How a former McKinsey consultant started selling fast food in Africa
British national Joe Falter came to Nigeria towards the end of 2012 to launch online food delivery service Hellofood. In a span of three years, the brand has expanded across 10 countries in Africa. Owned by the Africa Internet Group (AIG), Hellofood has signed up more than 4,500 restaurants in 15 cities.
Falter started his career as a management consultant for McKinsey in London. He quit and gave up a sponsored MBA because he wanted to do “something entrepreneurial”. Together with Rocket Internet – the Berlin headquartered co-owners of AIG – Falter started a flash sales e-commerce company which they took to 12 countries in four continents within just four months.
“It was an incredibly exciting journey [but] the business shut down within six months. We made a lot of expensive mistakes, but I learnt a huge amount,” recalls Falter.
When AIG approached him to launch Hellofood in Africa, he was keen to build on the experiences he had gained.
“I was fascinated by Africa – this completely huge, untapped continent. [But] if you told me back when I was working for McKinsey that [someday] I would be a resident of Nigeria selling fast food in Africa, I’d have been completely shocked.”
When it launched in Nigeria, Falter and his team operated out of “un-air conditioned room in Lagos sweating our guts out”. But it was one of his most “exciting periods” as he was hands-on with the business. He got out into the streets of Lagos, met with restaurant owners and delivery companies and put together his team.
The lessons he learnt in Nigeria have come in handy for the growth and expansion of Hellofood in other markets. It helped the e-commerce business develop a more efficient delivery system, tweak its proposition to restaurants, and address consumer behaviour challenges.
Convincing consumers to buy online
Although people’s awareness of using the internet to buy things is increasing across the continent, Falter says there is still need to educate consumers.
“If I am in London or New York and I want anything, the first place I will always look is Google, regardless of what it is. African consumers are not quite there yet, and there are all sorts of other avenues that they will look at before they look online,” says Falter.
“The challenge for us is to educate the market that they should be looking online for their next meal and that if they order online it’s going to be a much faster and convenient experience with much more variety compared with visiting a mall or going on the street to look for places to eat.”
Although it started out in Nigeria relying on restaurants to do deliveries, Hellofood had to invest in its own fleet of vehicles.
“[Today] we do nearly 70% of the deliveries in [Nigeria] through our own riders,” say Falter. In other markets nearly 50% to 60% of the deliveries are handled by Hellofood using motorbikes.
The riders, who are sometimes sub-contracted from delivery companies, are trained by Hellofood, and given uniforms and GPS tracking software.
“We have built our own delivery infrastructure which is like a completely different business. Our counterparts in developed markets are pure marketplace businesses, simply connecting a customer with a vendor. In Africa, a great marketplace is an incredibly complex business,” explains Falter.
It involves not just offering the best variety but ensuring a good customer experience, which Falter says is often lacking in most restaurants across the continent.
“It’s typically an incredibly bad experience ordering directly from restaurants in Africa,” says Falter. Quite often, he explains, when customers call there is no one answering the phone. And even when they do get through, they might be told the dish they want is not available that day, or if they place an order the delivery takes three hours to arrive.
“I can think of very few of our partners – out of the over 4,000 in Africa – who I would really trust to deliver an amazing delivery experience at scale. So we have to do it ourselves, and as a result we have a huge amount of control over the customer experience, over the operational efficiency and over the scalability of our business.”
While Hellofood is “already quite big” in Nigeria, Falter says there is opportunity to expand further in the West African country. Local restaurants are growing and international brands are entering the market for the first time.
“From a growth perspective Nigeria is an incredibly exciting market.”
Hellofood’s biggest selling vendor in Nigeria is a local eatery called Ghana High.
“Nigerians are absolutely mad for Nigerian food. You go to Ghana High and there are these three ladies, a few tables, and long queues around the block. When I first approached these ladies they were tech-savvy but had no idea what online food ordering was. It is a nice example of bridging the gap between what is a very traditional way of eating, and combining it with modern technology.”