German start-up foodora plans to take Hong Kong’s online food-courier services upmarket

PUBLISHED : Thursday, 08 October, 2015, 7:30am
UPDATED : Thursday, 08 October, 2015, 7:30am

Berlin-based start-up foodora aims to carve a profitable niche in the crowded, HK$2 billion-a-year (US$258.06 million) food-delivery services market in Hong Kong by focusing on online orders with the city's more upscale restaurants.

"We focus on the top 25 per cent of the market, which is currently inadequately served," Mat Podesta, the chief executive at foodora Hong Kong, told the South China Morning Post

"We are the first in our industry to go for the high-end segment of food delivery in Hong Kong."

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The expansion of foodora in the city last month followed its merger with German rival Urban Taste, a company owned by Delivery Hero. The combined on-demand, premium food delivery businesses now operate under the foodora brand.

Frankfurt-listed Rocket Internet, which launched foodora in October last year, sold 100 per cent of the start-up to Delivery Hero for an undisclosed amount early last month. 

Headquartered in Berlin, Delivery Hero has raised about US$1 billion in funding since it was founded in May 2011.

Combined with Urban Taste, foodora has more than 2,000 premium restaurants signed up across Europe, North America and Asia. The larger foodora plans to double that number over the next few months.

In Hong Kong, foodora has set itself apart from traditional, mass-market delivery services in the city by working with more than 100 premium restaurants such as Dragon-i, Iberico, Check-in Taipei, The Boss and Le Port Parfume, as well as no-reservation establishment Little Bao.

"Few realise Dragon-i has very talented chefs serving some of Hong Kong's best Chinese and Japanese food,” said Dragon-i general manager Raymond Young of one of the city’s most famous nightclubs.

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“With foodora, we can now extend the Dragon-i experience into homes and offices.”

By the end of this year, foodora expects to sign up a total of 400 restaurants.

The use of an advanced proprietary logistics algorithm that can identify the closest driver for each order, as well as coordinate the entire pick-up and delivery process, allows foodora to make the fastest delivery times in the business, it said.

The newly launched foodora app enables users to receive updates along the entire ordering process.

"We are the first and only [restaurant delivery service] company in Hong Kong that achieves delivery times within 30 minutes," Podesta said. 

"On the off-chance that we take 45 minutes or more to deliver, we give customers a voucher, usually worth HK$50 [US$6.45], or a full refund."

He said foodora's delivery team employs scooters because the roads in Hong Kong tend to be uneven and chaotic. They currently deliver to Central and Sheung Wan, and will soon extend coverage to Wan Chai, Causeway Bay, and Tsim Sha Tsui in Kowloon.

Adapting to the local terrain is what foodora is known for in Europe, where skilled cyclists are employed to make deliveries.

"We strongly believe that controlling the entire delivery chain and logistics process is key to having a strong product, so we avoid outsourcing delivery," Podesta said. 

But hiring the right drivers was a big challenge for foodora in Hong Kong. 

"This has made us become intimately in touch with some of the local driver communities," he added.

By comparison, global fast-food chains like McDonald's, KFC and Pizza Hut run some of the city's largest food-courier operations, with each employing hundreds of drivers.

Competition in the local online food-delivery market has become more intense in recent months as other start-ups launched their own apps and courier services. 

These include, Food by Fone, and another Rocket Internet-backed service, Foodpanda. 
Podesta, who previously worked as a vice-president at investment bank JP Morgan in Europe, said foodora was open to alliances to compete more effectively in Hong Kong.

"We have alliances that are already taking shape," he said. 

"We will be launching a new service in partnership with MaiDan Catering, which will tap into their relationships with corporations and our strong on-demand delivery operation."