Lunch in a hurry: is it possible to make money on delivery food in 8 minutes

Businessman Alexey Ovchinnikov

Very fast food

32-year-old graduate of economic faculty of Moscow state University Alexey Ovchinnikov — serial startups. In 2011 while working in the Railways, where Ovchinnikov participated in the project “Smart station”, he created the company Univer Club that produced and sold hoodies with logos of universities. In 2013, Ovchinnikov quit and the money raised from the sale of hoodies started to export paint from India and to organize festivals of colors.

The entrepreneur often would sit with colleagues in the office, and to spend time on Lunches and dinners in the cafe is not wanted. “We came up with the idea of “clicking” to deliver to the offices of something tasty and healthy, limiting the choice of the person, ” says Ovchinnikov. — First, we all thought to deliver a “pig in a poke”, that is, the unknown dish was a surprise. But in the end decided that the unknown is not as cool as it seems.”

Market food delivery in Moscow — one of the most competitive. Many restaurants are willing to bring food for yourself, work for some specialized services like Jacks, there are a few major aggregators — Delivery Club, Room service etc. the AddVenture Fund estimated last year’s volume of the market of food delivery in the Russian Federation in the amount of about $1.5 billion per year, $900 million of which was accounted for Moscow.

But when Ovchinnikov was to order food from different services and restaurants, they found that the average order bring in 80 minutes, and during this time you can manage to go to a cafe. A wide variety of assumed dignity of service delivery, but the selection also takes time. “For example, Delivery Club offers dishes of many restaurants, each with a large menu. But before anything, I want more reviews and to learn. In the end, only the choice of lunch takes 30 minutes,” says Ovchinnikov.

The entrepreneur came up with to create a very austere service like on a plane, where you have to make a simple choice: fish, chicken or meat. “We focused on men, a lot of working and earning that save time and are fun, and the result,” explains Alex. The main competitive advantage the creators of the project decided to make the speed of delivery: it had to be several times higher than the market average.

Startups Express delivery — a fashionable topic in the world. One of the first was the project Spriq, deliver meals to San Francisco in 15 minutes. The company was launched in 2013, raised $52 million investment and consumed its direct competitor SpoonRocket. Two years ago in England there was a project EatFirst, he recently raised $8 million investment. In Greece there is a similar project Forkee, which raised $3 million in investment. The concept is similar everywhere: a minimal choice of meals, a maximum delivery speed.

Speed is important

The launch of a project called “Hunger”, Ovchinnikov spent 3 million rubles of its own funds, of which 2.5 million rubles was spent on payment application development. A few months of “Hunger” working out the business model, trying to reduce the time spent on each stage. It turned out that 60% of the time waiting is spent on cooking food and only 40% is spent on the road to the client. Ovchinnikov decided to prepare meals in advance and deliver them on receipt of orders.

The first thing we had to determine the shortest delivery time. For this the employees of “Hunger” wrote a program that randomly created orders in the area of the Garden ring. On test routes went real carriers for this traffic. Someone managed to take only 3 minutes, and someone- for 26, but the average time was 8 minutes. Now it is for this time, the service promises to deliver food on its website and in the app.

The problematic point is the path from the car to the office. In the city centre courier, usually waste as much time as the trip itself: we need to find a Parking place, need office and settle with the client. So in “Hunger” has decided that the calculation will only be cashless, and most importantly, the client himself will have to leave the building. “All the experts told us that this will not work: Russian consumers are not going out. But our surveys showed that people are willing, if we are talking about fast delivery. Subsequently, the hypothesis was confirmed”, — says Alexey.

To ensure speed of delivery, it was decided to limit the geographical coverage is the “Hunger” works within the Garden ring and within a radius of approximately 1 km. According to the calculations Ovchinnikov, on this small territory there are 4 million jobs. All the delivery territory is divided into eight sectors, each served by one machine. The driver immediately picks up lunch for the day and waits for orders in your area. Each machine has two thermal bag for hot items and cold. Bags with heating elements cost 3 thousand rubles. produced specifically for startups, as available on the market counterparts, “burned” cigarette lighter machines.

Photo: Oleg Yakovlev/RBC

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Photo: Oleg Yakovlev/RBC

The first version of the app for IOS in the App Store, was released in November of 2015. Made it minimalistic in the center of the screen one big button “Order”. Above the buttons a few meals below the map. Already at the first order the map attached to the application, and no additional passwords then you need not.

“Everything went wrong”

The work of the service began in March 2016. Alex posted on Facebook, inviting friends to try it, give feedback. Friends Ovchinnikov in the first weekend made 500 units.

Everything just went wrong, as expected, says the entrepreneur. For example, the team believed that customers will primarily sat up till night workaholics, but it turned out that people in need of dinners, 30 times less than those who want to dine. Therefore, hours of service, which was first taken from 12 PM until midnight, had to be changed: now he works from 12 to 17.

Contact cooking dishes Ovchinnikov has not met since the beginning. The first partner of the project courses was a small company, also held acceleration in SKOLKOVO, Mr.Pit. She specializiruetsya on a low-calorie pitch. In the menu, the service at the start there were only two hot dishes: pita Greek chicken and vegetarian pita cost 200 RUB.

But to feed customers every day only pita was unreal. Hunger began to look for a larger partner — they became a restaurant Easy Ugh. But then summed pricing policy — the average check increased to 350-500 RUB, and demand fell. “The price of our dinner should not exceed 300-400 rubles.”, — calculated Ovchinnikov. “Hunger” tried to cooperate with the restaurant, The Hummus, Doodles noodle shop, a cafe with pies Pie Point and other restaurants. Meals that are offered to customers, ordered a La carte, but “Hunger” restaurants were doing a discount of 30%: restaurateurs interested in selling large volumes of similar dishes, and “Hunger” just bought a batch of dishes and assumed the problem remains.

Now “Hunger” was chosen by one partner, factory — fitted Eat Lunch, which does not have its own restaurant. “To Eat Lunch very well understand our customer, they are willing to change the menu, modify, seek to surprise the customer,” says Ovchinnikov. “Their forces have not been able to make the delivery the same day, and at Alexey was ready concept. Now “Hunger” is our main channel of distribution for them, we cook 90% of all Lunches”, — says Stepan is Low, founder of Eat Lunch.

Photo: Oleg Yakovlev/RBC

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Photo: Oleg Yakovlev/RBC

Economy Of Hunger”

To RUB 3 million spent on the launch, a month after the launch Ovchinnikov added a further 3.4 million rubles attracted from a business angel for 20% of the company. The name of the investor Ovchinnikov does not name, saying only that it top Manager of a large Russian company. According to SPARK, 57% of the company “University club” is owned by Ovchinnikov, 38 and 5% of its staff Valeria Makarova and Anna Potapova.

Two programmer mathematician working on “the Hunger” in Moscow, five in Novosibirsk. He Ovchinnikov played the role of product Manager. The delivery itself is performed by 14 couriers on their own machines. Until the end of the year their number should reach 50. Rate driver — 400 rubles per hour.

Lunch at “Hunger” is available for 330 rubles, its cost is around 170 rubles. Average check — 680 RUB (order lunch is usually two or three), the company is now working to increase to 800 rubles, If the earlier part of the dinner consisted of soup, salad, hot dish, juice and muffin, then soon, the drink will be sold separately. The plan is to bring Breakfast: 35% of the 1,200 surveyed customers stated that they were ready to order Breakfast.

The cost of shipping 90-95 rubles, the average price on the market — 150-200 rubles. the Price of delivery in the “Famine” was assigned to 47 RUB — the difference the project will compensate for the expense margins on the food.

Today, 70% of clients of the service — the staff offices located in business centers of class b or C at the age of 25-40. Although the menu is in “Hunger” is small and is updated rarely, about 70% of the customers are permanent.

In March, “the Hunger” has sold approximately 30 servings per day in June — about 80 now, according to Ovchinnikov, came to 100 servings. Revenue in June, according to the calculations of RBC, was expected to exceed 500 thousand rbl. “to reach the payback, we need to feed 400 people a day. This goal with the continued growth can be achieved by the end of the year,” told Alex.

The market volume of Express delivery Moscow Ovchinnikov estimated at 6 thousand orders per day. But now the fight for it takes the most expensive startup in the world: in June the head of St. Petersburg office of Uber Michael Fisher said that in 2016 Russia can earn service Express delivery of Lunches Uber Eats. Now this service is in demand in Chicago, Los Angeles, new York, Toronto, Barcelona. Another service taxi, Gett, launched the service last year.

Side view

Partners

“We fully adapt to “Hunger”

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Stepan is Low, co-founder of Eat Lunch

Our project has started to Eat Lunch more than a year ago, with Alexey Ovchinnikov we work with mid-March. We tried to work with their customers to deliver the next day, but the majority wished to receive lunch for a maximum of two hours.

In terms of dishes, we fully adapt to the “Hunger” if they have comments or feedback, we always consider them. If the menu should be updated then during the week we are developing and using couriers tracked, how long is it retains the taste and appearance in the container. The dishes we prepare, have an attractive appearance and do not lose taste for five hours. We cooked risotto with porcini mushrooms, but abandoned it because it “lives” only two hours.

“The model works, when you deliver awesome food”

Competitors

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Alexey Gisak, founder of Wokker”

The project “Hunger” is very interesting. They work on the model that exists in America, is fast delivery of restaurant quality food for sane money. When I started to chat with Roman Makarov during the acceleration of the project “SKOLKOVO”, the boys began to make a mobile app, but poorly understood in the specificity of the catering, so some features I was trying to convey to them. In this case, the application may twentieth thing, important to establish the logistics process, to carry quickly.

In the case of “Hunger” is important where the food comes from, in the future they certainly need to do your shop. And the issue is not the quality, just its own kitchen will allow children to make the price less. In my personal opinion, this model works when you take the awesome food, the restaurant, but take it for less money than it would cost in the restaurant (about 250-300 rubles. for a complete dish with vegetables), and bring in 15-20 minutes. In General, this product may not be unclaimed.

Delivery in the metropolis is very relevant, because the time we do not have enough always in the future, this market will definitely grow. Moreover, the decline in the purchasing power contributes to this — service can replace the restaurant.

“The average time of delivery our courier service is less than 35 minutes”

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Daniil mordovskoy, managing Director of Delivery Club

Food delivery in Russia today is a huge and growing market, assess all the prospects of which are quite difficult. Our team has all the problems of the young and emerging market. The lack of established traditions and rules of the game — one of the main problems today, so we, as market leaders often have to form the standards and rules of this business.

In Delivery Club, today presents the most popular restaurants in almost all the major cities of Russia. In the center of Moscow the average time of delivery by our own courier service is less than 35 minutes.

Our main goal for the near future is the development of its own delivery service Delivery Club Express. If we talk about goals for a few years is the improvement of the quality of dishes from restaurants, the price policy and increase the speed of delivery. This is three fundamental pillars of our business principles.

“The density of the market is quite large, but the “Hunger” targets a niche”

Investor

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Andrey Kuznetsov, an analyst at Maxfield Capital

The project looks quite interesting and at the moment has no equal in speed of delivery in the Russian Federation. Use only non-cash payment, on the one hand, narrows the potential market, on the other — eliminates the risk of failure/non-payment of the order.

The density of delivery market is already quite large, however, the “Hunger” targets a certain niche — those who are in a hurry and wants to quickly have lunch. On the one hand, this allows us not to have direct competitors, on the other — reduces the volume of the potential market, eliminating a large number of those who want to dine outside the office to unload the head and a change of scenery.

Typically, projects at the seed stage can be estimated in the range of $0.5–3 million “Hunger” has a working product and market validation, generates revenue and is showing good growth. Based on the available information I would have valued the company at $500 thousand.