Food delivery service Talabat to expand UAE operations

The company, founded in Kuwait and owned by Germany's Delivery Hero, has a target of doubling the number of riders to 30,000 by year-end to cut delivery times

Food delivery service Talabat aims to expand its UAE operations by doubling the number of riders to reduce delivery times and adding new services on its app to tap into the potential of "quick commerce", its executive said.

The food and groceries delivery app plans to increase the number of riders to 30,000 by the end of the year, up from 15,000 currently, to cut down delivery times to 15 minutes, Jeremy Doutte, vice president of Talabat's UAE division, said in a press conference on Monday.

The online platform is also considering adding more services on its app, as it seeks to diversify its offerings and increase the frequency of customer orders by 50 per cent by year-end, he said, citing examples such as the delivery of medicine prescriptions or the offer of at-home Covid-19 testing services. Research, trials and customer focus groups will guide the new offerings, he said.

Food delivery aggregators such as Talabat and Deliveroo have benefitted massively from an uptick in online orders amid the Covid-19 pandemic.

Online sales for the UAE’s food and beverage market surged 255 per cent year-on-year in 2020 to $412 million, according to a study by Dubai Chamber of Commerce and Industry released in February. The value of online food and beverage sales in the country is projected to reach $619m by 2025 and record a compound annual growth of 8.5 per cent in the period between 2020 and 2025, it said.

Talabat, which in 2015 was acquired by Germany's Delivery Hero, recorded 90 per cent year-on-year growth in online orders and 100 per cent year-on-year growth in app downloads during the first half of 2021, according to a company presentation.

The company reduced delivery times to 28 minutes in 2020, from an average of 40 minutes in 2018-2019, it said.

Talabat may not reach the target number of riders this year due to Covid-19-related travel restrictions on key source markets such as India combined with the long timeframe to acquire driving licences and complete training , Mr Doutte said. Talabat's riders are provided by third-party logistics companies, it said.

As part of its UAE expansion plans, Talabat will also be adding more cloud kitchens. Also known as ghost kitchens, these are commercial establishments built to prepare food specifically for delivery and they have benefited from the shift to online services during the coronavirus crisis. They have no physical presence as a restaurant and offer delivery-only services from a centralised location through a mobile app.

Talabat plans to add 12 cloud kitchens, in addition to its existing seven units, by the end of this year as they help reduce costs and increase operating margins, Mr Doutte told reporters.

The executive expects that about 30 to 40 per cent of its future deliveries in the next three to four years will be prepared in cloud kitchens to cut down on food delivery timings.

Last year, the online food delivery platform introduced initiatives to help its restaurant partners weather the impact of the Covid-19 pandemic that took a huge toll on the sector. Talabat waived and deferred fees for restaurants for six months but this agreement is no longer in place, Mr Doutte said.

In March 2021, Talabat also settled commission payments to restaurants twice a week, up from once a week previously, to help them manage cashflow, he said.

Delivery app commissions became a point of dispute between restaurants and the major food delivery apps last year during the height of the pandemic.

Founded in Kuwait in 2004, Talabat operates in markets in the Middle East and North Africa, including the UAE, Saudi Arabia, Oman, Bahrain, Qatar, Egypt and Jordan.

It expanded into Iraq earlier this year with operations into Erbil, the Kurdistan region's capital and the most populated city in northern Iraq, Mr Doutte said.

In 2019, Talabat bought the Middle East operations of Zomato but it has allowed it to retain its brand identity. However, it absorbed earlier acquisitions such as Kuwait's food delivery platform Carriage and Egypt's Otlob under its own brand.

Mr Doutte declined to comment on any potential new acquisitions.

The company's network includes more than 15,000 restaurants and stores and nearly 24,000 branches. Some of its partners include global brands like Burger King, KFC, Pizza Hut, Papa John's, TGI Fridays and Subway.

Updated: July 13th 2021, 3:31 PM
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