South Africa's Ghost Kitchen Market

Jasper Meyer, founder of Smart Kitchen Co

Jasper Meyer

founder of Smart Kitchen Co

Smart Kitchen Co.

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

Previously, we were just a small catering company. I used to deliver pizza 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 busy 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 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 to start offering more brands without customers realizing they were all coming from the same place. One thing led to another, and now we’re operating seven kitchens in Cape Town. All 40 restaurants sell 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 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, and Pokey bowls. And now we’ve got a variety of eight brands that cover everything from pizza to convenience stores. We have, for instance, our pizza brand called Jazzy’s Pizza, a Poké Bowl brand called Jiro Poké, a burger place called Burgo Burger, and convenience stores called How Convenient. They all run from our network of kitchens.

Food delivery

Initially, we focused on partnering with Uber Eats as a delivery partner. But high commission rates are involved, especially in the food game, making it hard to make money but very easy to grow because they have such good selling power. Then, we introduced our 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 regarding customer experience. They’ll hire anyone on a motorbike. And that’s an issue where we want to tailor our customer experience and give the industry the service it deserves. Though we still sell through Uber Eats, our focus and marketing efforts are on our platform.

Challenges

It’s all a challenge, and we are learning as we go. There are challenges, especially concerning scaling up, having multiple kitchens on a network, and keeping consistency, quality, and customer support.

One of the main challenges with using Uber Eats as a delivery service is that the platform does not provide us with the name of the customer who has placed an order. This can make it challenging to track and resolve any issues that may arise with a particular order. In such cases, Uber Eats typically offers the customer a coupon as compensation. However, when we handle deliveries in-house, we receive real-time customer feedback and can address any problems immediately by rescinding the food. This allows us to ensure customer satisfaction and retain them for future business.

The in-house delivery system manages the entire logistical aspect of the business. It is like running another business alongside the kitchen operations, as it requires additional staff, drivers and responsibilities. However, it is beneficial as it allows us complete control over the entire process, from the restaurant to the customer. Additionally, the software we use helps integrate the different aspects of the business.

Scale

Uber Eats is an excellent platform for scaling because it already has a customer base. Getting noticed on the platform is relatively easy. However, when we opened a new kitchen, we joined Uber Eats and monitored how well our food was received. As we all know, the food industry is all about good quality food, and we’re confident in our food’s quality. Therefore, we prioritize making good food, which is vital in scaling. As we grow and expand our kitchen and presence in a given area, we’ll introduce our in-house delivery service and convert Uber Eats customers to our in-house delivery service. The conversion process will be relatively simple because the Uber Eats experience could be better. Customers are drawn to a good experience, particularly regarding food.

South Africa’s Restaurant Industry

The pandemic had a devastating impact on the restaurant industry, resulting in the closure of thousands of establishments. Many businesses, both small and large, were unable to adapt quickly enough to the situation. However, my company was built for the online industry even before the pandemic. Due to the strict lockdown regulations, online delivery has flourished and skyrocketed. Online food delivery was already becoming popular, and the pandemic accelerated the trend. Thankfully, we were in the right place at the right time and had one of our best months at the start of the pandemic. Since then, we have grown, but at the beginning of the lockdown, 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. We always try to be better than the competition, and without competition, we would probably sit back and relax, which is not good.

Funding Advantage

We are not seen as a typical restaurant or chain in the restaurant industry. Instead, we are considered a technology-driven food logistics company. I prefer working in a technology-focused environment rather than a restaurant. Our company is well-funded due to our involvement in the technology industry.

Recently, we received the second half of our investment and welcomed a new investor to our team. This investor has a vast network and knowledge that far exceeds our own. We have closed the round and are finalizing the last few details.

Our investors would like others to join as we continue to grow. We plan to expand nationally and internationally, not just in South Africa. I have learned that growth requires money, and it is crucial to do things properly. Initially, I bootstrapped this business, borrowed money from my father, and begged for resources wherever I could. Our kitchens had limited resources, and our growth was slow. However, investing in our growth is essential to doing things right.

Growth

We find it fascinating that our scalability is exceptional compared to the regular food and beverage industry. For each location we open, we get eight different brands. We scale each new brand to all our kitchens. Our kitchens are more than just regular. They are a combination of kitchen and micro-performance centers due to the convenience aspect. We offer both food and a convenience store. We aim to scale to 200 online restaurants within 18 months, unheard of for a brick-and-mortar restaurant company.

Our growth largely depends on the location of the delivery hubs in a country or city. We work closely with Uber Eats to obtain data on where to place these kitchens and what food to sell in each area. This information significantly improves our success rate.

We have already covered all the high delivery areas in Cape Town, and now we are expanding to Johannesburg, which will be another challenge. Nevertheless, we are excited to continue growing, and it has been an incredible journey thus far.

Geographical Expansion

As you travel through Africa, you will notice a significant shift in cuisine types. In contrast, the cuisine in America and Europe is relatively similar. The emerging market in Africa is intriguing, and exploring it would be fascinating. However, our current plan is to concentrate on South Africa first. Once completed, we will consider expanding to other places, such as Canada.

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