rothwell declined to disclose the company’s revenues, he pointed to the big-name partners and large markets as indicators of his startup’s success.

“After launching in 2014 at University of Michigan, there was a quarter of the entire student population at the end of the semester actively using our app,” said Rothwell, adding that the total number of app downloads is “above the six-figure mark.”

Hooked has stiff competition. Groupon, a 7-year-old global e-commerce site, reported a $109.1 million profit in the second quarter of 2015. But Rothwell insists that Hooked’s unique market and branding technique is key to outperforming the competition.

“We have a really high-quality product for the students,” Rothwell said. “You scroll through Hooked. It feels like a social media app that students like to use every day.”

Hooked is free to small businesses and users. The operation uses advertising campaigns with bigger brands to bring in revenues.

Hooked has snatched $2 million in outside funding, and Rothwell said the company is in talks to secure more funding.

Company officials also plan to become a major national platform for small business in the major city markets. But Rothwell said honing their business model in the college market is a necessary step before unveiling it further.

But regardless of how big his company gets, Rothwell said it will remain focused on its main goal: helping small businesses.

Small businesses play an essential role in Arizona’s economy. Small businesses employ 955,194 workers in the state – that’s two-fifths of the economy’s private sector, according to the Small Business Association.

“My business partner and I have so much respect for local business owners,” Rothwell said. “It’s very, very difficult to build traction and to establish yourself and stay in business, and we just have a passion of helping them out.”

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Hooked, the app

• Founded: 2012
• Founders: Tim Rothwell and Brett Berman
• Headquarters: Los Angeles, California
• First market: University of Texas Austin, launched in 2013
• Total college towns that have the app: 15
• Businesses involved nationwide: More than 1,000
• Businesses in Tempe: 55

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