Our growth was 700 percent!
It was 1388. Few people knew about internet sales. Saeed Lotfi and his friends went to all restaurants and distributed leaflets to keep their ZoodFood
One of his friends came back from England and suggested
ZoodFood. They were three and gradually became 10. All they had was 3 million tomans which was their initial capital for launching a site and opening the company and the cost for advertisement.
It was 1388. Few people knew about internet sales. Saeed Lotfi and his friends went to all restaurants and distributed leaflets to keep their ZoodFood.
They worked the same way for 4 years until in 1393 they attracted investment and experienced a high growth. They reached to more than 500 foods per day and now their sale is more than 10.000 foods per day.
Their monthly costs is up to 2 billion tomans and their turn over is 50 billion tomans. This startup believes that the value of its business is up to 50 million dollars.
Lotfi believes that ZoodFood is the number one in the market. He says that the market is very big but saturated. Now Saeed Lotfi along with the other manager of ZoodFood, MehranAbdol Razagh, Amin Azhdarkosh as the sales manager and Masoud Zarei as the call center manager of ZoodFood, think about the future when their sales reaches 160.000 foods in a day.
Founder of ZoodFood talks about its growth, the market, future plans and costs and turnover of ZoodFood.
How big do you consider the online food order market in Iran?
It is a very big market, because it’s about food and for every age. Iran population is up to 80 million. Up to 17 million or even up to 20 million people (with suburbs) live in Tehran.
In Tehran there are more than 10.000 restaurants, fast foods and caterings. We can estimate this figure about other cities by analogy. When we put these next toeach other, many capacities would be seen. The generation is also changing andthe culture of cooking at home is fading.
How many foods does Zoodfood sell to restaurants in a day?
We can have calculations according to Tehran. For example 10.000 restaurants, fast foods and catering work in Tehran. But generally up to 200.000 meals are being sold online and offline every day.
I can mention Turkey and one of the businesses that sell foods online in that country. Turkey is similar to Iran in terms of culture and population. The company has 160.000 online sales per day.
But Turkey has several big cities like Tehran that contribute to the increase of online sales but in Iran even Mashhad and Tabriz and Isfahan are far different form Tehranand ZoodFood has felt this distance.
Now according to 10.000 restaurants and etc, we can estimate that up to 400 oreven 500 foods would be sold in Tehran each day.
You want an exact number and I think it’s better not to mention it. But theremay be such a number.
How much is the share of online sales in this field?
ZoodFood has the major share and if I say a number, in fact I have mentioned the amount of sales in ZoodFood.
Maybe Shanbeh audience wants to know that based on which documents Saeed Lotfi claims that ZoodFood has the major market share?
Let me mention a number in Rial because I can’t tell you the number of orders. Right now about 50 billion tomans is moved monthly for food order submission in ZoodFood.
According to such a number in ZoodFood, do you think that the growth of this business is positive or it should have a higher share based on its 8-year-old life?
I think ZoodFood has had a good growth and since 1393 it has experienced about 500 to 700 percent growth because we have a powerful marketing team and have done many investments.
We have an equipped call center and get up to 80% of orders automatically. We don’t even let a critical comment of the customer remain un-replied more than one day.
It seems that since 1393 ZoodFood has become more real and it started to grow. What was the reason?
Generally Iran startup ecosystem has got a better shape since then and its concept and definition became more determined. The main cause has been the entrance of investors to the country.
Before that year, the speed of ZoodFood growth was slow although it moved in accordance with society norm. But now we have a very fast growth rate.
And ZoodFood had moved towards use of investor in 1393?
Yes. In this year we make a threat to an opportunity. The investor has gone to launch a site similar to ours when we decided to introduce ZoodFood to them and use their capacity to make ZoodFood grow.
Although our investor, IIG (Iran Internet Group) not only injected money in ZoodFood but also provided high experience because it has launched such businesses in more than 40 parts of the world and ZoodFood took use of this knowledge in addition to the money of investor; for developing the market and for marketing.
How much was the money injected in ZoodFood?
I can say that our current costs for ZoodFood has been about one to 2 billion tomans after invertor attraction and business development and we couldn’t pay such an amount without invertor.
ZoodFood was launched with 3 million tomans in a year when many of internet sales concepts weren’t popular in the society.
There wasn’t any knowledge and experience. But it was launched and after capital attraction, it experienced a significant growth. But after its growth, other businesses came to the market.
For example during two years when they had organized financial support and vast knowledge in this field, they couldn’t become ZoodFood or surpass it. How much do you agree with it and what is the cause in your opinion?
You are right. But I don’t say other businesses have failed; I just know that none of them became something like ZoodFood. The reason is that they don’t know the market well. Because food sale isn’t like selling other products in which you rent a warehouse and put a product in it and think about selling it.
In the field of internet food order, there are two kinds of customers; buyers and owners of restaurants who don’t trust people easily. I even think that the most important reason of failure of other startups is related to the communication and belief the restaurants have towards ZoodFood!
We also add to our service every day and don’t let other businesses surpass us. We have even facilitated payment and service for our customers. Thus we had solved delivery system for a year by hiring couriers in two or three districts of Tehran, because the food wasn’t delivered on time but now it is delivered in less than 30 minutes with the use of ZoodFood couriers.
You mentioned the expansion of ZoodFood service. ZoodFood site said that it would sell greengage. Have you developed the model of your business? It seems that you have added new service to ZoodFood; tell us about them.
The news is that ZoodFood has developed its courier service in other parts of Tehran. Because this service is delivered only in Mirdamad, Jordan and SaadatAbad. Also we supply supermarket goods and try to deliver them in less than 30 minutes.
Why have you added supermarket goods to ZoodFood? Is it a kind of development of your business model?
In fact it’s a kind of development of business model and we have seen capacities in this field that if we can send a product to the customer in less than 30 minutes, we would increase the range of our customers;
it would also help people who are hired as a courier to make money. Sending super market goods to customers is in trial but we want to develop it faster and cooperate with stores and big hypermarkets.
You don’t mention to the figures related to your business so easily and on the other hand there are people who look at ZoodFood and want you to talk about the growth rate of ZoodFood. For example how many customers has it attracted in 1396?
We have database with about 500.000 users that are considered 250.000 active database of ZoodFood each of which has at least bought something from ZoodFood once.
You consider ZoodFood as the owner of the first share of online food sale. Why doesn’t ZoodFood define this social responsibility that for example it should include a pattern of Iranian traditional culture like MamanPaz or promote the use of herbal containers? Because each order from ZoodFood produces at least 200-gram waste. You have the program of book reading but it seems that you can be effective in your own field of business which is food.
We have tried to move such solutions forward. For example we have designed bags made of herbal texture which aren’t disposable and we provided to restaurants with our own expense.
But ZoodFood can’t move the whole thing forward. Restaurants don’t follow this and think about their profits. Thus the government should consider a subsidy for removing plastic containers because ZoodFood can’t order restaurants what to do.
You mention MamanPaz that has a definite field and its orders is clear and different from ZoodFood. We have tried in many restaurants to consider this culture. On the other hand, we have a small part of restaurants’ sale and most part is sold in disposable containers and produce waste.
Maybe both should ignore a part of their profit so that we can reach a reasonable culture. Can ZoodFood ask restaurants to use Iranian traditional food culture in their menu more?
Yes, because based on statistics and our data, we know which foods people like and even which foods are welcomed more in which days. For example, the order of pizza is high at Thursdays. Iranian foods are ordered more in Wednesdays and Saturdays. We can inform restaurants in this field and even promote the culture of healthy foods.
We have put the category of healthy foods in our site and informed the restaurants about it. Because companies that work with ZoodFood want healthy foods. Restaurants gradually are willing to offer a package of different foods instead of having duplicate foods.
Your startup is an organized company now, it has a wide presence in the market and has many strong investors. What is the Rial value of ZoodFood right now in 1396?
It is difficult to mention a number and even many business owners avoid telling the number. Even value calculation tools are very different.
However, what is the number in your mind?
I think ZoodFood worth is 50 million dollars now.
It shows a high growth. This number is tempting for many people to come to this market and launch startups in this field. Do you recommend them to enter this market?
Honestly, whoever wants to enter the market should look at competitors first to see that he shouldn’t enter this market. Because right now several websites with high knowledge and capital have entered in this market but they couldn’t be successful and they have a far distance from ZoodFood.
But you pointed to the bigness and vast capacities of this market?
I say that the market is big but it doesn’t mean that everyone can take a share in the shortest possible time and with ease. I estimate the possibility that newly established companies in food and restaurant industry reach ZoodFood status or two or three competitors is below 5 percent.
If we assume that new startups aren’t supposed to reach ZoodFood and others, is there a space for their activities? For example can’t it cooperate with 50 restaurants among 10.000 restaurants, caterings and fastfoods in Tehran?
Presence in this market is something different. I think this market is saturated. There is the capacity but how much is the share of online order? I think those who wanted to enter the market, have entered it long before.
Those businesses that are active right now don’t have a big share of produced food. In general, I think we can’t assign an exact percent of the market and then enter it. Because success of a business requires other factors as well.
For example, we have gathered a strong team in the field of marketing, call center, support and … who help each other to grow scientifically. In fact ZoodFood has experienced a 700% growth because it has a strong team. I should add the experience of being in the market for years.
Do you consider the food field a totally saturated one? So why are those like MamanPaz successful although they have come to this field after you?
MamanPaz is different from us.
But it works in food field.
Yes but it doesn’t work with restaurants. It has defined a different kind of food field for itself and serves a limited number of customers. The food is also produced by its colleagues and thus it can define its package and for example give a nostalgic sense to it.
On the other hand, it isn’t clear how much different businesses that enter food market with new ideas can grow and be positive. But in the field of restaurants and online food order, there are hard tasks to do.
Thus we can believe that if a person with an interesting and new idea enters the market, it may succeed but the copy of startups like ZoodFood wouldn’t be successful?
Exactly. Because we see the difficulties and for example ZoodFood after 8 years has reached this number of customers. I believe that copying ZoodFood doesn’t work because there are two kinds of customers;
buyers and restaurants both of which are difficult to reach. The cost of food delivery is high as well. We pay high cost for sending each food.
Won’t ZoodFood stand against restaurants? Aren’t restaurants dissatisfied with the presence of ZoodFood? For example the one that took place in properties and startups in the field of housing.
Restaurants should be happy due to the presence of ZoodFood because it replaces their additional costs. We have eliminated the cost of marketing and sale for them. On the other hand, our goal is to settle our account with them on time so that they trust zoodFood.
In 1393 the amount of food order in ZoodFood was 500 per day. How many orders did you receive in 1395?
Why should I answer this question? Whatever I say would be considered as the figures and numbers of my business.
Anyway our dialogue can’t be what the interviewee wants, otherwise it should be called an advertising reporting for ZoodFood. You think you are the number one in this field and maybe the figures can be the proof of what you claim?
Let me say that ZoodFood has passed 10.000 foods per day right now.
In early 1394 we had a short phone call with you and you had said that you sold more than 70.000 foods per month. Now your daily sale is more than 10.000 and this shows a great growth.
Albeit this number isn’t more than 10.000 each day because days are different and 10.000 has been the highest point but in vacations and weekends, this number can be more or less.
Shanbe is the first day of Ramadan. One of the social responsibilities of startups is to observe culture of community. How much is ZoodFood loyal to this culture?
We observe the rules of our country and thus we don’t offer food in Ramadan. There are restaurants that have license to buy cold food and if we know that the restaurants have the license we would cooperate with them.
When you wanted to attract capital and investors, many said that the investor owned the whole startup and Saeed Lotfi and his colleagues are users in ZoodFood. I like you to talk about this.
We have investors and we are glad that we could attract such a capital for our business growth. Even I negotiated with them otherwise there wouldn’t be a ZoodFood and they would launch a business for themselves.
Investor has invested a good amount of money on ZoodFood and owns a significant part of the business but Saeed Lotfi and his colleagues have shares in ZoodFood. I’m not just a manager and have shares in this startup.
Apparently, your investor has had an investment with cooperation of Irancell?
Yes. IIG company that is our investor, has had a good capital attraction with Irancell. MTN was present and now Irancell has invested on IIG holding and ZoodFood is a part of this holding.
If we talk to Saeed Lotfi next year, what would be the sale figure for his daily sales?
I hope this figure would be twice the current figure that is we have passed more than 20.000 daily sales.
How many food sales per day is ZoodFood vision?
My vision is to reach 160.000 foods per day; this is what a business like us in Turkey has.
How many years it would take to reach this figure in your opinion?
At least four or five years later.
When would you cover all parts of Iran?
We can cover all parts of Iran right now but there are many risks and in some cities there isn’t the culture of online food order. Thus, if ZoodFood serves there and doesn’t receive an order, it actually reduces its fame.
Wherever we see the capacities, we would be present there. We cover big cities right now and next year we would cover many more cities.
ZoodFood has started its activities in 1388. It took a long way until the late 1392. Let’s go back to the first year and first orders.
In the first year, our orders were less than 10 and this continues the next year. But in 1390, things became better and we received 50 to 60 orders per day and in 1393 we had 400 to 500 orders daily.
Reaching such a figure was a kind of success those days because there wasn’t a public trust towards internet sales and people didn’t know much about concepts like second pin and ….
Was ZoodFood the first in its own field?
It was the first in the field of internet food order. But there were people who have thought about this idea before but we didn’t have a business launched in this field. This idea was popular in the world but not in Iran.
People think that they can become rich when they launch a startup. You started when there weren’t any definitions and concepts in this field in Iran. Now there are many startups but most of which don’t succeed. What is the reason in your opinion?
Things have changed. If a person wants to launch a startup, he knows where to start and where to refer to. We were in an unknown field those days and faced many problems so much that we decided to quit because we had to explain everything to restaurants and fast foods.
Even we did their internet connection. But now there are accelerators that support ideas and invest on them and the definition of business plan is clear. Nowadays competition is stronger and we can’t say that I launch a startup and I would become rich.
Most people enter this field without investigating the market and waste the money of investors because they just look at opportunities and don’t see the threats. Knowledge, youth, incentive and creation is not all things. The most important thing is to examine the market and see the threats.
What is the most important thing that has bothered Saeed Lotfi?
Lacking money. Our most important investors were our families and we knew that they didn’t have much money. There wasn’t an accelerator those days. Maybe we became strong because we didn’t have investor in the beginning and we appreciated the money we had because it was for our families.
Another problem was the lack of success and failure experiences; that is there weren’t many business models in this field so that we could use them. We knew foreign busineses but we didn’t have information about their business models.
According to the presence of ZoodFood in cities, it’s better to ask related question. One of the things that we have faced with in other cities is launching businesses similar to ZoodFood. Businesses active in one city or at least two other adjacent cities. Are they considered a threat for ZoodFood?
We don’t see them as a threat. Even their presence in Tehran isn’t a threat for ZoodFood. We don’t get upset from their presence. They aren’t threats because each one should work for years to be present in the market.
That is they can’t get a high growth in one or two months so that for example ZoodFood doesn’t have an option to compete. I think the market is so big that new businesses with new ideas can think of success.
On the other hand, I’m sure that many websites enter the market with this thought that they would gain big money within several months and I know that this is impossible at least in our field and thus I don’t see their presence a long-term and threatening one because E-commerce isn’t a place for a business that want to be active just several days.
Other than ZoodFood, how many companies are active in this field?
We have three serious businesses in Tehran but in other cities there are many sites for internet food order.
According to your talk about the difficulty of presence in other cities, we can say that launching such businesses in other cities is in favor of companies like ZoodFood because they make the culture of this job.
We can also say that for example in terms of preparing restaurants and introducing them with this field, these small and big business are useful but they are also a threat which is related to failure experience for restaurants.
Thus they resist against cooperation with ZoodFood because they have unfavorable experience. Startups promise restaurants to give them customers and orders.
After several months, they don’t act what they have promised and when we talk to them they say many people have come to us and it didn’t have any result for us. Thus persuading restaurants is difficult.
Can restaurants get around ZoodFood?
Yes they can. It may happen that restaurants don’t know if ZoodFood introduces customers to them and if those customers are satisfied, they would order food through ZoodFood again.
Therefore, they sometimes get more money for the courier or reduce the portion of food. The number of these restaurants is few. However, we are trying to receive the courier cost online to solve this problem.
Would ZoodFood remain a business for online food order or would it provide other parts and facilities for its customers?
We are to design an application through which users can order foods online and reserve their restaurant and table. Also users can submit their experiences in different restaurants to help other users in selecting a restaurant.
ZoodFood in Tehran and Iran
Saeed Lotfi says now that he is talking to us, ZoodFood has more than 163 paid employees who have insurance. “I should add delivery network to this in which we have more than 80 persons as courier.
Also in Tehran and other cities in which ZoodFood is present, we cooperate with more than 1600 active restaurants.” He defines active restaurant as: “from totally 4.000 restaurants with which we have made contract, 1600 restaurants are active in our network and they submit the orders and send the foods.
This field has many input and output. Sometimes we make contract with a restaurant and it closed after one month and this is one of our business risks.” With all these, ZoodFood is present in 21 cities of Iran because it doesn’t want to focus just on Tehran.
Although there are many problems in this field but ZoodFood has been present in other cities since 1394 but more than 95% of its focus is still on Tehran.
Founder of ZoodFood says: “there are many factors in this field. Let me explain it in this way when you enter another city to expand your business, I can say it goes back to the year 1390. Because everything start from zero there; from communicating with restaurants and customers to improving the hardware.
For example, we deployed our sale team in Mashhad for a month so that we can enter this city. Even our sale managers had to be there and for a month in Mashhad we could start our cooperation with 80 restaurants.
Also in order to enter Shiraz, Isfahan and Mashhad and Karaj we did the same thing.”
Lotfi adds: “we want to be present in other cities but sometimes restaurants don’t join this network and sometimes customers don’t want to use this internet facility and don’t have a definition of internet food order because one of the entertainments in small cities is going to restaurant and eating food in such places.
Even some of the restaurants don’t have courier and this means that even ordering food by phone is not popular in some cities. Maybe people use internet so much but don’t buy through internet. Also population affects our presence in other cities.
No city has the population Tehran has. We have tried to enter other cities because we face many demands in this field.”
I distribute leaflets!
ZoodFood starts from the time when Saeed Lofti gets informed of internet food order through one of his friends who studied outside Iran. From then he continues this way with some of his friends. He says: “one of our friends studied in England and knew this field.
When he went back home, he proposed to launch such a business. In 1388 I was finishing my university and I was 22 and my knowledge about internet was to the extent of dial up.
But I thought the world would go towards internet and Iran wouldn’t be an exception. At that time, I worked in one of the biggest construction companies in Iran as a civil engineer but I left there to launch ZoodFood.”
Lotfi says: “at first we didn’t think that entering this field would be that much difficult and if we did, we wouldn’t enter it. They started with three persons and after 3 to 4 months, their team became 10.”
The name “ZoodFood” is proposed by the mother of one of the members and they accepted that. They collected at most 3 million tomans and that became the initial capital for launching ZoodFood.
“we had to make website, launch the company and advertise it with that money. I think we were so brave.” Lotfi says: “we didn’t know programming and started with a company in this field; although we suffered so much in this path.”
All the members of ZoodFood were from Gisha. They started with a fast food in this area. Lotfi says that they were to work with restaurants that have internet connection so that food order and delivery are done through internet; that is we wanted to have what we can do now after 8 years.
At those days, many restaurants and fast foods don’t know internet. Even many of them ignored us and didn’t want to hear us and if one of them listens to us, it was because they knew our father in that area.
Another difficulty of launching this business in that year was that few people knew about buying things via internet. Lotfi says despite of these problems, we wrote a panel so that orders go to restaurant automatically and restaurants are connected to the internet and … Even we had printed leaflets and distribute them among people at home ourselves.
The first order from ZoodFood was the result of distributing these leaflets. “The first customer submitted his order while I still had the image of his face in my mind when I gave him the leaflet.” It was an order about 25000 tomans which told people of ZoodFood that it works.
ZoodFood which started with 3 million tomans, got two loans, one was 3 million and the other was 30 million tomans, so that it could continue its job. But these loans didn’t help supplying the costs. Lotfi says that they received 20-million-toman financial aids from their families as well.
Even we didn’t have an office and my grandfather rented a 80-square-meter office in SattarKhan for us in 1390. Before that we worked in our homes. Lotfi says one of the things that we did well was that we supported our customers, those who submitted orders and those who got the orders well; that is we offered good support to buyer and restaurant.
They communicated with significant restaurants and brands in this path and finalized many contracts. We always paid our debts on time. They knew us as good dealers. Lotfi says that they didn’t have money for advertisement and it was a weakness they knew they had but they didn’t have necessary capital for advertisement.
But I didn’t want to quit and knew that the path we were in would work in the end and we had to look for solutions in order to succeed rather than quit our business and look for another business.
Even 3 members of our team stayed in the company and worked full-time and others cooperated remotely but with all these conditions, we continued our work.