A better system in the cooking


  • News
  • Monday, 09 Jan 2017

Big goals: Chan (left) and Cooked co-founder Nikolay Khokhlov aim to be the largest player in the country.

Frustrated with his former employer’s system, Joon Chan decided that he could do it better his way.

Between Klang Valley’s traffic woes and its large population of office workers, it comes as no surprise that food delivery services are thriving.

One of the newer contenders, Cooked, believes there is plenty of pie to share between industry players.

Chief executive officer Joon Chan cites a Mckinsey report which found that only 2% of the 19 million meals Malaysians eat a month were transacted online.

“The immediate competition is still offline restaurants and home cooking. Of course there are (online) competition, but everyone is trying to make the market realise that online food is as good as offline and can be delivered at a competitive price,” he says.

Chan thinks online delivery companies prefer to capture the offline pie than compete with each other, noting that most were differentiated by their product and were only similar in having the same service system.

On Cooked’s end, business has been booming, surging from barely 1,000 orders a month when they started in May 2016, to almost 1,000 a day now.

Efficient: Batch orders allow Cooked to prepare meals ahead of time and cook in one go, says Chan.
Efficient: Batch orders allow Cooked to prepare meals ahead of time and cook in one go, says Chan.

Chan believes the main hurdle for online food delivery platforms is to scale their production and delivery to enter the “big leagues”. Serving 1,000 or 10,000 meals a day is a different ball game from 100 meals a day.

“The only way to overcome this is to have a stellar team to grow the system. I don’t think market consumers will be much of a hurdle as the market is increasing, while payment and logistics friction is decreasing,” he says.

Chan, the former managing director (Malaysia) of online food delivery pioneer Foodpanda, had decided to head his own startup in the same space partly due to his frustration with his former employer’s system.

He points out that an online food delivery company’s efficiency was at the mercy of its partnered restaurants, which have a tendency to favour dine-in customers over delivery orders. This slows down delivery times during peak hours.

“Late delivery, bad food and impolite riders were big pain points,” he says.

To address this, Cooked uses kitchen-to-table delivery chain, where all meals are prepared in its own central kitchen at the Southgate Commercial Center, Cheras and delivered by a team of 16 trained in-house riders.

“The three questions I wanted to answer with Cooked are: can we make a better product, cook better food at a better price, and be more dependable?” he says.

By controlling the kitchen and delivery, Cooked claims it has been able to achieve better customer retention, make deliveries 25% faster than its competition and lower prices as volume increases.

He disagrees that convenience is the primary driver for the online food delivery market.

“Convenience is a niche market while pricing is mass market. Cooked’s vision is clear, we don’t want to be a luxury online food company, we want to be the largest one and our KPI is to supply 20% calories for the country,” says Chan.

Is Cooked a startup, considering it is comparable to existing fast food delivery services or restaurants that have dedicated kitchens for delivery? Chan insists it is.

“You know why they say startups can disrupt big companies? When big corporations start something new, it’s auxiliary. You want to take care of your golden goose. Are you really willing to kill it and go entirely online?” he challenges.

Purely online food companies were a new model without the legacy of physical stores to shed.

Unlike a brick-and-mortar restaurant, there was no limitation as to how many customers Cooked could sit at one time.

“The beauty of the model is we aren’t made to order. Alacarte kitchens have tonnes of things to do that need to be done in 10 minutes. But with batch orders, my team can prep meals ahead of time and cook in one go. You spend the same time as made to order, but produce 10 times the food,” reveals Chan.

Currently, Cooked, which only serves lunch, can cook for 1,000 pax a day, but is in the process of doubling its capacity.

Another technology at play is Cooked’s use of big data to determine its weekly menu.

“Based on the ratio of dishes sold, we can figure out which ones sell the best. We take a week’s worth of menu, take out the low performers and replace it with popular dishes,” reveals Chan. Cooked takes a fairly traditional approach to marketing, acquiring new customers through advertisements. Customer acquisition costs them RM14 for business-to-consumer (B2C) customers and RM20-24 for business-to-business (B2B) customers.

Chan says B2B customers are more profitable but not as consistent and B2C has great growth potential. Cooked is focused on solving its customer retention in Malaysia before expanding into new markets.

“We don’t think the first-mover advantage is a thing here as there is no need to get 100% market share. There is going to be room and one player will never be the monopoly,” he says.

Cooked received a CIP 500 technology commercialisation grant from Cradle and the rest of its investments are self-funded.

“We’re looking to expand into new brands rather than expand Cooked’s menu as you get diminishing returns beyond eight to 10 items,” he says.

His dream? To be the Yum Foods of online delivery.

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Business , entrepreneur , food delivery , cooked , startup

   

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