Food delivery apps have been a big deal this year, both for consumers stuck at home and unable (or unwilling) to go to a restaurant or grocery store, and for investors considering the opportunity to support rising stars to help them grow.
Today came the latest development in this story: hungry pandawhich makes a Mandarin-language app specifically targeting Chinese consumers outside of China, has raised $70 million to continue its global expansion into delivering food from Chinese restaurants and Asian grocery stores targeting the Chinese diaspora.
Estimates place the number of Chinese living abroad (counting students and first-generation immigrants, and counting those living outside the mainland, Taiwan, Hong Kong and Macau) at about 50 million, most of them concentrated in other Asian countries, so this is a specific target for the startup. Longer term, there are tens of millions more people if you consider second, third and other generations of people, although this will likely bring big changes to the app, including the introduction of other languages.
The funding comes following an increase in the use of HungryPanda. It now has a presence in 47 cities (up from 31 in February this year) in Australia, Canada, France, New Zealand and the UK – the country where it was founded. Having grown 30-fold over the past three years, HungryPanda CEO and Founder Eric Liu said in an interview that it was already profitable in its early markets in the UK, as well as New York, and that it was well on its way to going dark in other places too.
Series C is led by Kinnevik (a prolific backer of e-commerce startups), with participation also from 83North and Felix Capital (which backed HungryPanda in its final round of $20 million earlier this year), as well as Piton Capital and Burda Principal Investment.
HungryPanda isn’t currently disclosing its valuation, but it’s worth noting that most of its four-year lifespan has been spent on startups – it’s only raised $90 million to date, all this year.
Food apps have taken off in 2020. Already popular with consumers who love the convenience of using a phone or website to browse and order food to bring to their doorstep during the COVID-19 pandemic, many Services were expanded to full capacity in towns where people were ordered to shelter in place and restaurants were closed.
E-marketer estimates that in the United States alone, usage has increased by more than 25%. All of this has a cost. For example, the increased measures that had to be taken to ensure social distancing meant higher costs for companies, which are often already strained in their economic unit.
In this sea of apps, however, you might find it hard to tell them apart. At one point in the UK, for example, even the delivery bags and logos of two big rivals, Deliveroo and Uber Eats, looked alike.
HungryPanda is a very different bird from these. For starters, the entire app is in Mandarin. And it focuses primarily (in most cases, only) on Chinese food. If you want a pizza or a burger, or want to read the menu in English, go somewhere else.
The app was founded four years ago by Liu, who was an international computer science student at the University of Nottingham. Coming from China, although there are indeed a number of Chinese restaurants in the city, he and other Chinese students found it almost impossible to order from them.
The reasons? All the menus were in English, and the names of the dishes, as translated, had no meaning to them; and in any case, they’ve all been essentially filtered and tweaked for local (read: British) palates. That was more important than it might be to some: Chinese people prefer to eat “traditional” food, Liu said, and they take eating very seriously.
His solution was to create an app that provided all the information for students like him in a format they could actually use, including items that usually could only be offered on side menus to Chinese customers in Mandarin, if at all. all.
What’s interesting is that while the food delivery unit economy can be very difficult in a sprawling city, the same is usually not the case for HungryPanda. As a general rule, in a company like Deliveroo, the golden rule is to be slightly above two deliveries per hour and per driver to make this hour profitable. This is not always possible, however, in the real world. (And that’s before you count all the other marketing costs, etc.)
HungryPanda, however, delivered to students who were in dorms and often ordered in groups to eat “family style”. This meant that HungryPanda dampened much of the typical unit economy, said Antoine Nussenbaum, co-founder of Felix Capital.
“It made the delivery efficiency much higher,” he added.
The same was true for grocery delivery. Panwen Chen, the global vice president of strategy and one of the company’s first employees, was also a student at Nottingham and said, since even students don’t want to eat out all the time, groceries were almost impossible for him and the others. Like him.
“I didn’t have a car, so getting to the Chinese grocery store in Nottingham meant taking two buses or walking 50 to 60 minutes,” he said. “Before you know it, you’re struggling with very heavy grocery bags. It’s not a nice experience. We then started working with grocery stores, and what we found was that with food delivery, we already had the infrastructure, so it was a natural extension of what we do, to especially since the community was the same. It helped us understand what they wanted as well.
He added that ready-to-eat meals still represent the majority of the startup’s business, both of which are growing very rapidly.
Loading one feature, then two, into the app sets up HungryPanda for how it might develop further in the future. Asia has been a pioneer on this front, with apps like WeChat, and especially those focused on delivery services like Grab, really carving out a niche as “super apps”, offering users a huge range of services beyond the core, the original purpose of these applications.
Consumers and businesses in the wider network are used to the existence of “super apps” and they are widely used. So in a world where some of the local Chinese apps have had a harder time penetrating international markets (and in some cases like the US, they may be squarely challenged to do so), this gives HungryPanda, which is a British app, an interesting position, potentially as a partner or as a serious competitor in these markets.
Indeed, it already offers a wide range of offers to users of partner organizations, which go far beyond ordering basic food.
HungryPanda started for Liu as a side project in college. His plan was to go to the London School of Economics for postgraduate work after completing his undergraduate degree at Nottingham. The business took off, however, and so he postponed for two years. Last year he received the reminder from the LSE to push him on what happens next, and he said he ended up postponing indefinitely for now.
“I think it’s not just a good experience for me, but for the Chinese community that uses us,” he said. He now lives in New York, building the business in the United States