With the arrival of food aggregators in the region this past decade, the F&B sector has seen a radical shift. While food delivery has always been big in the UAE, the convenience and varied selection offered by these new market entrants forever changed the face of the industry.
Fast-forward a few years, and some cracks began to appear. Food aggregators made the process of ordering food and delivery seamless and simplified for customers, but their existence also put exceptional pressure on restaurants that were now faced with dwindling profit margins thanks to sales commissions and unrealistic discounts. This was only exacerbated by the pandemic, and ‘analogue’ brands had two options: quickly deploy online operations, or go out of business. A solution was desperately required.
Chatfood, a UAE-based SaaS (software-as-a-service) startup, has stepped in to give restaurant owners a third option.
Putting restaurants “back in control”
Founded in 2018, Chatfood offers F&B brands the opportunity to sell directly to their customers, putting them “back in control” of their business. Essentially, the company enables restaurants to monetize their social media channels and their own website, allowing clients to place orders, track deliveries and more via platforms the brand has direct control of. This not only eliminates the commission costs associated with aggregators, but also allows brands to know their consumers better and to build a database to derive insights from, as well as offer loyalty rewards and more. As for costs, restaurants pay a subscription fee (starting at AED 240) based on the size of their operations.
This is according to Benjamin Mouflard, Co-Founder of the Dubai-based tech startup, who shared some valuable insights in a conversation with the Abu Dhabi SME Hub.
Coming from a family of SME owners, Mouflard saw his parents’ business overshadowed by corporations with nigh unlimited access to technology and capital. Arriving in Dubai while under the employ of Facebook, he saw a similar scenario unfolding in the F&B sector here.
“As a restaurant, your job and passion is to cook great food, but when it comes to selling online, it’s [quite] difficult [for the uninitiated]. You need to think about logistics, payments, technology, and there was no tool or platform to allow these brands to easily set up an online store with access to these [digital tools],” Mouflard explained.
Naturally, COVID-19 only made matters worse.
“The pandemic has been an eye-opener for a lot of restaurants,” Mouflard said. “The minute they could no longer host customers in-store, and with 100 per cent of their sales now being funnelled through aggregators, they really realized how dependent they were on these digital platforms, and how important it was for them to take control of their online [sales] rather than have no option but to sell through aggregators.”
Today, Chatfood has over thousands of clients, providing the software needed for any restaurant to start selling via their Instagram, Facebook Messenger or WhatsApp channels, or via their own first-party website.
Reconciliation with aggregators and finding a balance
In hindsight, some of the friction we’ve witnessed between restaurants and aggregators in the past couple of years has been the result of a lack of options for F&B brands.
“I always say that aggregators in themselves are not bad - you need to be there, you need to have the exposure that they bring you, you need to sell through those platforms,” Mouflard noted. “What you don’t want is to completely be dependent [on them].
“The [purpose] of Chatfood is to help restaurants find the right balance.”
This balance, therefore, lies in the existence of choice: giving an F&B brand the option to sell through the medium of their choice. In this current F&B landscape, selling via aggregators is a must for most. The customer access they provide is unparalleled, and to not exist on these platforms can be a one-way ticket to bankruptcy.
What restaurants need to do, in turn, is to put in the effort to entice customers to use alternative sales channels, such as a brand’s own site, or via social media apps such as Instagram or WhatsApp. The way they can do this with tools like Chatfood is to not only offer a parallel ordering service that’s as seamless as that offered by aggregators, but to also reconnect with their customers: understand who your clients are, monetize your social media following, identify loyal individuals, and offer tailored offers and discounts; essentially, you need to create a reason for your customers to use your direct channels. You need to put in the effort to show them the value in the alternative.
If customers are looking for convenience and a simplified ordering process with all the bells and whistles that come with that, then you need to match (and exceed) those expectations. Mouflard recalls a popular pizzeria brand that almost lost a large portion of its consumer base overnight. Customers were no longer interested in calling the store to place an order, and selling primarily via aggregators would have jeopardized the restaurant owner’s business. Collaborating with Chatfood allowed them to regain a hold of the reigns, and they were eventually able to match the experience provided by aggregators, and as a result, recaptured their consumer base. They didn’t stop selling via aggregators - they just gave their customers a viable alternative.
The next step for the F&B industry
In a country as fast-moving as the UAE, where new technology trends and innovations are rapidly developed and adopted, it can be difficult to predict the next big innovation to take centre stage.
In the F&B sector, cloud kitchens have found great success post-COVID-19, and have cemented themselves as a viable business model, which Mouflard concurred on.
Now that pandemic restrictions have finally eased, Mouflard noted that the next big transformation that is already taking place is the digitization of the in-store dining experience, and particularly the ordering and payment side of things.
Convenience is very much the name of the game, and just like we saw a digital upheaval of the ordering and delivery process, Mouflard noted that the same is starting to take place within restaurants.
“The same way that people don’t want to call to place their order for delivery, they also don’t want to struggle to request their bill,” he explained. “They don’t want to wait to be able to place their orders. They want to be able to do it as easily in-store as they would online when ordering for delivery.”
Therefore, “the next big transformation that is going to happen is this digitization of the in-store ordering and payment experiences,” which happens to be the next main avenue of focus for Chatfood.