Yemeksepeti: Operational Excellence in Online Food Ordering
Providing its customers with a simple, rich and well-working online food ordering portal, Yemeksepeti has been a global case study for successful investments in the field of online food delivery.
Founded in late 2000 by three entrepreneurs, Yemeksepeti (“the Company”) has become one of the most successful online services companies in Turkey and in the region. In its 15 years of operational history, the Company achieved remarkable reputation and financial success. With its sustainable and growing business, Yemeksepeti has exploited its expertise and capabilities further and launched growth plans to add other countries to its operations. Started in a 400 square feet living-room, servicing only couple of neighborhoods in Istanbul, Yemeksepeti currently processes over 100,000 orders daily from 62 provinces of Turkey. With more than 10,000 member restaurants and millions of users, the Company continues its operations in United Arab Emirates, Greece, Qatar, Oman, Lebanon, Jordan, Saudi and Turkey.
With consistent high double-digit average annual revenue growth rates, Yemeksepeti generates revenues from orders processed, one-time gate fees, annual subscription fees, web-site advertisements and annual maintenance services.
Management team of the Company explains the business model of Yemeksepeti as follows:
Yemeksepeti is an efficient, simple and rich marketplace for real-time food ordering. The Company functions as a broker between the users who search for the most convenient ways of food delivery and the member restaurants that are searching effective ways to boost their business volume while promoting / marketing their menu. Bringing supply and demand in real time by eliminating process-based problems is the key to the success of this business model.
What made this a difficult business segment to operate?
Both parties had concerns and reasons:
Restaurants
- “I don’t want to pay to this platform before making money or securing an order.”
- “I don’t trust any intermediaries for my own transaction with my customer. My service, my food, my payment.”
Customers (Users ordering food)
- “I don’t want to share my bank account / credit card information online for a $5 transaction.”
- “What if I don’t receive my order at all? I will not pay for it before receiving it.”
- “Who is going to help us 24/7 if I need help?”
- “I definitely don’t want to pay an extra fee (delivery fee & inflated prices) for this service.”
- “I don’t trust this restaurant or their quality of food.”
Operating Process: Yemeksepeti finds a middle ground
A process designed to address the concerns
The user chooses her restaurant from a list of member restaurants which can be filtered by their location, cuisine, etc. Using either the Yemeksepeti.com website or the Yemeksepeti Mobile App, the user completes and submits her order. Yemeksepeti conveys the order to the member restaurant’s computer dedicated to Yemeksepeti orders. Member restaurant prepares the order in around 15-45 minutes and hands it to the motor-courier (employed by the member restaurant). When the user receives the order, she pays the motor-courier with cash or credit-card at the door (all credit or debit card payments are processed by mobile POS machines at the door). As soon as the delivery is complete, member restaurant makes a commission payment to Yemeksepeti. User may rate the restaurant’s quality of food and service together with its speed of delivery on the Company’s online feedback platform and provide detailed information for other users seeking measurable data before ordering food.
Timely information flow is the key
The most common problems encountered throughout this process are almost always information flow based. Yemeksepeti interferes with its full-service call-center services whenever something distorts the fluidity of the process (User updates the order, cancels order, leaves house; member restaurant runs out of a particular menu item, is closing early, runs out of delivery personnel, cancel deliveries due to weather conditions, runs late for the delivery schedule etc.). Timely delivery of the most recent information in both ways between users and member restaurants has been the key reason for the Company’s long term success.
Conclusion
With this established efficient operating model, the Company has been keeping its business model promise for almost 15 years. Alignment between a business model that offers a functional and simple marketplace and an operating model that adds value to both parties in the process gives the Company its competitive edge. Majority of member restaurants define Yemeksepeti as a platform that has changed the way the restaurants did business. This highly effective and mutual relationship between the Company and its member restaurants benefits the customers (users) the most through increased customer care, with no surprise, leading to constantly escalading retention.
References:
http://www.wsj.com/articles/delivery-hero-acquires-turkeys-yemeksepeti-1430802002
http://www.inc.com/zoe-henry/this-is-the-grubhub-of-turkey.html
Meetings & Informational Interviews with the executive management and shareholders of the Company
http://www.boardofinnovation.com/2011/09/17/a-strong-e-commerce-business-model-yemek-sepetiu-turkey/
http://www.wamda.com/2014/11/yemeksepeti-gains-foothold-in-jordan-with-majority-stake-
Even though I can’t understand the language, that commercial was hilarious.
I have some serious doubts about the sustainability of this company’s business model. I see that they have 15 years of outstanding customer service, but their value creation is not very proprietary. The service can easily be replicated by the restaurant or a cheaper competitor. UberRUSH is also looking to enter this space without the need for the restaurant to employ the delivery staff.
Thanks for the comment JPB!
I will try to give you a bit more insight about the model and the competitive landscape:
– In the past 15 years, the Company’s growth never slowed down, stopped or turned negative. In the first five years into its growth between 2000 and 2005, the Company heavily built its brand equity through proven growth it provided its member restaurants with.
– In the past 5 years, there have been strong / weak attempts (global and domestic players) as mentioned in your comment (actually this is one of the reasons why I wrote about this company). Yemeksepeti very very easily overwhelmed new entrants proving its simple yet crystal-clear and successful business plan. There are two reasons to this: Member restaurant owners have been smart enough to be not-price sensitive. They are traffic & growth & volume & reach & accessibility sensitive. Yemeksepeti’s established network makes this business very unfeasible to compete with (organic green-field competition is impossible + there’s no inorganic opportunities).
– For Uber: In my post above I mentioned the concerns of member restaurants in the region. Neither customers nor restaurants will give away their control in the process by transferring delivery and payment processes to a third party (and also, Uber would have to gather 10,000 member restaurant on a platform, making these restaurants violate their agreements with Yemeksepeti).
All in all, the service can be replicated but the whole business/operating model cannot be copied. Considering, being listed as a restaurant on Yemeksepeti is a source of pride for restaurants, this company’s accomplishments don’t seem to be temporary.
Thanks for sharing Ercu!
I heard about this company when I was researching Turkey for my Field 2 assignment and was amazed by their success. I think they were bought by Delivery Hero (German company that operates internationally in over 29 countries) for $589M earlier this year. I believe Yemeksepeti and other delivery services are able to add value due to traffic congestion in most of the cities/countries it operates in. Ive heard the traffic in Turkey is horrendous and can take from 1-4 hours. The delivery bikes can weave in and out of traffic to deliver within 45 minutes. Consumers are willing to pay a higher price as they do not want to be stuck in traffic for hours. Additionally, restaurants capture customers that would not otherwise be at their physical location. I would be worried about the longterm success of the business model as it seems easily replaceable by other companies willing to offer a lower price.
Melissa thanks for writing! I am copying the response I’ve written for JBP as a reply to a similar concern (as this was the rightful concern of many potential investors at the time who didn’t invest in the business). And yes you’re right about the sale, I didn’t want to mention the latest transaction just to highlight the business & operating model.
– In the past 15 years, the Company’s growth never slowed down, stopped or turned negative. In the first five years into its growth between 2000 and 2005, the Company heavily built its brand equity through proven growth it provided its member restaurants with.
– In the past 5 years, there have been strong / weak attempts (global and domestic players) as mentioned in your comment (actually this is one of the reasons why I wrote about this company). Yemeksepeti very very easily overwhelmed new entrants proving its simple yet crystal-clear and successful business plan. There are two reasons to this: Member restaurant owners have been smart enough to be not-price sensitive. They are traffic & growth & volume & reach & accessibility sensitive. Yemeksepeti’s established network makes this business very unfeasible to compete with (organic green-field competition is impossible + there’s no inorganic opportunities).
– For Uber: In my post above I mentioned the concerns of member restaurants in the region. Neither customers nor restaurants will give away their control in the process by transferring delivery and payment processes to a third party (and also, Uber would have to gather 10,000 member restaurant on a platform, making these restaurants violate their agreements with Yemeksepeti).
All in all, the service can be replicated but the whole business/operating model cannot be copied. Considering, being listed as a restaurant on Yemeksepeti is a source of pride for restaurants, this company’s accomplishments don’t seem to be temporary.
I belive that Yemeksepeti’s business and operating alignment will be put into challenge in its expansion outside of turkey. Given that it has been around for 15 years in turkey, customers and restaurants might have grown accustom to it. However, in other middle eastern countries cash is still the main mean of transaction, as infrastructure for credit card transaction are not up to par with Turkey, yet. Moreover, restaurants might not trust the third party to deliver their food or at least would take time to develop that level of trust. At the same time, there care growing local competitors in this market such as hunger hub and talabat that already partnering with restaurants and providing guarantees. Nonetheless, with 15 years of experience in the delivery market, Yemeksepeti is probably the most experienced and technologically advance. An potentially interesting business model outside of turkey is to join venture with local food delivery companies that already existed in the market.
Thanks for writing Aziz!
You are definitely right about the expansion moves outside of Turkey. It’s been a challenge and the management of the Company is trying to take only the right steps as they are still building the name for the industry (delivery, payments, trust, eating outside of home etc.).
Who knew Turkish adverts could be so spunky?
Thanks for sharing – it’s a well-written post and an interesting company. You’ve done a great job explaining their success. I think a large part of this success also has to do with the following points:
– Increased internet penetration in Turkey in the last decade; between 2005 and 2010 alone, penetration grew almost 3x from 15% to 40%. It’s probably over 60% today.
– This business model is well suited for densely populated cities like Istanbul, where horrible traffic is rampant, and delivery drivers using motor bikes are able to navigate in small amounts of time.
The website is attractive to customers as long as it provides enough options from which to choose, and it is attractive to restaurant owners as long as the orders are being placed by new users and therefore increasing their overall business. There is therefore a clear case for its monetization; however, I wonder if the model will migrate towards that used in mature economies like the US. American food delivery services Seamless Web and Grub Hub, for instance, charge restaurants around 13.5% commissions on the food, 0% for customers, and do not charge any membership/subscription fee.
Ercu – thanks for sharing this. It seems somewhat similar to GrubHub, Seamless, Door Dash, and a few other services here in the states. What struck me, though, was how the delivery mechanism is actually provided by the restaurants. Is this something that is already part of each restaurant’s business model? How can Yemeksepeti (the Company) expand its selection of restaurants to include those that do not have a delivery service? Is the Company looking to expand into providing its own delivery system to be more inclusive of all restaurants (with and without preexisting delivery mechanisms)? How can it maintain a competitive advantage to keep the Seamless’s and Door Dashes of the world from entering the Istanbul market? Recently, Dilveroo received a large round of funding to expand its delivery service (mostly restaurant food-based) throughout the UK. It’s an interesting marketplace, but it seems it is being crowded by competitors. Perhaps the Company has an advantage with exclusive deals with partner restaurants, in which case it has a distinct advantage over newcomers.