The F&B industry in Malaysia has been hit hard by the pandemic. Yet, the demand for F&B services is still intact. Having to adapt to the new normal has been the challenge for many F&B businesses.
According to Statista, revenue in the Malaysian F&B industry is expected to show an annual growth rate (CAGR 2021-2025) of 11.08%, resulting in a projected market volume of US$183m by 2025.
This week, SME & ENTREPRENEURSHIP MAGAZINE Asia speaks to Vincent Kok, co-founder of Eatcosys, a solutions provider to the F&B industry on how to best tackle the challenges of the pandemic.
So to start with, what inspired you to set up Eatcosys?
Eatcosys is not a business that has suddenly emerged out of nowhere but is the evolution of VMO Rocks Sdn Bhd. VMO originally started as an event venues and services booking platform in 2014.
Over the years as we engaged a growing number of F&B outlets and as we collaborated with other platforms to provide a more complete solution, it dawned on me and my co-founder, Tham Lih Chung, that we needed to build an F&B tech services ecosystem to assist F&B and retail businesses grow from start-up to scale-up.
What are the greatest challenges that you have faced so far in the journey?
In the early years when we were bootstrapped, it was the challenge of being credible to the consumers and merchants who were using the platform. Once we had raised our first round of funding in 2017, it was dealing with copycat sites that mimicked our platform. In fact, one of them even copied our content word for word. Later as we were scaling, there were cash flow issues as we balanced growth and cash.
The pandemic in 2020 presented a total curveball to everyone. The events side of the business was not spared but we were fortunate that we had acquired Boozeat earlier and it allowed us to grow through the pandemic as alcohol sales surged through the lockdown.
The current challenge is now our biggest. How do we integrate so many services and remain cohesive? Are we stretching ourselves thin?
How does the company help F&B merchants scale up?
Prior to the pandemic, restaurants and cafes would use our customer insight data to price their events packages. We have a wealth of information on the pricing spend that customers would spend on a birthday event (there are differences for boys and girls or whether it’s the father or mother who holds the purse strings). With that information, cafes could create packages that best fit the demand of most customers.
Now, the first thing you are likely to do when you are looking for food is that you will use Google search. What you will find, very often, is a FoodAdvisor page at the top or near the top of a Google search result page.
We have a listing service on our search listing pages at FoodAdvisor that starts at just RM200 a year. Any F&B establishment can list their business on our popular listings.
When they are onboard for a listing, they can sign up for digital wallets, card terminals, or online forms with us to make it easy and safe for them to collect monies from their customers.
What are the trends do you see moving forward in the F&B space?
To say digitisation is the way forward would be stating the obvious. But let’s break that down into phases.
The first step is being found online. The “easy thing” to do is to list it through food delivery marketplaces. But in the long run, F&B merchants would have to give up a lot of margins to participate in these channels. In pre-pandemic times, delivery would account for 20 percent to 30 percent of a merchant’s revenue. That delivery cost can be accounted for as marketing expenses. However, when delivery is 80 percent to 100 percent of total revenue, then it becomes unsustainable.
I see what F&B and retail merchants are going through now is akin to what many hoteliers faced when dealing with the online travel agents (OTA) like Agoda or Expedia a few years ago. The OTAs initially started with low fees and over time, as they gained dominance, priced their fees higher and even demanded price parity. Hotels then began to make sure that they did not oversell their inventory on OTAs and took control that no single channel controls their ability to price and sell their products. F&B and retail merchants will have to do the same too.
Phase two is achieving efficiencies. This comes from making sure they get clearer insights into what customers want in the area they are serving, better MDR rates on card terminals, faster resolution time on wallet payments, reducing their ingredient costs etc,
Phase three is loyalty management. How do you identify and sell better to your fans? Simply having a discount is not the answer. A discount is a customer engagement exercise. Loyalty is when you know your customer and reward him accordingly. Sometimes, it’s about offering the customer an off the menu item that only or a special table seating that you know he or she appreciates. Discounting is a lazy approach.
Phase four is then using all these to analyse what is working (or what is not) and grow from there. When you have this figured out, then that’s where financing can come in to help you grow.