Overview-Online halal food takeout and delivery in Muslim-minority countries

Muslims are a sizeable customer segment accounting for 17 percent of global spend on Food and Beverage in 2014, with a clear and largely unaddressed demand for the delivery of halal food in Muslim-minority countries. With several players emerging that connect small halal restaurants with Muslim households, including UK-based HalalEat and Russia-based Halal eda.me, what are the opportunities for new players to provide online takeout and delivery services for halal food in countries where Muslims are a minority?

GLOBAL MARKET SIZE

The online food takeout and delivery market was estimated to be worth $95 billion in 2015 and is expected to grow by 3.3 percent cumulative annual growth rate (CAGR) to reach $104.7 billion in 2018, according to Euromonitor International. The largest players are predominantly located in the U.S. and UK. Global market growth is driven primarily by rapid rising smartphone penetration globally, which is expected to reach 67 percent from 42 percent in 2013, according to ZenithOptimedia. This in turn is creating demand for convenience, including home delivery for consumer goods, including food.

The largest online food takeout and delivery companies include Delivery Hero, Just Eat, and Grubhub, connecting households with restaurants via their websites and mobile apps.

Delivery Hero was founded in 2011 from Germany. The company’s rapid growth trajectory has been supported by the acquisition of eight smaller rivals and $1.41 billion in equity funding since inception. The company is private, releasing limited financial information. However, based on most recent reported data, the company achieved annual revenues of over $400 million in 2013 and was valued at $3.1 billion in 2015.

Grubhub, founded in 2004, is the leading online platform for restaurant pickup and delivery in the U.S. It has global reach and generated $362 million in revenues in 2015. Grubhub acquired Seamless in 2013 and had its IPO in 2014 with shares that currently trade on the New York Stock Exchange.

Just Eat, founded in 2001 and headquartered in the UK is currently the country’s leading online food takeout and delivery site. The company had revenues of $358 million in 2015 and is listed on the London Stock Exchange.

HIGH GROWTH MUSLIM MARKET OPPORTUNITY

Muslims are projected to have spent $1.1 trillion on food and beverage in 2014 and this valueis estimated to reach $1.6 trillion in 2020 based on a 5.8 percent CAGR, according to the State of the Global Islamic Economy 2015/16 report.

The online marketplace for ordering was identified as a key area of opportunity in the Digital Islamic Economy Report 2015/16. While addressed by leading players such as Grubhub, there is significant scope for dedicated services addressing Muslim demand especially in countries where Muslims are a minority and halal food is not widely and easily available.

To address the Muslim opportunity, a number of dedicated players have emerged – notably, HalalEat in the UK, Halal Eda.me in Russia and Halalonclick in Singapore, all of which physically verify the halal status of restaurants they sign up, reviewing halal signage on premises and halal certificates.  

HalalEat, founded in 2013, is the first halal food online takeaway and delivery portal in the UK and EU. It has now signed up over 280 restaurants, with coverage of major cities London, Birmingham and Manchester, according to the company’s CEO Abul Rob.

HalalEat has taken steps to expand internationally, launching a sister site in Australia, eathalal.com.au, addressing Muslims in Melbourne. The company has also registered domain names in Belgium, Germany, Russia and South Africa in anticipation of expansion into those markets. The company plans to launch a crowdfunding campaign to raise $220,000 in 2016, according to Rob.  

Halal Eda.me was founded in 2015 and offers halal food online takeout and delivery service in 21 cities across Russia, according to its website. The website and mobile applications were launched by the Halal Guide team, which was founded in 2012 and successfully raised close to $800,000 towards the end of 2015 in a start-up competition in Kazan. There are currently over 60 restaurants that are listed on the Halal Eda.me website.

Halalonclick was launched in 2014 and serves over 20 delivery areas across Singapore. It has signed up 18 partnering stalls, restaurants and cafes, according to the company’s website.

CHALLENGES AND CONSIDERATIONS

There is tremendous opportunity to address the Muslim demand, however, as more players begin to emerge there are several key considerations for services to set themselves up for success.

To entice Muslim consumers to switch from services such as Grubhub, it’s critical to reach Muslims and engage them appropriately, going beyond online advertising. Both an online and offline strategy is needed.

Online, social media channels such as Facebook and Twitter will help engage customers and entice them to use the brands. This strategy has been immensely critical to the rapid growth seen by other players in the digital Islamic Economy, most notably Turkish modest fashion company Modanisa.

Offline, find organizations and associations where you can reach the right market segment. Muslim student associations represent an ideal channel. Discussing expansion plans and next steps for expansion, Abul Rob of HalalEat commented, “We’re seeking to appoint brand ambassadors at a number of universities around the UK, including Kingston University, The University of Portsmouth and Queen Mary University.”

Being a growth partner to restaurant owners, and not just another delivery platform, is a key to success. The restaurant market is by its very nature fragmented and requires direct outreach. The level of effort required by HalalEat CEO Abul Rob was staggering and involved a lengthy wait at the premises before owners would sign up.

Halal eda.me has leveraged a comprehensive guide of Russia to develop brand awareness before approaching individual restaurants for its booking platform.

Access to a core customer segment is a key selling point to restaurants.

However, throwing equity in the business in return for investment was a unique move by HalalEat, and helping align the success of the platform with the success of restaurants. HalalEat plans to offer Shariah-compliant financing solutions for restaurants, which would differentiate it from a regular booking platform.

© SalaamGateway.com 2016