GrubTech is helping Mena restaurants to reduce food delivery waiting times
▶ The company intends to eliminate inefficiencies across back-end operations of restaurants through the automation of cumbersome processes, writes
In February this year, entrepreneurs Mohamed Al Fayed and Mohamed Hamedi had just two restaurants signed up to use a product designed by their new company GrubTech to digitise the backend operation of restaurants.
GrubTech was less than six months old when the coronavirus pandemic struck. Restaurants, which were once heavily dependent on customer footfall, had to review their business models overnight. To survive, some shifted to a delivery-only model to keep their meagre incomes flowing.
“Prior to the pandemic, [the] digital penetration of restaurants was 30 per cent. Post-coronavirus, nearly 70 per cent to 80 per cent of revenue was driven by digital mediums as a result of dining restrictions,” says Mr Al Fayed, co-founder and chief executive of GrubTech.
As restaurants struggled for survival, GrubTech’s services suddenly proved invaluable. While every restaurant had some form of digital engagement as an add-on, the pandemic upended the dynamics of conventional business, completely pushing the food industry online.
“Our business model turned out to be pandemic-resilient in the sense that [restaurants] now have to rely wholly on digital mediums to communicate with their customers,” Mr Al Fayed says. “A restaurant now has to serve you food at your home rather than welcoming you to their brick-and-mortar establishment due to capacity restrictions or as a precaution. It accelerated the need to solve the inefficiencies within the digital revenue streams [of] restaurants.”
They needed to transform digitally – not only to deal with food aggregators such as Talabat, Zomato and Deliveroo that brought in orders, but also to streamline the back-end processes to speed up deliveries.
“You received orders from these [aggregators] and then [the staff] manually entered these orders into a point-of-sale solution. That allowed the back end to prepare the food and then the order needed to be fulfilled through your own driver or a food aggregator,” he says.
“All these manual functions could lead to human errors ... and that could add to massive delays in deliveries.”
Mr Al Fayed says GrubTech was born out of a need to digitise and simplify the food sector through the automation of certain labour-intensive operations in restaurants, or cloud or ghost kitchens that operate several delivery-only food brands from a single location. The company’s target group consists of restaurants that generate at least 50 per cent of their revenue from food aggregators.
Mr Al Fayed first got the idea for the start-up when he took part in a syndicate that sought to invest in a local cloud kitchen. At the time, he was vice president of Al Tayer Group’s omnichannel division and was shocked at the inefficiencies that existed in cloud kitchens. Having built Al Tayer’s e-commerce platform Ounass from scratch, he quickly noticed gaps that could be solved by technology.
Mr Al Fayed quit his job and teamed up with another technology enthusiast Mr Hamedi – who became GrubTech’s chief technology officer – to tap into the sector. During the initial months, the duo embedded themselves in restaurants and cloud kitchens to observe their processes, as well as how food was stored and prepared.
“We mapped out all problems and pain points ... and we analysed how technology could solve it and then we started to code,” he says.
GrubTech hired a team of engineers and soon launched operations. While the initial team consisted of just 15 people, including the founders, the start-up scaled up quickly as demand increased amid the pandemic. The company’s engineering teams are based in Sri Lanka and Istanbul, while its operations and management teams are in Dubai.
GrubTech employs 50 people and is in talks with about 700 restaurants across the GCC and Mena region that are looking to use its solutions.
What has driven its growth is the growing demand from cloud kitchens – a lucrative segment in a fragmented food delivery market.
According to RedSeer Consulting, cloud kitchen revenue in the UAE and Saudi Arabia grew by 160 per cent year on year to more than $65 million (Dh283.55m) last year.
GrubTech has snagged a healthy share of the regional and global cloud kitchen market. Mr Al Fayed says they holding talks with cloud kitchens from Singapore, Oman, Milan, Riyadh, Jeddah and Cairo.
“Cloud kitchens have been around for two years and more of these are popping up in South Korea, Egypt and Saudi Arabia. It has attracted a lot of frenzy and there wasn’t any tech that could power these cloud kitchens. We were well positioned to capitalise on the demand.”
However, the initial few months have not been without challenges. While GrubTech’s services clearly helped restaurants, not many were able to invest heavily in technology at the onset of the pandemic, even though it was necessary.
The founders worked around it by giving early adopters free trials to familiarise themselves with the product.
“It was a win-win situation since it gave us an opportunity to [put in place] our solution and learn from it being in the wild. It was used by real customers to refine and polish the product. It also gave restaurants a chance to use the product without a financial commitment,” he says.
The company’s strategy has clearly worked.
“When things got better, none of the customers left us,” Mr Al Fayed says.
GrubTech raised $2m in its seed round last month, which it plans to use to expand. The start-up is now preparing to raise more money through a pre-Series A round.
“We need a little more firepower to go after and capture the potential in markets such as South-East Asia and Europe.”
Looking ahead, Mr Al Fayed and his team are also working to diversify operations between cloud kitchens and restaurants to achieve sustainable growth.
“The business model is bifurcated across delivery-centric rests and cloud kitchens – we see equal demand in both sides of equations. If [the] cloud kitchen business model proves to be unsustainable and evaporates in the next five years, I strongly believe that our revenue targets will be met by delivery-centric restaurants.”