Dinner is served — sans the hassle of shopping or takeaway grease
UCook has to keep on the boil as competition threatens to enter meal-kit market
When my first big cardboard box arrived from UCook, it felt like Christmas for adults. I reverently set it on the kitchen counter and pulled out three brown paper bags and an envelope containing pretty recipe cards. There were bags within bags, filled with noodles, broccoli, snippets of herbs, sprinklings of spices, and a titchy tub of sour cream. So cute! Out came a garlic clove, a lemon, a tiny onion and an ice-cold fillet of angelfish.
I hopped with delight as each item emerged — such is the sad life of a singleton who can’t be bothered to shop, let alone prepare real meals every day.
I don’t care that it cost R330 for three meals, or that I have to cook them myself. I’m going to enjoy sophisticated food without schlepping around a supermarket, wishing stuff came in portions for one, not families of six, then risking food poisoning by leaving the excess festering for days because I’m too environmentally considerate (or stingy?) to fling it out.
UCook is not just convenient, it’s fun. Would I normally ever contemplate cooking angelfish laska with fragrant coconut broth, broccoli, peas and tomato salsa? Nope. I’d just open a can of soup.
CEO David Torr knew his market when he founded UCook three years ago. It delivers 15,000 to 22,000 meals weekly, touts health as a selling point, and uses sustainable, ethically sourced ingredients from organic small-batch farmers.
The firm has burned through R5m getting to a place where it’s "profit neutral", but Torr is happy with that, and reinvests the revenue into operations. "We’ve scaled very nicely from revenue of R40,000 a month two years ago to R7m a month now. We’re not aiming to be profitable, for tax reasons, but we have a firm target to be profitable at the end of next year," he says.
The initial 500% year-on-year growth slowed to 180% in 2018 off a larger base, with aims for a modest 30% growth next year plus profitability.
Torr describes his background as "unconventional", having been expelled from various schools before dropping out of university after a fortnight to spend two years travelling. He came across a dinner-kit delivery service in the UK, and explored it fully when he returned to Cape Town.
Initially he and friend Chris Verster-Cohen packed the boxes themselves, holding down jobs as waiters to fund it. The breakthrough came when local venture capitalists Silvertree Internet Holdings pumped in R5m in exchange for a 50% stake. "When they invested in us a lot of people thought: "I don’t know if that’s a good idea" because we were doing 25 boxes a week and operating out of a garage in Newlands!" Torr remembers. "I was so happy, and I’m pretty sure Silvertree is happy with its investment now."
UCook employs 90 staff including 55 labourers, because weighing and packing the different portions is labour intensive.
The problem is that gaining customers can lose it money, as each single-portion meal costs more to pack and deliver than it earns. "We’re losing money on every bachelor box because it’s cheaper to deliver for four people than for one, but as advocates of the product it makes a lot of sense to target bachelors," Torr says. "They have been absolutely key in instigating growth because this scales through advocacy."
Other customers who don’t help financially are those who live far from its food hubs in Johannesburg and Cape Town, with meal boxes having to be flown to Durban and Port Elizabeth. Though the plan is to expand nationwide, Torr says it was an early mistake to select its areas according to the LSM of a given region. "It can cost R1,500 just for the delivery," he says.
There are two rivals in the market, and UCook claims to be five times bigger than either. But fiercer competition is threatening. "It will become more competitive because we are going to see big retailers entering the space. Woolworths has already done a trial and I’m sure Checkers is looking with interest."
UCook is at a point of transition. While its dinner kits have generated customer figures among the best in the world, it could reach a bigger market by dumbing down a little.
"We believe in giving people access to healthy, organic ingredients in recipes that have a bit of upskilling so they’re learning something new, but a large number of people don’t have time to cook even three times a week," he says pragmatically.
So he will introduce ready-made frozen meals in 2018. "Historically people have a low opinion of frozen food, saying it doesn’t contain enough nutrients and is full of emulsifiers, but I came across a business in the UK that has reinvigorated the idea with a different process that freezes in five seconds so you lock in the nutrients," he says. "It’s a natural progression and it opens up a new benefit, because we tout convenience, but there are more convenient options, like Uber Eats. So if you can cook one day a week but the rest you’re not sure about, this will cater for that much bigger segment." It might temporarily stymie the profit plan, he acknowledges, since he’s not yet sure how much the specialised equipment is going to cost.
Another change will allow customers who do have time to cook to order four meals a week instead of three. That will see the weekly choice of nine meals rise to 12, adding operational complexity with more sourcing, sizing and packing to be done.
Changes to UCook’s model, impending encroachment by the big boys and customers who cost it money make the dinner-kit service a tricky business. No wonder Torr has lost weight in recent months — despite being surrounded by delicious food.