With more and more families supported by working parents, and younger, single people favouring convenience above everything else, cooking after a long day at work is not exactly the option uptown Dhaka residents prefer these days.

Banking on that, two events have occurred: restaurants are mushrooming in the city and food delivery services—an age-old system, but now repackaged with a crunch of tech—are thriving.

These delivery companies are working to offer consumers meals in a context that provides more choice, improved quality, a high level of transparency and, above all else, convenience.

“We thought of starting the food-delivery app business to cater to the need we had felt was missing in Dhaka’s food scenario,” said AD Ahmad, co-founder and CEO of food delivery service HungryNaki. “That is getting your favourite meal delivered to your home or office.”

The idea popped up in Ahmad’s mind while he was working in the textile industry back in 2012. “We had a lot of meetings, and we thought it would be useful if there was a way to order food without having to rely on what the office peon could find nearby,” Ahmad told The Independent.

From there, Ahmad first thought of starting a tech-based online food delivery service that would expedite the process.

In 2013, a year after he started mulling this, Ahmad and his friends—Sajid Rahman and Tausif Ahmad—founded Hungrynaki, Bangladesh’s first food delivery business.

Ahmad’s team grew from seven people in 2013 to 225 in 2018, and the operation has expanded in many areas beyond Dhaka. “It has been a roller-coaster ride, but a good one,” he said.

Pursuit of appyness

Food delivery companies, which effectively act as middlemen between the restaurant and the consumer, fuelled by a smartphone app or webpage, are growing in the major cities around the world.

Grubhub, founded in 2004 by two web developers looking for an alternative to paper take-out menus, was the first such example of what is now a global phenomenon. Though there was nothing new about getting food delivered to your doorstep—pizza companies and grocery stores had already been doing it, especially in the Western hemisphere.

But what Grubhub did in 2004 was to to deliver food from restaurants that did not operate delivery services themselves. It thereby truly offered something to consumers they had not got before: freshly prepared food from their favourite restaurants, enjoyed at home.

For busy urbanites across the cities, this was the very definition of “having it all”.

Julian Dames, chief marketing officer and co-founder of Foodora, one of the largest food delivery services that is owned by Berlin-based Delivery Hero—which owns Bangladesh’s Foodpanda—says he feels the rising global demand for high-end food delivery is the result of the combined success of two other recent movements.

“On the one hand, you have an increasing appreciation for food, a demand for higher food quality and a rise in ‘conscious eating’,” he pointed out. “On the other, you have an increasing need for convenience and things that are available at your fingertips, with the help of apps.”

Business model

The business model that these food delivery services are founded on—proposing delivery services to restaurants that do not deliver themselves—provides a way for restaurants to increase their revenues without touching their profits.

This means that when a customer places an order through the delivery service, the restaurant’s operating expenses are not applicable. Usually a price is divided into thirds: one-third food cost, one-third operating expenses, and one-third profits.

“We take one-third of the value of each order, which is normally used to pay the operating expenses,” said Ahmad.

Usually the food delivery companies employ both administrative staff and delivery staff. Most companies have employees who are a mix of both freelancers and full-time staffers, which enables these companies to respond to demand as it evolves.

Foodpanda, owned by European giant Delivery Hero, currently enjoys the largest market share of the food delivery business in Bangladesh. It employs both permanent employees and freelancers as delivery people.

Talking with The Independent, Ambareen Reza, the managing director of Foodpanda Bangladesh, said, “Food from local restaurants is ordered via their apps or websites, and delivered by motorcycle or bicycle or car, depending on the area and the traffic in the city.”

She said, “None of the food delivery companies in the world has publicly shared its exact commission structure. Most of the delivery companies usually take a commission per order (arranged under bilateral agreement with the restaurants), paid 100 per cent by the restaurant and a delivery fee, paid 100 per cent by the client.”

Hungrynaki also defines its delivery riders as “independent contractors” and has experimented with both a fixed hourly rate for its riders and a per-delivery pay model.

When demand is high, both models can be successful, but when delivery riders do not receive jobs over a stretch of a few hours while being paid an hourly rate, profitability can dive quickly, said Ahmad.

This is where Pathao Food, one of the industry’s newest players, could come out on top. Its business model effectively “piggybacks” off already working Pathao drivers. When they don’t have a ride, they can deliver food, helping to eliminate the expensive ‘down-time’ that plagues other food delivery companies paying hourly wages.

Pathao co-founder and CEO, Hussain Elius, claimed at the end of April that his company is the leader in the food delivery market. “We only started in January, and we are already No. 1 in the food market, just in three months,” Elius said while talking to CNBC’s ‘Street Signs’ programme at the end of April.

Tech tonic

Meanwhile, Foodpanda says it has over 100 per cent year-wise growth. CEO Ambareen Reza explained that to stay ahead of the game, Foodpanda places its emphasis on the need to constantly upgrade itself. “If you look at our new app, you will see how much improvement we have made there. It needs a few clicks, has lots of customized options, and updates you from the restaurant kitchen to your doorsteps,” Reza said.

“In a growing industry with so much competition, what may eventually set us apart has, surprisingly, nothing to do with food,” said Reza. “It’s all about technology.”

Foodpanda claims its algorithms would enable it to get ahead in what the industry calls UTRs: rider utilisation or absence of the rider ‘down time’, as mentioned above.

Hungrynaki CEO Ahmad echoed her. He, too, thinks that the adoption of technological innovation will determine who will stay ahead in the market. “The more technology advances, the more will artificial intelligence—AI—become important. Food delivery is very much within the purview of this. If one day you find a robot coming to your house to cook you a meal, don’t be surprised,” he said.