- Launched: 2013 (Operations in Thailand began in 2014)
- Funding: Bootstrapped until Series A, US$15.5 million in total funding to date, investors include: Tripadvisor
- Markets: Thailand (Bangkok, Pattaya), Singapore, Malaysia (Kuala Lumpur), Hong Kong
- “A restaurant always makes more money with eatigo than it does without,” says Cluzel.
Funny how a company that raised over $15.5 million in funding and is backed by one of the largest names in travel, TripAdvisor, all started with a graph.
“What I noticed were the inefficiencies of airlines, hotels and restaurants,” shares Michael. “The global sit-down restaurant market is worth $2.6 trillion but restaurants operate at only 30% capacity and was the only stream being underserved, whereas hotels have always practiced yield management and airlines have to run at 80%.”
So how do companies fill empty airline seats, hotel rooms or unseated tables?
By anticipating or modifying consumer behaviour – in this case, eating outside the typical meal times to save money – returns that would otherwise not exist can be maximized. Enter eatigo, a restaurant reservations platform that offers discounts at off-peak hours to fill otherwise empty establishments.
Creating an ‘exportable business’
To date, the company has seated over 4 million people at 1,000 restaurants across the region and operates in Thailand (Bangkok, Pattaya), Singapore, Malaysia (Kuala Lumpur), and most recently, Hong Kong.
eatigo has also accomplished something not many startups in the region can say,
“Our LTV is bigger than our CAC so we have positive unit economics.”
“Every month I can decide if I want to invest in growth or be profitable, it’s a healthy business at its core,” comments Michael. “I wouldn’t invest my own money otherwise.”
But like most success stories, it didn’t happen overnight. The app actually had zero bookings for 2-3 weeks when it first launched.
“But it was fine, there is no shortcut to experience.”
“It took us two years to understand exactly what we’re doing to allow us to scale. We didn’t rush into it at all,” says Michael. “And that’s why the challenges that face us now are purely executional.”
“Think of an empty table as a perishable good – fixed costs are incurred, an electricity bill is incurred and contribution to an empty table is zip.”
By incentivizing patrons and partners alike to give some and get some, restaurants – the fixed asset owners – win, the consumer wins and the startup itself wins. There is profitability on every table.
Michael, an avid user of the app himself, says eatigo is open to partnering with anyone from McDonalds to Michelin, the only factor being the restaurant needs to have a good reputation and healthy foot traffic. Upcoming partners in Thailand include The Coffee Club and Wine Connection.
His steps to obtaining an exportable business? A lot of trial and error and consideration of these factors:
- Are we entering a sophisticated market or do we need to educate?
For an emerging market like Thailand, there isn’t much competition but penetration and understanding of ecommerce is quite low so it needs education. Sophisticated markets like Singapore means consumers are comfortable with paying with credit card online but is crowded.
Another question important to eatigo when looking at market potential:
- Will the demographic be comfortable on mobile? 95% of bookings are made through the mobile app.
- All of Southeast Asia has a discount affinity and so,
“You can’t make a non-discounted booking on eatigo, users will always pay at minimum 10% less and our partners must offer 50% off at some time of the day.”
- Two eatigo alpha markets – Thailand and Singapore – both have an ‘eating’ out culture and spend a higher percentage of their disposable income on eating out than Germany.
The company also discovered interesting quirks about each market and tailored its UX to be widely usable across the region:
- In Thailand, users like to browse, they don’t like to fill out forms or click through menus and they respond best to photos of food.
- Singaporeans are cerebral and typically know which restaurant they want to dine at and they respond best to photos of the venue.
- Malaysians are more impulse bookers and Hong Kong users like to dine in groups.
- But across the different Southeast Asian markets, reservation habits aren’t too dissimilar as eatigo data reveals.
- “The delivery market is a red ocean whereas total eating out spending is 8X bigger than delivery,” says Michael.
If you look at companies trying to scale in Southeast Asia, it’s all flags, no troops. They open offices everywhere but 90% of their revenue comes from HQ.
As the company grows, professionalization of the company – getting more efficient in processes and simply “growing up” as a business – is vital to sustainable growth. The founding team also has an average age of 40 and have all managed sizeable businesses before.
“We’re like a teenager now, we’re not nobody but we’re not a somebody yet – we have traits from a corporate business but corporate processes don’t work in a startup,” says Michael.
KPIs are a) time to market and b) time to meaningful revenue
“eatigo is not a marketing company, we’re a bottom-line company that is able to differentiate yielding and marketing.”
After only two months, eatigo shares that Malaysia and Hong Kong are hitting reservation levels that took Thailand and Singapore over one year to reach.
The new markets after two months already make 15% of total revenue.
But no company is without its own set of challenges:
“We’re like Uber and AirBnB in the way that we are the interface, it’s not a problem of demand, the challenge comes with the supply. The user wants the discounts so we need to deliver a section of good merchants. We will never have 7,000 merchants in Bangkok because it’s not about ubiquity and once we hit 800-900, we begin changing bad ones and good ones,” says Michael.
“I can always invest money to get more users but there is no shortcut on inventory.”
A crowded food space
In the past few years, a number of food commerce startups have emerged to capture the growing appetite of Southeast Asia’s booming population. They include Offpeak, Hungry Hub, foodpanda, UberEats, etc. to name a few but eatigo isn’t worried, the company has never been about niche, it’s about eating out, relevant to everyone everywhere.
“eatigo’s moves have never been influenced by others – we do what’s strategically in our own interest. People think it’s easy to just copy business models but you can’t look from the outside and know our playbook.”
And what about the boom of delivery apps driving the ‘eating in’ culture?
“Delivery is need based and eating out is opportunity based – let’s go out because I’m bored and I want to be with friends,” explains Michael. “When people decide to eat, the choice to eat in or eat out has already been made, eatigo is there to help them discover where they want to go.”
“Delivery also creates strain – they tend to happen during peak hours when the kitchen is already full. 95% of our traffic happens when kitchens are empty.”
What’s on eatigo’s plate?
“Finish our roll out to be in 6-7 markets, prove scalability, establish ourselves as a dominant regional player and move into next round.”
“We’re in the business of changing human behaviour and to succeed, you need either a lot of time, a lot of money or you need a good reason,” says Michael. “We have the reason.”