UK's Just-Eat Buys 60% Stake In Restaurant Listings Site Hungryzone
UK-based online ordering service Just-Eat has acquired a 60% stake in Bangalore-based startup Achindra Online Marketing Pvt Ltd which runs the online restaurant listings and ordering website Hungryzone.com.
Just Eat will invest a total of $5-10 million into Hungryzone.com. The first tranche has been completed and Just-Eat will gradually increase investment in Hungryzone over the next three years. A brand change may be in the works too and a final decision on this is likely by February.
The acquisition will help Hungryzone with technology and strategic advice from Just-Eat. "It has mostly to do with the know-how. Since Just-Eat has mastered local trade in 10 countries, the partnership will help us scale. In India, big cities are different from each other and they will be offering us advice on how to scale up in each successfully," said Hungryzone CEO and founder Ritesh Dwivedy, who owns 20% stake in the venture.
“In the long run, Hungryzone will be a significant business in our group. India has an exotic and rich culinary heritage; thereby catering to the variant foodies requires an innovative company like Hungry Zone to understand their preferences,” said Klaus Randel Nyengaard, Group CEO, Just-Eat.
Hungryzone.com was launched in Bangalore in 2006 as a community service by a group of IITians working in software companies. The website was relaunched in May 2007 with a new UI and in August 2008, it received its first round of investment from Indian Angel Network. It has a registered customer base of 100,000 users and offers restaurant listings, reviews as well as online ordering. While listings are available for 10,000 restaurants in 10 cities, online ordering is only available in Bangalore. This will now be extended to Mumbai and Delhi by March and the website will then reach out to 3 more cities.
Nyengaard expects that over the next five years, users will be able to book tables at 10,000 restaurants, up from the current 650 restaurants offered. Hungryzone's team will also be expanded from 25 to 65 this year.
Hungryzone.com processes 10,000 orders per month. A majority of these are home delivery orders and only 20% are online orders. Hungryzone has generated $1 million in revenues for restaurants so far. Its revenue model is based on orders and ads form a negligible share of its revenues. Revenues from commissions will be the focus for the company going forth. Hungryzone.com competes with Infomedia 18's Burrp.com and Zomato.com, which received Rs. 4.7 crore from InfoEdge.
Just-Eat was founded in 2001 by Christian Frismodt and Jesper Buch. In 2005, the SM Trust, which has investments in web hosting firm UK2Group.com and poker site PKR.com, bought a majority share in Just-Eat. In January 2010, the website raised £10.5 million in Series A funding from Index Ventures, which contributed approximately £7 million while London based private investment firm Venrex and individuals including Carsten Mikkelsen, who was the original angel investor also infused the rest.
With an annual run rate of £250 million worth of sales for restaurants listed on its directory, Just-Eat is the only global player in the online food ordering space. Competition such as Takeaway.com (UK) and Seamlessweb.com (US) continue to stay local. "We don't have any competition at the international level. We are the only company that has managed to go international. Everybody else is positioned in one country such as Holland or UK," said Nyengaard.
India will be the 10th country the group is now present, after UK, Denmark, Sweden, Belgium, Spain, Netherlands, Ireland, Norway and Canada. Just-Eat will expand to four more countries this year including one in Latin America. Though online ordering currently is only 2-3% of the $75 billion world market for home delivery, it is growing rapidly, according to Nyengaard. "The world market is growing at 5-10% and today only a small percentage is transacted online. However, online is growing at 50% year on year," he said.