Elmenus & Egyptian Food Delivery

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Amir, can you provide some context to the Egyptian online food delivery market in 2011, when you started your business?

It was a whole different story in 2011. There wasn't an online delivery market in Egypt. Up to then, most orders were made on the phone, but the delivery market in Egypt is super mature. Restaurants have their own fleets and logistics teams, so they always deliver the food themselves. I think McDonald's in Egypt was one of maybe three McDonald's in the whole world to deliver when they started in the early 1990s. It was already a pretty mature delivery market.

In 2011, there was improvement in the online penetration rate, but it was still very early. Today, we're seeing around 7% of all deliveries happening online, and that number is increasing rapidly. It grew more than double in the past year alone. It will keep increasing because restaurants are getting educated, users are adapting to the online experience, and platforms like ours are investing a lot into the market.

Why do all the restaurants have their own delivery?

This relates to Egypt generally being used to ordering things conveniently at home. Getting a delivery guy or a couple of guys to work for the restaurant wasn't that big of an investment from their side. Overall, Egypt is infamous for having a lot of traffic, and nobody wants to go and pick up their orders from around the corner or drive to a restaurant, so I think that also helps. Traffic is a big angle for it; second would be labor cost, and third is the fact that Egyptians love their food, so we typically order a lot.

How would you describe Egyptian consumer behavior versus a typical Western, US, or UK consumer?

The consumer in the US or the UK is, by now, very used to ordering food online. People can order their food and groceries up to three times a day, and all your frequencies are higher than Egypt. To a very large extent, that relates to the fact that the market is still in its early days, in terms of being online. We've seen frequency increasing on the platform year over year, by the restaurants getting delivery experience, us becoming more efficient, prices going in a downward direction. Overall, the whole delivery experience makes you think about whether you want to cook or not because food is available and comes to you quickly enough. That behavior is changing, but the frequency rates are much lower than in the US or the UK.

What is the average order frequency in Egypt? I’m looking at Deliveroo now, for example, and they‘re doing an average of three times a month.

It would be higher than three per month Egypt today.

Roughly how many online orders are there today, in Egypt, as a market?

It's around 7% of the current delivery numbers in Egypt, which are around one million orders per day.

One million orders per day is the total market.

Yes, and 7% to 10% are being done online.

So the restaurants are just delivering everything?

Yes, restaurants deliver 90% of orders.

How are restaurants evolving in the way they look at online versus phone orders?

There was resistance to shift to online since the restaurants are already doing it on the phone and their customers call them. Since the day we launched, we've witnessed a lot of resistance from even big brands, and we've probably seen these trends happening and rolling out everywhere in the world. But over the past two to three years, that mindset has changed dramatically. They understood the efficiency that online platforms could bring to them. They understood they could get better insights through data on performance and SLAs when they shifted online, which led to a better customer experience and more orders. The education became accelerated, and I would doubt right now there is any major restaurant that has not adopted online ordering to a large extent. Currently, it's more about platforms and restaurants working together and figuring out how to bring up the experience to a much higher level, to where it is in more developed markets.

It's almost like Egypt is the reverse of what we have in the west, where it seems like in the UK and the US, all the restaurants were coming online to offer delivery because they never offered delivery before. But in Egypt, all the restaurants already offer delivery, and you are trying to transition them to going online. What's the value proposition, given that the economics is probably higher for them when they own the customer and deliver themselves?

It’s two-fold. One is the proposition that the experience is better for the user, so the users are the ones who flock to the online ordering experience, which means restaurants need to be there to help cater for them. It's one of growth; if they weren't there and this was the trend and everybody was going into that direction, they typically lose customers and lose growth. Some of the restaurants that were very resistant have seen that happen to their numbers. When they adopted too late, they found that the neighboring restaurant took up some of their market share. That's one part. The user drove the trend in that direction.