The technology in food a rational investing approach

The technology investments in the food sector is a wining reality in this right moment and it’s no longer applicable to address it as the future of the industry, simply the what we used to call the future is the now.

The question that should be asked is it too late to take a part in this industry?

To answer this question we have to cover more than one aspect in order for us to reach out to the right conclusion.

First you have to know what type of technology you are willing to invest in, for example let us cover the online ordering from the different restaurants, usually a growth or decline In a pillar of an industry pulls the other pillars up or pushes them down, so this will give us an indicator of the overall industry statues.

Second we have to look over this service how is the online ordering is doing in Egypt?

Lets define the contributors of this industry and how they’re performing.

A) Food delivery applications

- Elmenus

- Talabat

- Survv

- Akelni

- Ubereats

- Glovo

B) The online ordering of the restaurants itself

C) The traditional phone ordering

the food delivery applications performance in the Egyptian market is flawless, despite the exit of Glovo the Spanish startup from the Egyptian market.

This exit might give the wrong impression regarding the Egyptian market, but if you digged deeper you will find out that this exit is justified, as Glovo tend to be the market gurus in whatever market they do operate in, and in the Egyptian market that was not the case, because of different reasons the first is 16% of their share is held by delivery hero the mother company of otlob which is now talabat, this gives delivery hero a saying when it comes to glovo plans for the Egyptian market.

Another reason is that only around 4% of people over 16 years old in Egypt own credit cards which is used for creating a competitive advantage for the ordering applications that is allowing cashless transactions, but recently many of the industry operators whom operates through traditional channels allowed their delivery agents to have POS machines to allow clients to enjoy the same type of service provided by the application.

Another important factor is that Glovo didn’t specialize in the food delivery only, despite that the majority of the transactions was driven from food, Glovo still did offer delivery from supermarkets, pharmacies and others.

While this might look like a good idea to develop the provided service, but that wasn’t the case for Glovo the already suffering app that didn’t perform well in the competition and the lack of focus did make it suffer more.

On the other hand a success story that reflects how big of a chance the Egyptian market is the Elmenus App, the Egyptian based application made by Amir Allam in 2011.

Despite the socio cultural political factors that was surrounding the Egyptian landscape at this time, Elmenus did find its way into success and growth.

In 2017 the startup did manage to obtain a $1.5 million investment from Algebra ventures in Series A.

And in Series B Elmenus on 2020 was able to raise $8 million from Algebra ventures and Global ventures from the UAE, also in February 2021 the former just eat CEO David Buttress did announce that he’s investing his personal funds and joining the board.

The success of elmenus, their growth and ability to compete with international apps that are operating in the Egyptian market is first due to their specialization in the food service strategy that allowed them to obtain a sufficient market share, and the growth of the market itself.

Third we have to overlook the market itself, the delivery services is considered as an infrastructure for the food services, and it’s been boosted worldwide because of the pandemic.

In Egypt many small businesses that are emerging within the food industry such as food trucks, or one to three branch restaurants lack the resources of investing in their own delivering infrastructure, even if they did, it will be on a very small scale using the traditional channel which slows the opportunity of growth.

The online ordering and delivering applications serves as this infrastructure which helps growing the business selling channel and increasing their brand recognition.

While these types of businesses are rapidly growing and many new entrants are existing every day to meet the demand for the Egyptian appetite, this comes as a great opportunity for these apps.

Another important factor to be checked is the usages of these applications, with a population of 102 million ages from 10 to 24 alone are around 30 million, a generation whom are considered tech savvies, are an easy target for creating demand through these applications.

We also shouldn’t miss out on the fact that currently everyone is adjusted to using smartphones and different applications, which means that the pool of targeting is now bigger than ever, especially when it comes to ordering food, at the end everyone eats.

The competition between mega brands in the food service also is a very big opportunity for these apps, despite the fact that some of these brands own their channel of online ordering either through website or apps, still who wouldn’t like to diversify their selling channels.

And if my competitors are available on a platform i should also exist on this channel, as I don’t want to lose customers to them.

the existence of mega food service brands in Egypt is huge, as the American franchises alone are estimated at more than $800 million.

The support of the Egyptian authorities to the food ordering and delivery industry which is worth almost $2.5 billions is huge, this was obvious in 2019 when Glovo decided for the first time to exit the Egyptian market, and it was prevented by the Egyptian authorities to undermine Otlob’s ability to dominate the market and allow for more competition.

This indicates that the Egyptian authorities are willing to allow different operators to grow and exist in the growing market.

After covering the past few points it’s now your turn to make a decision, will you invest in this growing industry or will you miss out on this chance?

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