#WhatsNext: Food and Beverages
In the 44th edition of the #WhatsNext series we discussed a topic close to many people’s heart — Food & Drinks. The main focus was on the key drivers and trends catalyzing the industry and it’s projected future.
We were proud to have a star-studded list of panelists that included:
- Kaluhi Adagala- an award-winning blogger, YouTuber, and the face behind the culinary brand Kaluhi’s Kitchen, which is undoubtedly Kenya’s number 1 food blog.
- Jay Shaghavi- a serial entrepreneur behind popular restaurant brands such as Nyama Mama, Blue Door, Mr. Yao under The Good Earth Group.
- Mikul Shah- the brains behind Kenya’s biggest food festivals such as Nairobi Pizza Festival, Nairobi Restaurant Week, Nairobi Burger Festival, The Big Brunch under the Eat Out brand.
- Alexandra Chappatte — proprietor of the Kenyan Original brand which prides itself as the home of authentic African crafts and flavours.
- Jacob Hason- an executive overseeing the Yum Deliveries Group operations in Kenya & South Africa — all with an aim of getting your food delivery by your doorstep within 20 minutes.
The conversation was moderated by Martin Ruga, who is the founder of a local brand, DessertsAnyone, manufacturing and serving a product that we all love to love — chocolates.
Julien Garcier, MD Sagaci Research, kick-started the event with a presentation of the Food Service in Africa 2020 Report.
The report provides a comprehensive analysis of the African Food Service examining its driving factors; highlighting key international, regional, and national players; assessing market segments and channels; and outlining emerging trends, such as online delivery services, and likely future developments.
Key takeaways from the presentation:
- On Evolution
2. On Eating Out
3. On Restaurant Strategy
The presentation also provided an interesting trend with the introduction of the concept of Dark Kitchens — also known as ghost kitchens, virtual kitchens, cloud kitchens or delivery-only restaurants. ‘While we may use different names to refer to the dark kitchen, the concept remains the same — these kitchens sell meals exclusively through delivery. Rather than cooking for eat-in diners, cloud kitchens cook purely for delivery, so the food that is produced there can only be consumed elsewhere. It’s the success of online ordering players such as Uber Eats, Glovo, Just Eat and many more that paved the way for dark kitchens.’
Dark Kitchen’s and delivery only concepts will form a significant part of the future.
The presentation was then followed by the main highlight of the event which was the panel discussion. Some of the key insights included:
4. On Restaurant Failure
Kenny Rose, CEO of Semfia, a firm that educates people on franchise investing, claims “Food is the most competitive industry known to man. It has the highest investment level of any industry, the highest failure rate, and the lowest margins”.
Jay Shanghavi, a serial entrepreneur, agrees with the statement and admits the level of difficulty in running a chain of restaurants is astronomical. According to statistics, “60% of new restaurants fail within the first 3 years, and 80% of restaurants fail within the first 5 years.”
Jay believes the key to surviving in the restaurant business lies mainly in the brand image and food consistency.
“Numbers are good metrics to track to know whether your business is successful. However, consistency in food, service and your brand image are very important metrics to track to know if your business is succeeding or failing.”
5. On Food Delivery
The food delivery business is an extremely competitive business with the presence of multiple players such as Uber Eats, Glovo, Jumia Food, Yum Deliveries, all competing for market share. The industry is rife with price wars with each delivery aiming to outspend the other with offers, discounts, and promotions which ultimately reduces the profitability of the companies. The current strategies are all in a bid to garner market share with an end goal of an exit.
The sector will see more international delivery companies enter the market, continuously backed by investors and adopted by restaurateurs.
“Food delivery in Nairobi is a profitable business theoretically but no-one’s making money. The players are raising capital for customer acquisition and expansion which means the idea of taking a cut from the restaurant and a fee from a customer isn’t sustainable with the current level of competition.”
-Jacob Hanson, CEO, Yum Deliveries.
6. On Innovation
‘A restaurant is like a manufacturing plant, but the industry hasn’t changed in terms of tech-enabled efficiency nearly as manufacturing has over the past 100 years.’
This statement pretty much paints the picture of the current state of restaurant innovation in Nairobi. A lot hasn’t changed in the eat-in dining experience. The majority of the restaurant industry tech innovation has come from the exterior with faster deliveries and increased searchability.
Innovation is not just all about increasing product offerings, speed, and convenience. In the market, there is a sweet opportunity in knowing your customer based on their names, and their preferences to the very last detail. A lot of investment is needed to introduce “personalization” into the industry.
“Many restaurant companies have no connection to their customers. A waiter may know a repeat customer but management does not see opportunities in connecting to repeat clients for R&D to grow their brands.”
Mikul Shah, Managing Director, Eat Out.
7. On Monetizing Food Blogging
The attractiveness of healthy home-made meals coupled with the rise of the Do-It-Yourself (DIY) narrative and culinary exploration has led to an increase in the food blogging audience. This has led to food bloggers supported by brand endorsements and digital advertisements to generate content. But more often than not it has not led to sustainable career paths.
Kaluhi Adagala acknowledges the use of advertisements and endorsements as a lucrative but temporary way of making money. She advises creation of purchasable market products that are in line with food blogging, such as kitchenware, as a good way to ensure longevity in monetization and also a food blogging career.
“As a food blogger or influencer, advertisements, endorsements and partnering with brands is a lucrative way of making money but is not sustainable for your career. Coming up with your own market products will help cement your brand, create more partnerships and ensure sustainability.”
8. Packaging African Products
African delicacies such as Ethiopian and Moroccan are widely known across the world while Kenyan dishes are rarely seen in foreign markets. This can be attributed to poor packaging of our cuisines that makes them unappealing to foreign cultures.
Alexandra uses her brand as an example on how to package authentically Kenyan products in a way that makes them attractive to the outside market without losing their identity and originality.
“70% of our raw products at Kenya Originals is from Kenya and we are striving to have them 100% Kenyan. We are moving to an age where people care about what goes into their drink and whether the crafts are truly original to the specific area. Your products should reflect the authenticity of its origins through its raw materials and packaging while still appealing to an outside market. ”
#WhatsNext
As it is the tradition of the series, we ask all our panelists what they think is next in the industry. This what they had to say:
