Kenya’s Eat Out generates real cash not burn rate and plans to expand across East Africa
Beyond donor-funded web services and apps, new online commercial services are beginning to set up and attract traffic. Some like Eat Out in Kenya are generating actual revenues and have ambitious expansion plans, both geographically and with new online services. Unable to afford large marketing budgets, it has forged alliances with old print media. Russell Southwood talked to Mikul Shah, Managing Director, Eat Out.
Q: Where did you get the idea for Eat Out?
A: I was familiar with Top Table and London Eating from living in the UK. Eating out is primarily based on word of mouth. Restaurants don’t get much Return On Investment on print advertising. You don’t know how your money’s worked for you.
Q: How did you get started and how does it work?
A: We did a pilot with young restaurant owners who we knew would get the idea. It quickly worked without any SEO or search engine marketing and quickly captured the market.
It works like Top Table but there is no integration with restaurant booking systems. We make the booking confirmation to the user by either SMS or e-mail but the booking with the restaurant is a manual process. There are no automated booking systems. We want to become start integrating with the Point of Sale systems but most are not online and those that are have too many different systems.
The system is very simple because a lot of people are scared off from filling in a form and we’re not taking credit card information. But we get a tremendous response to our 10% off offers where you have to ring a special number.
Q: How did you start collaborating with print partners?
A: Our focus was web-based because we didn’t have the money to market the product so we thought let’s focus on keeping users booking through us. After a while, because we had all this information on restaurants, we thought we should turn our attention to print.
We identified suitable print partners and offered them chef and restaurant reviews and shared ad revenues generated by these sections. It did a lot for the magazines and raised our profile. The print partners are free publications include Kenya Concierge (which goes into hotel rooms) and Buzz.
Q: What’s the business model?
A: We offer a two-tier service to restaurants. For US$1,000 a year, they get our booking service and banner advertising. There are 200 of these premium restaurants. Then for US$200 a year you get listed and have your telephone number: there just over 200 restaurants in this category.
Q: Are you on mobile phones?
A: We have recently launched a mobile site which is available on the following platforms: Blackberry, iPhone, Android and Samsung’s Bada. It’s not expensive and each website is launched by the app.
We’re going to do an East Africa-wide app and we’re targeting iPhone and Android for that. We’re also talking about a “white label” version of the application for the mobile operators. There’s a huge war between operators on data use. We’re in negotiation with Safaricom and they’ve just put Eat Out on their portal.
Q: Do you have other services?
A: We also do Flicks Cinema Guide and have other products in line. One of our new products is Eat In where you can order restaurant food to be delivered. We will take payment and pay after a week or a month depending on the volume of orders, taking a 10% commission. We’re putting up the three largest shopping centres that have food courts. Lots of clients asked for this service. After that we want to add hospitality including hotels, lodges and accommodation. There is US$1 billion in tourism and we believe it would be easy to tap into a small amount.
Q: You’ve attracted investment?
A: Eat Out attracted a lot of attention from venture capital companies. After some discussion with two of them, we sold a 20% interest in the company to a Dutch company called Africa Media Ventures. This sale valued the company at US$1 million and our turnover in the last 12 months has been US$150,000.
Q: What’s the traffic like on the site?
A: We get 100,000 page views and 50,000 visits a month. In 2010 we actually booked 12,000 seats excluding parties above 20 seats. The mobile site has only just been launched so use is still in the hundreds but at the end of July we will start marketing it.
Q: Who are your competitors?
A: We don’t have competitors online really but I guess Yellow Pages and Mocality are our biggest competitors online.
Q: Is there more potential for expansion?
A: There is additional restaurant list potential because we believe so far we only have 75% penetration. We want to go to Tanzania, Rwanda and Uganda and we’re talking to print partners there.
Q: What other sites are there in Kenya?
Dealfish is now one of the most popular online sites in Kenya and there a lot of other classified players. There are a few property sites and South Africa’s Bid or Buy (the equivalent of eBay) has opened in Kenya. There used to be lots of Groupon-style sites but only two have survived, Rupu and Zetu. I don’t think the market is big enough for this kind of product. There is some hype but it’s inflating real potential.
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