Last spring, a food delivery service from Foodfox restaurants was launched in Moscow. Through the application or website, you can order food at home in one of the available institutions within a radius of about 2-2.5 kilometers. At the same time, the company seeks to work mainly with popular catering outlets among citizens. Now about 300 restaurants are cooperating with the service, including Coffeemania, Zodiac, Voronezh, Mushrooms, Prime, Torro Grill, Upside Down Cake, Correa's and others, and delivery extends to the zone inside the TTK and some other areas.
Founders of the service Sergey Polissar and Maxim Firsov used to work together in the online clothing store Lamoda. The money for the project was partially given to them by their former bosses: Lamoda co-founders Florian Jansen and Nils Tonsen participated in the first round of investments together with the Target Global fund, which previously supported similar companies abroad.
Life around met with the founders of Foodfox, and also talked with their customers and competitor to find out how the food delivery market in Moscow works.
Launch of the project
The number of orders
500 per day
Volume of investments
1 million dollars
Turnover (as estimated by Life around)
50 million rublesin 10 months
1 700 rubles
Sergey Polissar: Maxim and I met at Lamoda. Since I was 11 years old, I studied in the United States, where I worked for a small consulting company in Boston, then I went to the MBA program in London, after which I received an offer to the Moscow office of the Boston Consulting Group. This is a rather prestigious company working in the field of strategic consulting, so I decided to move to Moscow: it was very interesting for me to try working in Russia. Two years later, I left BCG to the Lamoda online store: I wanted to not only give recommendations to the business, but be responsible for some part of the company and change something with my own hands. At Lamoda I was immediately given a managerial position, there I met Maxim - we did projects related to logistics, CRM and production content.
Maxim Firsov: Before Lamoda, I was engaged in corporate finance at the Interros holding, after which I worked at two Russian investment banks. At the same time, I have long wanted to do my own business in the field of e-commerce, but I realized that I did not have any experience, team or understanding how to build it. I came to Lamoda for this experience and worked there for two years.
Two years ago, Sergey and I left the company with the understanding that we would do a joint business, but without an understanding of which one. Sergey traveled to Iran for a month, and then we met and began to think what to do.
Search for an idea
Sergei: We considered business models that are quickly gaining popularity in the West, but are not yet represented in Russia. These were different services: not only food, but also cleaning of apartments, telephone repair, manicure with a bias in the so-called on-demand - services where a person can download the application and select the necessary service in 30 seconds. This is also called "Uberization": in a similar way, Uber has changed the taxi service.
We chose food, because it is a huge market, which includes not only restaurants, but also products, and “menu designers” for a week. We saw that many services are trying to drag this market from offline to online. In the West, this is a trend, gigantic growth is observed, but Russia is still lagging behind.
We understood that it was necessary to build a model on the basis of one big city: release the first IT product, test it, see demand and set up work. And if the idea works, then you can aggressively grow and try to capture cities as quickly as possible where there is no quality service and competition. That was the plan, and now we stick to it.
We saw that there is already a demand for a food delivery service from restaurants. Opened this market Delivery Club: people realized that you can order food from smartphones, and saw in this value.
Maksim: Choosing what we will do, we looked at how the economy of orders of various goods is developing. The marginality of food sold by restaurants is much higher than the marginality that, for example, a food chain has, earning on products. You can include a delivery fee in restaurant food, but for the client the price will remain the same.
In the West there were several companies whose experience we considered. The London Deliveroo now works practically throughout Western Europe, and Foodora from Berlin competes with it. We took their business model as a basis and simply repeated it with minor changes necessary for the Russian market. For example, they do not accept the cache, and you can pay with us in cash or with a card.
Everyone asks: why Foodfox? I answer that the fox is a smart animal with good taste. But actually it was almost the only free domain. I remember I was in the gym when I decided to check it from the phone: it turned out to be free, and I immediately registered it.
Sergei: We had specific criteria for the name. Naturally, it should be related to food. We wanted the words to be either English or easy to read in English so that potential Western investors could remember and pronounce them. And it should not have been too long.
Maksim: We started developing MVP (minimum viable product) in September 2015, by December we had a website ready, and we started connecting restaurants, and in March we launched the service. Then we tried to advertise it through social networks (it was not full-fledged marketing, but testing) - that’s how it came to three orders a day.
At the initial stage, Sergey and I invested about 30 thousand dollars in the project and attracted a small round of investments, the so-called family & friends (money from relatives and friends). In July, we closed the first round of investments with Target Global and a number of other investors, including with the founders of Lamoda, our former bosses. The total investment amounted to a million dollars.
We connected the first ten restaurants together: we looked for contacts through friends, arranged meetings. Among them were "Mr. Lebanese," "Receptor," "T-Bon." We came and said: “Guys, tomorrow we will start delivery, but you do not need to do anything for this.” We have an easy-to-sell product - restaurants don’t need to invest money, hire employees, or buy programs. For them, this is the same as giving people food with them - they receive an order, prepare a dish, and our courier picks it up and delivers it. According to our standard contract, restaurants pay 30% of the commission for the order delivered and paid by the client.
At first, we were afraid that the business would not work, as many restaurants already have delivery, even if it’s three couriers or a small outsourced service. But in practice, the institutions were ready to abandon it in favor of our solution, because delivery is a completely different business that large chains do well, but restaurateurs themselves are not very good.
Sergei: Fussing with hiring couriers and retaining them, quality control, customer service by phone is very different from kitchen work and room service. This is not a restaurant business.
Maksim: Our service is integrated into the restaurant order processing system.
Our order automatically flies to them. After the restaurant has accepted it, they begin to cook food, then pack it, at this time the courier arrives and picks it up. On average, a restaurant completes an order in 30 minutes.
Not all restaurateurs understand that delivery is more important than orders from the hall, because the visitor can bring tea, coffee or a starter, and the Foodfox client waits for all the dishes to be prepared and delivered. Therefore, we have to train restaurateurs, and this is daily work. We have a separate team that works with restaurants. At the same time, if there are constantly problems with a separate institution, we turn it off.
The issue of adaptation of dishes of author's cuisine depends on the restaurant itself. Some modify the dishes so that they are suitable for transportation, some simply remove some of the dishes from the delivery menu. We work with the White Rabbit Family network, but not with the White Rabbit restaurant, because serving is important to them.
Sergei: An important part of the service is the interface in which we see all orders. Both call center operators and logisticians work with him, who give tasks to couriers. As soon as the client has made an order, the page is updated, the operator accepts the order, goes to the card, where the statuses “Phoned the client”, “Confirmed with the restaurant”, “Appointed courier” are put down.
Maksim: All couriers have an android application that displays orders. There they can see the nearest route to the restaurant and from the restaurant to the client. Our logisticians see on the map all couriers, all restaurants and all orders.
Sergei: The most difficult thing is to control in what form the food comes, because the restaurant itself plays a very important role here. Institutions are responsible for packing food, but if they have poor food, we can offer our own. Our courier can not check the dishes in a packaged order, and there are times when restaurants do not live up to expectations. The client writes to us anyway, and in his eyes it is we who offer low-quality service. This is one of the key issues, and we recently hired a person whose task is to deal with complex cases.
Another important thing is customer interaction. Compliance with the delivery time is also critical, therefore it is built into the motivation system. The turnover of couriers is quite low, in general, both restaurants and customers are satisfied with them.
Maksim: Beginners take a training course: they are told how to use the application, what to tell customers, how to behave in a restaurant, how to transport dishes. In the future, we will introduce a rating of couriers so that customers can evaluate their work.
Maksim: At the time of launch in March, we had 20-30 restaurants connected, and the team consisted of two sales, four people from IT, a person responsible for all operational work with restaurants, one operator and one courier.
Sergei: One of the first was an order for 19 thousand rubles from the Four Seasons Hotel. Then the restaurant itself recommended us to guests who wanted to order Lebanese food with delivery. And now restaurants are one of the key promotion channels. By the way, those clients turned out to be members of the delegation of the Arab prince, who met with John Kerry in Moscow. Maxim and I had to personally carry this order, because one courier was not enough.
Now we make 500 deliveries per day. About 500 restaurants are connected to the service, more than 30 employees work in the office, there is also a call center and couriers (there are about 100 of them).
Our target audience is Muscovites with higher than average salaries. Initially, the majority of customers ordered meals at the office, so the peak load was during the daytime on weekdays. Now we have reached the people who live inside the TTK: the percentage of orders in the evenings and on weekends has increased. The distribution of revenue is about the same, at lunch there are more orders, but the average check is lower.
In the business model, we laid the average check at 1,500 rubles, but now it is about 1,700 rubles. Delivery from 500 rubles is free with us, for small orders we charge 99 rubles, but there are not many such orders, only 3%. If the high average check and the size of the commission of restaurants remain, then delivery for customers will remain free.
Sergei: Now we are slowly expanding our geography: we have connected the areas Sokol, Airport, Dynamo, Universitet, and Akademicheskaya. There is a good selection of restaurants, there are more or less well-known brands. Very often in the area there may be a restaurant that is not known to the general public, but loved by the locals. We also connect such.
We work and will work only in areas where there are suitable restaurants. This means that in two years we can open in several other cities, but not the fact that Foodfox will work in the Novokosino area. This is a limitation of our business model. If we carry food from restaurants in the center outside the MKAD, this will make logistics inefficient, and food will always arrive cold and in poor shape. Therefore, in the future, we will either limit the delivery area, or we will look for other solutions - for example, there is an option to build kitchens and invite famous chefs to work under their brand, as they do in London.
We do not limit ourselves to the cities of Russia, it may be other cities with a population of over one million. For us, such criteria as the size of the catering market, the percentage of establishments that are potentially suitable for us, and the presence of competitors are important to us.
Maksim: We are going to restart the application: there will be photos of dishes, tracking the courier, sharing the basket with other users and other options. At the same time, we expect large players to come to the market: this is inevitable. But from the experience of other countries, we see that local market participants can be more flexible. When Foodpanda came to Russia, she was unable to defeat Delivery Club and was forced to buy it. UberEats also plans to launch in Russia, but we will just do our job well.
Sergei: Our performance indicators are revenue growth and customer loyalty, which we measure in the percentage of repeat orders and their frequency. Now 42% of users are re-ordering, and the frequency of purchase is once a week.
What do customers think
I found out about Foodfox on social networks or on Google search, I don’t remember exactly. I use it for a couple of months, but infrequently, about once every three weeks. I live in the Savyolovskaya district, sometimes I work from home and I don’t have time to go out for a snack.
The service likes a good selection of restaurants. It is important for me that the food is quality and tasty. Bribed that, unlike other services, delivery is free and very fast. Three or four times I ordered food from Coffeemania, and they often promised to bring it within 40 minutes, and they brought it in half an hour. It's nice that the service reports when the order is being prepared and when it is on its way. Couriers easily and quickly find the right house and porch without unnecessary questions.
How does it really work
Life around correspondent
In order to test Foodfox, I select the Falcon area. This is one of several non-central areas where the service works. I download the application and see the promotional code: 30% discount on the first order. I enter the address - in response, a list of restaurants opens. There are only 12 of them (Goodbeef Steak Cafe, Amigo Miguel, Cheretto, Easy Pub and others), and looking at them, I understand how poorly I am guided in the Falcon restaurant life. The fastest order is Jack Rabbit Slim's (58 minutes), the longest wait is for food from Xarcho & Puri (87 minutes). Almost at random I poke in the Maxima-Pizza menu (do not repeat my mistakes), from where they promise to deliver the order in 65 minutes. You have to choose from salads, appetizers, actually pizzas, pastas and desserts. The application is convenient, but there are no photos of dishes on the menu, only a minimal description. Therefore, the second time I make a choice almost at random.
SMS arrives that the order has been accepted.
To confirm the order, the operator calls. Since I indicated cash in the "Payment Method" section, the operator clarifies how much change will be required.
SMS arrives that the restaurant has begun to prepare an order.
SMS arrives that the courier will be in 28 minutes. I did not have time to notice the time when the doorbell rings. The courier is on the doorstep at 21:42. Instead of the expected 65 minutes, delivery took only 35! The courier does not have change, but this issue is quickly resolved with the help of an online bank. Food packaging is standard, a cash receipt is included.
Delivery was very fast, the application was convenient, the operator and the courier worked without overlays, but the choice of establishments let us down: the same Maxima-Pizza and some other establishments from the list can be found on Delivery Club and other aggregators.
How well niche is chosen
Managing Director of Delivery Club
According to our own estimates, Muscovites order food home about 2.5 million times a month.This figure includes both its own delivery of restaurants and aggregator services. Delivery Club is a leader among aggregators both in Moscow and throughout the country - we make more than 500 thousand orders per month.
The vast majority of restaurants do not open their delivery, because it requires considerable investment in logistics. But even this is not enough, as there is also marketing, and in a very competitive niche. And it turns out that the restaurant should become an expert not only in cooking, but also in delivery and marketing. Few decide on this. It is much more effective to use the expertise of services. We invest huge resources in the dispatching module, software for couriers and restaurants, in quality control, training and so on. With us, the restaurant does not need to worry about all this, just connect and immediately start earning. This is a classic win-win situation in which all parties are satisfied.
The restaurant business is really distinguished by the fact that the premium segment is more developed in terms of variety of establishments and assortment. It is this segment that is more widely heard, and therefore it may seem that only it has the most promising business. However, this is an illusion: outside the premium there is a much more massive sector, where there is more money and the competition is actually much higher. Especially in the field of delivery. Of the 2.5 million orders in Moscow, the premium segment is only 5%. For example, pizza delivery and sushi delivery are some of the most competitive searches. Why is this so? Everything is quite obvious. Lunch or dinner in a premium restaurant is very often an event for many, and it’s not cheap. And even in some way status. It is in premium restaurants that owners usually do not skimp on repairs and surroundings. To sacrifice all this and order food delivery to your home or office is to lose some of the positive emotions from an expensive lunch or dinner. And everything is exactly the opposite in the segment of economic restaurants, where lunch or dinner is often an exclusively utilitarian measure to satisfy hunger. Therefore, delivery from such establishments is absolutely normal.
The premium has more restrictions than the mass market: this is primarily the number of establishments and purchasing power, which are very much related to the economic situation in the country and city.
That is why, from the very first day of its existence, Delivery Club chose a strategy for working with any consumer, no matter from which segment. For delivery from premium restaurants, for example, we have special criteria and requirements directly for couriers and support staff. And in the economy, the speed of placing an order and delivery is often paramount. In our opinion, only such a strategy can be winning and promising on the horizon of many years.
According to our data, UberEats will come to Russia in the first half of this year and will primarily connect premium restaurants. Delivery Club is represented in all segments with more than 5 thousand restaurants in dozens of cities.