Dubai’s F&B takeaway business in app mode

Dubai: Dining in via a mobile app is sure finding takers in the UAE. Now, a new venture — which has been operational for just over four weeks — wants to carve up its own niche in the takeaway business.

Foodora — part of the German Rocket Internet’s growing portfolio of online startups — allows orders to be placed via its platform and — this is where it separates itself from the herd — also makes the delivery instead of leaving it to the F&B operator which has bagged the order.

“We have gone with the model in 21 global cities and Dubai is the first in the region where it’s been introduced,” said Alexander Kappes, Vice-President and Managing Director at Foodora. “We started with servicing orders in one particular delivery area in Dubai and will soon add a second one. After that, there will be more cities.

“What we are not is an online marketplace for local restaurants and which is why we are not taking a mass-market approach. The plan was always to offer a premium at-home dining experience for those making the order. That’s why the alliances have been with F&B partners which can offer a premium experience.”

By taking direct control of the actual order fulfilment, Foodora’s costs would be proportionately higher. But this is offset by charging the customer a certain percentage on each order as well from the F&B operator.

“In the four weeks we have been, orders have averaged between Dh50-Dh100, and currently we have 43 F&B partners and to which we will keep adding,” said Kappes, who declined to mention the extent of Rocket Internet’s funding exposure to the startup. (In the recent past, Rocket Internet has been involved with Talabat.com and 24h.ae.)

In a survey it did mid-year, the consultancy KPMG found smartphone-based food delivery models can be the disruptor to the traditional way things get been done in the sector. “Increasing internet usage and smartphone penetration is both a risk and an opportunity,” said Anurag Bajpai, Partner KPMG, in a statement issued at the time.

“Brands now really need to pay attention to their online presence and have a clear strategy. The operators who are getting this right are really benefiting, as they are not only raising their profile but are also enabling their customers to be advocates for their brand.”

According to KPMG, the takeaway side of the F&B business “remains... relatively small given the propensity of UAE residents to go out to eat but a number of the well-known restaurants have been witnessing regular usage and following”.

This is the growth potential the likes of Foodora will want to cook up to optimum potential. A sizable user base coming online via its app and with the right F&B partner connections, this is seen as eminently doable.

But some industry operators are taking a slight wait-and-watch approach. “Traditional restaurants have offered the take away service for years,” said Abdul Hakeem Kamkar, Director at Al Danah Capital, part of Global Capital Partners and which owns and operates the BigBen outlets as well as Arrions Cafe.

“Given that this service has always existed, it is unclear the apps have increased market penetration. “Dubai has been a market where due to the relatively inexpensive nature of labour has always managed to offer deliveries for both groceries as well as F&B.

“But the apps allow for customer-specific restaurants or cuisine to be accessed in a transparent and efficient manner through the tech platform.”

These apps will also have to contend with the F&B operators making direct deliveries on orders placed, a system which has worked well through the years. All these restaurants need to have is the manpower on call to ensure order fulfilments are done on time. The rest should take care of itself.

This is where Foodora’s hands on curating of its F&B tie-ins is significant. “The tie-ins have been selective, represented by a mix of trendy F&B experiences and those that can be deemed up and coming,” said Kappes. “And the way we have built awareness is working offline and getting involved with the communities [which fall within the delivery areas].”