Back to the complete issue
Sunday, 21 August 2022

Digitization is key to the F&B sector

What’s next for F&B in Egypt? The Egyptian F&B sector has been expanding rapidly, between welcoming new players into the market — Dubai-based foodtech startup GrubTech, which promised to invest USD 5 mn over the next 12-18 months into its operations — and Egyptian-based food startups expanding through mergers and acquisitions, most recently grocery delivery startup Appetito acquiring Tunisian startup Lamma.

Locally speaking, how big is the sector? Egypt has some 100k F&B players, distributed among 400k branches, GrubTech country manager Osama Harfoush (LinkedIn) told Enterprise, adding that around 60% of those present in the market have between 1-3 branches. “There is a gap in data seeing that the data gathered only covers those operating in Cairo, Alexandria, Mansoura, Tanta, Zagazig and Port Said,” Harfoush said. Only a mere 27k-30k restaurants are registered with the state and have tax IDs, significantly limiting the amount of players aggregators such as GrubTech can work with.

And it’s still growing: “I think it's definitely at a stage where it's growing tremendously and bringing in more and more new concepts and original concepts. Homegrown brands are flourishing, truly,” OneOrder co-founder Tamer Amer (LinkedIn) said.

Where do they stand in terms of adopting tech trends? Around 60-70% of our 100k local players are adopting tech trends, but only 70% of them have systems in place that can probably integrate new tech into their operations, Harfoush said.

Today, restaurants can outsource everything: There are food aggregators to help a restaurant get orders, a delivery aggregator to deliver these orders and a supplier to help the kitchen secure its ingredients, Harfoush said, adding that this raises the need for a software that tracks all that simultaneously and helps the process of managing it.

But they need the tech to back it up and integrate it: The sector, both locally and globally, is moving towards adopting more digital trends into its operations, which requires restaurants to firstly be present digitally, and secondly build a cloud system or APIs to give them the ability to integrate with other systems or third parties, Harfoush explained. These steps will allow them to integrate new payment methods, enhance customer experience, implement better supply chain solutions and optimize their delivery process.

Emerging F&B tech trends can be witnessed in three main areas: supply chain, customer experience and delivery. Here’s how it happens:

#1- Supply chain. Restaurants are forced to rent bigger spaces to allocate storage space due to weekly delivery schedules from traditional suppliers and the need to keep necessary inventory at hand. Supply chain solutions — like next-day delivery options — can help restaurants forgo storage when renting a commercial space, Amer said. “Now they can [rent] smaller spaces, pay less in rent and not worry about the supply chain because they know they can make an order for next day delivery and expect it to be delivered on time.”

#2- Customer experience. Tech can be used to enhance a customer’s experience, either inside the restaurant, or when ordering delivery from the comfort of their couch. This can include interactive menus, WiFi, and targeted promotions to potential customers in the vicinity of the restaurant, our experts told us.

#3- Delivery. “Almost 80% of restaurants now offer delivery services,” Survv and Takery cofounder Ahmad Tawfik (LinkedIn) told us. The F&B sector saw drastic changes due to the covid outbreak, which pushed customers towards digital food-ordering platforms, Tawfik said. A lot of brands now have their own delivery-friendly website and can simultaneously rely on third-party delivery apps including Talabat and Elmenus. “Digitization has allowed for the constant monitoring of delivery couriers, giving restaurants an estimate as to when they should expect the courier to arrive so they can prepare the food accordingly,” Harfoush said.

And the net is widening: F&B players have started looking at third-party logistics companies, such as Survv and Yalla Fel Sekka, to help them offload delivery services. Integrating operations with delivery services like Mylerz and Bosta has helped the company track and stay connected to the shipment while it’s being delivered, cofounder of foodtech startup 3attar Mohamed Ali told us (LinkedIn).

Those two together provide restaurants with a pot of gold: data. The growth in the use of digital delivery platforms, for instance, has provided F&B players with more data about their consumer base, allowing restaurants to utilize their operations more efficiently and help them discover new customer habits, customer trends and create new products quicker, Tawfik added.

And it’s making things cheaper: “[The rise of tech use] is helping new small restaurants be digitized at a fraction of cost they would have paid if they had gone the traditional way,” Amer added. With the establishment of tech companies such as One Order, which acts as a one-stop shop for restaurant produce and equipment, restaurants are saving a lot. “About 6% of the restaurant revenue is wasted on sourcing supplies, not the actual supplies,” he added.

The rise of tech was accompanied by the rise of cloud kitchens: Cloud kitchens — also known as professional cooking facilities without storefronts — are set up to prepare delivery-only meals for restaurants that may not have the capacity to prepare meals for both on-site and off-site orders. Cloud kitchens help restaurants regionally expand and start operating in new areas without worrying about the logistics of it all.

However, with this significant rise in tech, it becomes a challenge finding tech-literate employees, GrubTech’s country manager told us, adding that restaurants have been making an effort to better equip their employees with the skills needed to adapt to the sector’s tech transformation. “We, at GrubTech, offer employees training and onboarding workshops to help them understand how things work,” Ali said, explaining that tech-based companies usually poach qualified employees from each other seeing that there are very few of them available.


Your top stories on future trends for the week:

  • Abu Dhabi is jumping on disruptive tech investments in EMs: AI firm G42 and ADQ-backed Abu Dhabi Growth Fund are setting up a USD 10 bn fund focused on investing in tech in emerging markets.
  • Groundbreaking new tech in the pharma industry could make animal testing obsolete.
  • Swvl’s revenues more than tripled in 2Q 2022 as the company’s entry into new markets drove a surge in bookings, according to its latest earnings release.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.