UK’s newest halal grocery delivery service shows there’s room for more companies amid pandemic e-commerce surge

A new halal grocery delivery service in the UK believes that if it can ride the challenges of the pandemic it will be in a “very strong position” once the market stabilises.

The Halal Food Shop started at the end of May and currently operates as a start-up from the founders’ home office in Leicester.

Founder and CEO Bilal Khan explained that the coronavirus and subsequent lockdown in the UK has had a positive impact on the business. “When people are not able to get to the shops, our business picked up,” Khan told Salaam Gateway. He said the lockdown situation gave him the impetus to kickstart the business when he did.

The UK’s online grocery sector is forecasted to increase by 33% this year to £16.8 billion ($22.25 billion) from only 2.9% growth in 2019, according to market research company Mintel. This is all because of the COVID-19 lockdowns. Mintel believes the huge switch to online shopping will have an impact beyond the crisis. The biggest and most popular services are AmazonFresh, Amazon Pantry, and Ocado. All major supermarkets also provide their own deliveries, including Asda, Co-Op, Iceland, Morrisons, Sainsbury’s, Tesco, and Waitrose.

Halal Food Shop competes most directly with Mullaco and SaveCo in the halal-only sector, while a handful of other companies focus on meat, including Tariq Halal, Haloodies, Click Halal, Haji Baba, and Healthy Halal.

The newest all-halal grocery delivery start-up has earned a respectable amount of business since its very recent start, fulfilling between 50 to 70 orders a week and well over 200 a month, according to Khan.

“We have delivered all over the country, from Inverness, North Scotland to Londonderry, Northern Ireland to Falmouth on the tip of Southern England,” he said.

Deliveries are made via third-party courier, or with the company’s own van on Tuesdays and Fridays if customers are in the Midlands. Courier services are for addresses outside the Midlands or for customers requesting quicker delivery, such as the next day service on orders made before 10am.

The company currently owns only one van. “This service means 100% of the process until your doorstep is delivered by ourselves (much like Ocado). We are currently trialling the M6 route every Tuesday which is very successful and hope to add more routes covering the UK,” Khan said.

To protect products, it uses solutions like iced gel packs, insulated wool and dry ice to preserve perishable goods in transit.

Halal Food Shop has pegged some of its charges to big grocery delivery company Ocado (while the two Amazon services require monthly Prime subscription). For example, orders over £75 get free delivery. For orders under £75, the halal service charges £6.99 for standard delivery, £9.99 for next day delivery and £14.99 for Saturday delivery. The much bigger Ocado charges between £2.99 and £6.99 for orders under £75. SaveCo, which focuses primarily on the northern England city of Bradford, delivers for free for orders over £50.

These minimum orders and delivery charges have to be as competitive and attractive as the range of brands and products these companies can deliver. For example, Ocado has been synonymous with Waitrose for two decades but that will end in October, and the delivery company will start a deal with Marks & Spencer’s next year.

The Halal Food Shop has a substantially smaller shopfront and does not stock big names such as Waitrose or M&S. Khan said his company has agreements with local suppliers like Liberty Foods. The Halal Food Shop store front sells frozen food, dry goods, sauces, and fresh meat which are Halal Monitoring Committee (HMC) certified. Brands with at least five listed products include Armaan, Blackfriars, Ceekay’s, Chef Shef’s Masala, Dexters, For Aisha, Heavenly Delights, Humza, Jahan Pizza, and KQF Quality Foods.

Khan said the business does not primarily target bigger urban areas like Manchester, London or Birmingham. “A huge focus of our business is delivering to remote areas and is an aspect of our business we take great pride in,” he said.

The service is owned by the Halal Family Group. There are currently three people involved with the business, Al Noori Manjothi, Zain Lambat as well as Bilal Khan. 

THE BUSINESS

There has been good support from customers, particularly millennials, according to Khan.

“We feel they have been introduced into a digital age and we fit into their lifestyle model,” he noted. 

Adding to this, he said that customer ethnicity is varied, from what he can tell of their names. Around 30% of customers have non-Muslim names and 70% Muslim names, he said.

The business has not taken any loans or debt and has been fully funded by the founders.

“We haven’t broken even yet but have exceeded monthly targets,” said Khan. “We hope for net profitability within the next three years. Our key focus is ensuring our service is 100%.” 

He said they are open to talks with strategic partners to help scale and grow the business.

“Islamic investors could be an option as they will understand the ethics of halal, however we want to ensure our level of service is morally equally respected,” he added.

PLANS

Looking ahead, the Halal Food Shop is looking for scalability by acquiring a distribution centre in the UK.

As the business continues to scale and grow, Khan said it will most definitely need to expand its workforce and in the long-term acquire more vehicles to expand its routes and move away from relying on third-party couriers.

For the next one to two years, the business aims to show existence in the market, according to Khan. This will be predominantly use social media to raise brand awareness. The company also plans to advertise on TV platforms like Sky.

The Halal Family Group will also host 'The Halal Food Festival' in Leicester which has been pushed to May 2021 because of the pandemic.

“The aim of the festival is for the general public to enjoy international flavours and show a more relaxed and fun view of the Muslim community,” he explained. “After all, eating out is top of the list when it comes to British Asians’ leisure activities.” 

(Reporting by Hassan Jivraj; Editing by Emmy Abdul Alim emmy.abdulalim@salaamgateway.com)

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