Takeaway portals suck. For high-frequency services such as takeaway it should really only take seconds for users to transact. It should not require the kind of brainpower the current incumbent services do.
HUNGR was founded exactly to change that. But after 12 exciting and exhausting months of turning the industry’s “yellow pages” experience into a truly mobile 3-tap experience, we have decided to close up shop.
The business idea of HUNGR was simple: We would sign up only the 20% best rated delivery restaurants – ALL the restaurants on HUNGR would thus be good and would save the user from the market-places’ endless scrolling and risk of picking a bad restaurant. Also, our research showed that 93% of people who order takeaway care more about the food and delivery quality than about the brand of the restaurant when ordering for delivery. This insight inspired us to create the industry’s only app where the user picks the dishes from a generic menu-card first, and then in a 2nd step sees a short list of the restaurants that are closest, has the cheapest basket price (a completely unique feature) and are the best rated. HUNGR would make it much easier to order food online – something like a Hotel Tonight for takeaway.
The first 6 months of our venture went great. We raised capital from an experienced group of angel-investors, we built an amazing high-energy team, signed the 200 best delivery restaurants in Berlin, and launched the first version of our app in a shape close to what we originally had envisioned. We were on fire!
The Launch itself also went great. We saw faster 1st month order growth than any takeaway market-place – and we saw 38% of our users in September order again in October. Exciting times it was. But that’s also when the reality of this horribly over-crowded market hit us.
Obviously we knew it would be competitive. And in our business case we had planned with a marketing cost that was well above the benchmarks we had from the existing market-places. However, since we started planning HUNGR in late 2014, irrational competition has driven the cost to attract new users to extreme levels – everybody is loosing money. Especially in the major cities which is where the HUNGR concept makes the biggest difference. With the 10% commission that HUNGR charges to restaurants it would take +20 orders just to make back the initial marketing cost of attracting a new user. Add to this the cost of future reactivation and loyalty initiatives and we were looking at 2 years just to break even on the marketing cost for a new customer.
In the last months it became clear that to drive down this upfront acquisition cost we would need to invest heavily in the brand to shout loud enough to get heard through the market noise. We would have to roll out nationally to reach users through a broader range of marketing channels and to tap better into organic app-store downloads, PR and TV. And to do that would require a risk-willing investor with deep pockets to fight it out with us in a red hot market.
Unfortunately, finding a partner with serious funds for a crowded market before having proven attractive and repeatable KPI’s to show is not feasible. And thus, we have decided to put HUNGR on the back burner until the dust settles a bit in the industry. We got the timing wrong, but our belief that the market-place must evolve remains unchanged. With consumers spending +$100bn every year on delivery food they will surely not stand for a web 2.0 experience forever. Hopefully, other innovative food startups will pick up the baton and succeed.
Even with all this said and done, we have no regrets. Albeit risky, starting a business from scratch is an incredible learning opportunity and fulfilling life experience that has made us all smarter and ready for our next ventures. It was a honor to fight in the trenches with Lorena, Raffaele, Boris, Friederike, Else, Bruno, Adolf, Eleonora, Dimitri, Martijn and Eimear who all put their heart and soul into HUNGR. Count on us all to continue to push the digital evolution!