For a population of a mere 5 million, we boast an impressive mobile penetration rate (150%—that’s 1.5 phones per capita!) as well as great urban impatience.
As a result of the combined factors, investors and app dev alike have decided that we are ripe for the pickings. Cue a strong bloom of food tech apps and an oversaturated market of giants and ambitious local startups. Unfortunately for fledging businesses, Singaporean consumers are an articulate bunch; and we demand delivery on all fronts—variety, price points and convenience.
As a result, unsustainable growth has led to some of these apps going under. They just couldn’t fight the good fight anymore. Even more unfortunate is that most of these apps were homegrown, and faint signs of Singapore’s fledging entrepreneurship.
Here’s a roundup of 7 and you may recognise some of them.
Plum proffered a meticulously-curated menu from 400 merchants (in F&B speak, that means restaurants and hawker partners). It’s also deftly removed the paradox of (too many choices) and whittled down the rotating menu options to six to eight per day. This included the likes of Wong Kee, Tanuki Raw among others. Kudos for a food-centric app without any minimum order or delivery fee, but they had hyper-specific pick-up points (one of which, curiously at the SNEC) and timings. On Jan 19, Plum announced ceasing of its operations that came as a shock for most people, especially since the Jan 19 was a Saturday. Some customers reported still having app credits logged in.
Did Plum overestimate consumers willingness to travel to pickup points? Some of us simply do not have the luxury of flexibility.
Founded by a former EDB employee, Fastbee had a founder flexible enough to pivot his business model and garang enough to soldier on, which made the closure all the more tragic. Food that had been ordered was placed in temperature-regulated vending machines installed at biz parks in the West. They could be unlocked with user’s phone number. I like the idea of vending machines, it feels a little like Japan.
I guess FastBee was ahead of it’s time.
In fact, the move out west came after it was found that CBD-ers weren’t receptive to breakfast delivery. Fastbee had 105 merchants over five centres, but even variety didn’t help; logistics and labour crunch saw delivery operations scaled back, and soon, the number of vending machines were cut down, in a last-ditch attempt to cut-cost.
It’s an unfortunate case of a startup with a small war-chest, that in these days, doesn’t stand a chance against giants.
Did mainly “bulk order” from five up to a thousand people each time and was more a catering delivery service. HungrySia, as its name implied, was hyperlocal, and worked with 100 active hawker stalls from across six hawker centres. However, users, unable to view menus nor prices, faced a dearth of information. This proved to be a mistake in a market that thrives on reading reviews (Amazon), rating products and services (Grab) and getting the best deals (Fave). Finally, ordering meant rounding up five other like-minded people, which in a largely individualistic society with citizens highly articulate about their needs and choices, proved to be their downfall. Delivery fee ($1.50).
Although Jonathan Faynop originally conceived the idea with lofty goals about “preserving the hawker culture” and spotlighting street food, or something along those lines, it seemed as though the app had been nothing but self-serving. Mercifully, it shuttered after a short run. He did manage to get 200 hawker merchants, an impressive feat, considering reluctant hawkers are usually the last to jump onboard on anything tech-related.
Customers generally are receptive to a token service fee ($1) but the killer must have been ($4) delivery fee on each order.
Hawker food exists as a cheap solution to easy meals, so in the name of sensibility, does the need for convenience justify a $5 charge?
Started also by Jonathan after the cessation of Hawker.today, YiHawker had 300 partners from Fengshan market in Bedok to Old Airport Road Food Centre. It shut down in July 2016 after six months. Turns out that a island-wide delivery scheme ultimately proved larger than what the fledgling business could support. Labour and costs logistics did not pan out as expected and it had only been a matter of time that YiHawker was done.
What To Eat
With a no-frills, non “disruptive” model and no specific USP to boot, What To Eat however had a ($2.99) delivery fee, island-wide services and a minimum order of ($30). With its exit, the founder also promptly vanished, and several merchants have taken up with CASE to assist with recovery of funds they were owed.
Gourmet To Go
Gourmet To Go was apparently a stalwart in delivery, having lasted more than a decade in the industry, which is almost a lifetime. Altogether, it saw 70 restaurants on its platform but had a chunky two-step ordering system which necessitated users to phone in even after confirming items (online). From there, presumably, the “concierge” had to call the related merchants to order, hence doubling up on efforts. This seemed more 2000s than 2020. Furthermore, hefty charges await upon carting out. Firstly, a minimum order of ($25) is necessary, and then a surcharge of ($5) applied on top of orders that do not make ($40); with an addition of a 10% “survival charge”…….
Ironically, the “survival charge” did not salvage what must have been poor profit margins.
Thoughts and takeaways:
- Automation is much needed in this business as more smartphone users adopt and take advantage of tech
- Growth is hard to come by, due to the lack of ability to scale (labour crunch, location-oriented models)
- Rising costs of labour and diminishing margins of returns in the F&B industry
- Apps survival hinged more on funding and less about efficiency (Fastbee)
- A lack of pivot or flexibility makes it difficult for businesses to break the model
According to McKinsey’s report about food delivery, “once customers sign up, 80 percent never or rarely leave for another platform, creating a strong winner-take-all dynamic, in which the reward goes to the player who can sign up the most customers in the shortest amount of time”.
Yet in the local context, it appears that this might not be accurate—Uber’s 2018 exit; and the persistent and constant rolling out of app promo codes to maintain retention rates. Maybe we’re just a society spoilt for choice because we do get more benefits from being “unloyal customers” than we do from sticking to one app.
There’s another thought, that maybe, hawker apps haven’t taken off because of all the extra costs and surcharge. Hawker food primarily exists as the cheapest solution to laziness. There, with the ($1.50) delivery costs that makes up for 30% of meal must not have seemed terribly affordable.
Cue XINDOTS, a food tech app with no delivery fee
- Have a total of 170 merchants including food kiosks and bakeries
- Hawker-focused, with a scatter of food kiosks and bakeries
- Work across 10 CBD eateries, from Tanjong Pagar to Downtown, including Lau Pasat, Maxwell and Amoy
- Are expanding to Hong Lim Complex
- Have our own QR code for a dine-in or takeaway option (select hawker stalls)
- Facilitate cashless payments, via in-app transactions
- Completely free for users apart from the MDR charges for top up via credit card
- Are in talks with an upcoming partnership with NETS for direct payment, FOC