Ghost kitchens are hot in South Africa right now

Jasper Meyer, founder of Smart Kitchen, speaks about the growing opportunities and shift towards smart kitchens in SA

Ghost Kitchen: Photo credit Dhaka Courier

  • Online delivery has skyrocketed in South Africa
  • Competition is fierce in the SA’s Smart Kitchen industry
  • scalability is exceptional

 

About Smart Kitchen Co.

I’m Jasper Meyer, the founder and CEO of Smart Kitchen Co., a company which I founded in 2017.

Previously, we were just a small catering company, I used to deliver pizza actually, for a small restaurant, and saw an opportunity to start catering for private events. This was before the boom in online food delivery or Uber Eats. I would bring in a mobile pizza oven, and we would make pizzas on site. We set up a kitchen to cater to our catering clients, and then Uber Eats came to town. So, we thought about putting in an Uber Eats tablet and started selling food directly from our kitchen because it was very well-positioned in the middle of a neighbourhood. We got the tablet in from Uber Eats, started selling and doing very well, and then realized that we could open up more locations quite cheaply because it’s an out-of-house operation. After opening up a few more locations, we realized we had more space and resources in our kitchen which allowed us actually start offering more brands without customers realizing that it’s all actually coming from the same place. And one thing led to another and now we’re operating seven kitchens in Cape Town. All 40 restaurants selling 1000s of meals a week.

 

The Brands

The model has changed as we’ve moved along. Initially, we used to rent out space in our kitchens to other established brands. But we realized that there was a huge opportunity to own our brands in our kitchens. And we started developing an array of brands to cover all aspects of the sort of food market we are in, pizza, burgers, sushi, pokey bowls. And now we’ve got a variety of eight brands that cover everything from pizza to convenience store. We have, for instance, our pizza brand called Jazzy’s pizza, we have a Poké Bowl brand called Jiro Poké, we have a burger place called Burgo Burger, and we have convenience stores called How Convenient. They all run from our network of kitchens.

 

Food delivery

Initially, we were very focused on just partnering with Uber Eats as a delivery partner. But there are super high commission rates involved, which, especially in the food game, makes it hard to make money but very easy to grow because they have such good selling power. And then we introduced our own software, where now, on our smart kitchen app, you can order directly, and use our delivery force. Also here in South Africa, Uber Eats lets us down with regards to customer experience. They’ll hire anyone on a motorbike. And that’s an issue where we sort of want to really tailor our customer experience and give the industry the service it actually deserves basically. Though we still sell through Uber Eats, our focus and our marketing efforts are all on our own platform.

 

Challenges 

It’s all a challenge, and we are learning as we go. There are challenges especially with regards to scaling up and having multiple kitchens on a network. Keeping the consistency, quality, and customer support. Considerable challenges which we are tackling.

The biggest challenge with Uber Eats specifically is that Uber Eats does not let us know whom we are actually sending the food to. So, if there is an issue, we can’t solve it, Uber Eats will just offer the customer a coupon. Whereas with in-house deliveries, if we get a complaint, it comes directly to us in real-time, and we can rescind food immediately. Therefore, keeping the customer happy and keeping them

With the in-house delivery system, it’s running the whole logistical side of that business. It’s basically running another business that joins on to the kitchen side of things, we have more staff, we have drivers, we have a lot more responsibility. But it does pay in terms of the ability to control the whole process from restaurant to customer, and the software that joins them.

 

Scale

Uber Eats is actually very good for scaling, because they have a customer base. And it’s very easy to get on their platform and get noticed. But once we are in the Uber Eats platforms like when we open up a new kitchen, the first thing we’ll do is get on Uber Eats and then we’ll study how well the food is being received. Our food is very good, it’s also a big part of scaling, your food has to be good, because it’s you know, the food industry. And then as we scale and our kitchen and our presence grow in that area, we’ll introduce our in-house delivery, and start converting Uber Eats customers to our in-house delivery, which is actually quite easy because the Uber Eats experience is not nearly as good as it could be and customers are drawn to a good experience, especially in food.

Uber Eats is actually very good for scaling, because they have a customer base

The Restaurant Industry 

The pandemic has absolutely butchered the restaurant industry. I mean, there have been thousands of restaurants that have closed. And a lot of restaurants Institutions and massive food chains that have been running for many, many years, haven’t been able to adapt quickly enough. 

The pandemic has absolutely butchered the restaurant industry.

While a company like mine was, even before the pandemic, built for the online industry. And because of the lockdown’s tight regulation, we have flourished, and online delivery has just skyrocketed. I’ve always felt that online food delivery was where it was going, the natural sort of way customers would start ordering food. But the pandemic has just sped it up, to be honest. And we were thankfully in the right place at the right time.

We actually had one of our best months when the pandemic started back then, obviously, we’ve grown since then but as soon as the pandemic hit, it was locked down, no restaurants could open.

 

Competition

Competition is fierce. But I’ve always said that competition is good. It keeps us on our toes. It keeps us improving and keeps us innovating. You know, we always try to be better than the competition and without competition, we would probably just sit back and relax which is not good.

 

Funding Advantage

In the restaurant industry, yes. We are not seen as a restaurant or restaurant chain, we are seen as a technology data-driven, sort of food logistics company, I wouldn’t like to work in the food industry as in a restaurant. But what we are doing is, its technology-driven. And I think the technology industry is very well funded. So, we have a technology company that is involved in food.

We are not seen as a restaurant or restaurant chain, we are seen as a technology data-driven, sort of food logistics company

We’ve officially got the other half of the investment we sort; we got another investor to come in. It’s a great team with very knowledgeable networks that I couldn’t have dreamed of. And we’ve just closed the round, we are just getting the final details sorted.

Investors want more people on board, and as we grow, we will still do more rounds of funding. We are not aiming just at South Africa but are definitely looking at scaling nationally and internationally. And I’ve learned. Originally, I bootstrapped this business, I borrowed money from my father, borrowed and begged where I could, we were very skimp on our kitchens, and our growth was slow, but you need money to grow and it’s vital to do doing things properly.

 

Growth

We think it’s interesting, the scalability is exceptional. The rate at which we can grow compared to a normal food and beverage industry doesn’t compare. For every location we open, we get eight sorts of brands. And for every time we want to introduce a new brand, we scale it to all our kitchens. And a kitchen is not just a kitchen, where we are right now is half kitchen half micro–Performance Center, because of the convenience side of things. We do a convenience store as well as food. We can scale to 200 online restaurants, within 18 months, and that’s our goal. Whereas for a brick-and-mortar restaurant company to scale at that pace is unheard of.

The rate at which we can grow compared to a normal food and beverage industry doesn’t compare

Growth is very reliant on geography on where the delivery hubs are in a country or in a city. We work very closely with Uber Eats on giving us data on where to put these kitchens, almost to the point of what food we should sell in that area. That information is there, and it just improves our success rate.

We can scale to 200 online restaurants, within 18 months

We’re looking now to expand. We’ve pretty much done Cape Town and we’re covering all the high delivery areas with our delivery footprint. And now the next move is Johannesburg which is going to be another beast in itself. But we are excited to grow, and it’s been a crazy journey so far.

 

Geographical Expansion

As you go through Africa, the cuisine types sort of change drastically. Whereas if we look at maybe America, Europe, the cuisine type is a bit more in line. But you know, Africa is a crazy emerging market, which would be very interesting to tackle. And it depends. Our path right now is to focus on South Africa. And when we finished with that, we will look further. Maybe Canada.

This piece is based on our conversation with Jasper Meyer, the founder of Smart Kitchen Co. South Africa. It has been edited and summarized for brevity and clarity by Anthony Atigari, Executive Director of Canada Africa Business Forum

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