It’s raining, it’s almost lunchtime and 30-year-old Neelam Babul is craving a warm cup of coffee, hot samosas and a pizza from Pizza Hut. Years ago, she made do; today, she can order all of that through her phone. Within 30-40 minutes, the busy lawyer will get whatever she was craving for at her office’s doorstep – she’ll be warm and satisfied and not a single dish to wash thereafter.
Besides the rains and busy schedule, Neelam, a self-confessed foodie also agrees that quality time at home also matters to her – and that means trying out a new place to order from after a long day at work. “The ease of delivery and the availability of diverse options on apps such as Piki is useful because sometimes you neither want to cook nor go out, so it saves time,” says Neelam.
With more and more food ordering apps coming in, it’s unlikely that Neelam is going to change her habit anytime soon.
Demand equals to supply
Eating at a restaurant is no longer an occasional event for millennials like Neelam, especially in big cities like Dar es Salaam. The popularity of food delivery apps is a testament to this.
Life&Style magazine’s brief survey found out that the industry is becoming complex and saturated than perhaps what it was five years ago; there’s Piki, Msoso Express, Goget Food, Yamee, Foodsasa, Dinestle, Chap food … and the list goes on. These companies are expanding and changing at a rapid rate, bringing on the rise of virtual dining, ghost kitchens, and customers who are changing the pattern of dining culture in Tanzania.
New players like Yamee that has signed up more than 120 merchants on its platform, and growing, have gained popularity since its inception in February this year.
Boi Kgathi Rasmussen, founder and chief executive officer (CEO) of Yamee wants to give the lost time back to the Tanzanians. In an interview with Life&Style magazine, Boi who calls herself an African female entrepreneur believes that most Tanzanians are living a busy life, working 5 to ten hustles at the same time, which has directly impacted physical stores, restaurants that are seeing fewer people walking in.
“Where are those people? We understand our customers and we know what exactly they are looking for. In terms of who we serve with the products from our merchants – are the busy working city professionals – the same people who spend their time stuck in traffic, getting to work or home on time, rushing to having to cook and those things. And we just want to give them time back,” says Boi. The startup estimates that the take-away food industry in Tanzania is worth $2 billion.
In order to fit in the demand pool in Tanzania, Boi says that her core idea of starting a food ordering app is to create an ecosystem by connecting food merchants to digital transactions and e-commerce so that they can access extra sales and continue to grow their businesses, employ logistic companies and local riders thereby giving them the opportunity to increase their earnings and hence impacting lives.
There is a surge in smartphone adoption and this will likely drive further internet penetration in the country, and this is a testament to the demand and evolvement of food delivery apps in the country.
The country’s internet penetration rate now stands at 43 per cent, with the total number of internet users in the country jumping to 23.1 million as at the end of 2018, Tanzania Communications Regulatory Authority reveal.
This means out of the 43.6 million mobile phone subscribers, 22.2 million of them were connected to the internet services through their handset. This data goes hand in hand with the surge in cashless transactions via mobile money.
One of the core aims of Boi’s startup is to connect food merchants to digital transactions. “You have to align your business with the evolving changing behaviour of people. And when I started Yamee in Dar es Salaam, I thought majority of our transactions would be cash. But to my surprise, 40 per cent of our transactions are digital – and this is based on our assessment,” she says.
When Covid-19 hit
When the world took a hit during the Covid-19 pandemic, unlike other countries, we never faced an imposed lockdown. While some food delivery apps believe that the demand grew, others say that the online business took a blow.
Zadok Prescott, founder and CEO of Piki, a food delivery app that has gained popularity by attracting over 300 food merchants in Dar es Salaam and Arusha since its inception in 2019, tells Life&Style, “There was certainly some growth in demand during that time [Covid-19], but I don’t think on the same scale as was experienced in other countries where lock-down was mandatory.”
Zadok adds, “Large proportion of the international community left the country at that time which had a negative impact on the entire restaurant and food industry in certain parts of Dar, but the good thing was that more Tanzanians tried delivery services at that time, which certainly encouraged growth into new areas of the city, which is great, as I believe that for this business to work we have to cater to a wide variety of customers.”
For Zadok, e-commerce market is really important in the market, keeping aside the demand necessitated by Covid-19. He says, “Online platforms give access to new customers without a business having to open new branches at a high cost, and also enables restaurants to serve their customers at their homes or offices, without each restaurant having to develop a delivery management system, which is too costly for most restaurants to manage.”
Who is eating the pie?
The brief research by Life&Style magazine further revealed that most food apps are doing more than just delivery of food from the restaurants and cafes. The competition has necessitated the apps to expand their services to grocery delivery, general shops, gardening services, cleaning services and so forth.
With the demand for e-commerce apps ranging from anything between 5 per cent and 30 per cent, depending on factors such as app, restaurant and delivery fee, who is dominating the market?
Boi says that as a startup company they study everything – from the business environment, competitors to her customers but she believes that there are absolutely no dominant players and the market is very wide open.
For Zadok it is a competitive market but he believes that the economics are challenging. “I think that some of the new players in the market actually overestimate the size of the pie that is available! There are actually very few food delivery companies in the world that are profitable, even ones which have been going for many years in much wealthier economies. But we [Piki] do not focus on the competition, for us, customer care is our focus and how we choose to stand out. By far the largest costs that we spend as a company are on people and systems to ensure that we are able to look after our customers well,” he says.
Making a difference
There is no doubt that the food culture in Tanzania, especially in the city of Dar es Salaam is something that everyone talks about. Its diversity and demand is something Boi was inspired personally too. “I love food and I love the fact that there is food everywhere in Dar es Salaam, literally. One of the things that struck me was that looking at all these different types of foods from different types of merchants, even those where you are literally sitting by the street. And it occurred to me that we need to connect all these merchants. Because I would want to be sitting at home or in my hotel room and I would want the food from Jackie’s, for example. Tanzania has such a rich food culture and that is something so impressive,” she says.
Many restaurant owners – small or big and old or new – have felt the need and the difference in their sales after taking their services online on food delivery platforms.
Mohammed Mchowera, owner of Mudi Mabiryani based in Sinza witnessed his sales go up by a 100 per cent after joining food delivery platforms. Mohammed is not new to food apps, in fact, he began using the apps about 4 years ago when the then Jumia and Hellofood first set foot in the market, leading to awareness of the industry from what they created. When he re-joined other players last year, he saw his sales shoot.
“Initially when I started this business seven years ago, I used to send a driver to deliver 1 plate of order at a certain hour, now after expanding my services on these platforms, I see myself sending 16 plates of order at the same time in the same hour. So I saw myself going from selling 50 plates to 300 plates a week, at times,” Mohammed tells.
Adeck Muganda, founder of Adeck Juice Bar and East African Chapati based in Kijitonyama, expanded his services online on food delivery platforms because he wanted to keep up with his customers’ demands. “They all wanted assured, smart delivery services. This means the advantage to getting well-trained drivers who can handle orders properly,” says Adeck.
Adeck realised in 2019 that he can reach more customers via online food services platform. Currently, he has partnered with three food delivery apps and with this Adeck has noticed sales boost up. “I’ve noticed a good marginal growth in sales. In terms of percentage, it could be up to 25 per cent increase in sales. It has really helped in our efforts to expand our market and reach many people,” he says.
Learn, thrive, evolve
In the past, we have seen several apps like Hellofood and Jumia, which had a similar concept, and the like, which haven’t thrived because of reasons unknown. Both Zadok and Boi agree that they are aware of what has previously happened but it had nothing to do with the market itself. Both agree that they understand the challenges but the opportunity as well.
Zadok, who previously worked with Hellofood and Jumia says, “These were the first food delivery and e-commerce businesses that invested significant capital into developing the market in Tanzania, but certainly learnt some hard lessons along the way. But all e-commerce companies that have launched since they left the market have benefited from the awareness of the industry that they created.
E-commerce really comes down to three things: choice, convenience and trust. How we now respond to issues with both customers and vendors I think is what differentiates us. A lot of people think that the key differentiator in e-commerce is technology, but this is a myth. Technology is quite commoditized these days, but good customer service is a rare thing,” Zadok tells.