If you’ve slumped on to the sofa, grabbed the TV control and ordered a takeaway during any of the UK’s coronavirus lockdowns – and let’s be honest, who hasn’t? – there’s a good chance that you’ll have used Foodhub, which recently overtook its rival Uber Eats to rank as the country’s third biggest online food-ordering portal.
Foodhub now has 22,000 takeaways on its books, compared with 18,000 restaurants for Uber Eats, having grown 160% in 2020, thanks to a surge in demand during the pandemic. “Our online orders have gone up 30% to 40% every single month; we keep hitting records. It just doesn’t seem to stop,” says Mohamed Chaudry, the company’s chief financial officer.
The business, which is based in Stoke-on-Trent but also has staff in India, Australia and the US, has increased its turnover from £3m to around £30m in the past three years. From humble beginnings – Chaudry compares the company’s success with that of Aldi, a relatively recent, no-frills entrant to the UK’s supermarket sector – it has now secured significant funding from BOOST&Co to support the business as it enters negotiations with private equity firms to raise £100m.
Global approach, local success
Foodhub made a breakthrough in 2017, when it launched an online portal that enabled the company to sign up restaurants across the UK, rather than simply driving customers to individual takeaways near their homes. Having since performed strongly in a saturated market, the firm is now automating many of its processes to accelerate its expansion into Europe and the US. “The business model is global,” Chaudry says. “Trust me, if we had a population on the moon, we’d have an app and you could get deliveries there.”
So, how has Foodhub stolen a march on its better-known rivals? Unlike bigger competitors, it does not charge commission, instead asking restaurants to pay a fixed rental fee. This improves the bottom line for takeaways, so they do not need to pass on price increases to their customers. Rather, they can offer discounts via Foodhub, which does not impose a service fee on users of its app.
The business has also caused a splash with its tongue-in-cheek marketing: during its recent #JustDelete campaign, billboards in cities around the UK offered customers a discount if they deleted the app of one of Foodhub’s rivals. “We’re a global company, but we’re trying to do different things at a local level, and our marketing strategy matches that,” Chaudry says.
Growth capital supports inroads into Europe and US
While Foodhub continues to fundraise, it will use its growth loan to support international expansion, increase its marketing spend and recruit senior financial staff. Principal Faye McDonough, who led the deal from BOOST&Co’s Cambridge office, was delighted to help “an exciting business that is transforming its sector with a unique offer. Foodhub’s entrepreneurial team has a passion for supporting independent restaurants and is targeting world domination with a strategic plan to deliver growth,” she says.
After a frustrating experience with another lender, Chaudry was impressed by the swift, smooth process of securing a loan from BOOST&Co. “For me, the most important thing is working with people who understand the industry, because if they don’t understand the industry, they don’t understand the business,” he says. “Yes, this is a food business, but we’re a SaaS business at the end of the day. Faye took the time to understand this, which made life so much easier.”
No one can be sure what form the post-pandemic recovery will take, but Chaudry is confident that customers will not kick the takeaway habit after restaurants are permitted to reopen for sit-down meals. “Even if people go back to eating out, a shift has occurred. Now, you can get fine dining at home, as well as takeaways, so the demand will still be there,” he says. “Ultimately, if you can save the restaurant money and you can save the consumer money, they’re going to want to buy from you.”