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SMEs stirring change in local food service industry

By Sara Okuoro | July 9th 2020

For most Kenyans growing up in the 1980s and 1990s, the food experience was very mundane. Those living in urban areas would source their food in a variety of ways. Ranging from purchasing foodstuffs at supermarkets, the local market, a kiosk or for those with means, a night out dining in a fine restaurant.

For those living in rural areas, the experience was quite similar. They would additionally sourced their food from the smallholder farms which were located around their homes.

The food service industry greatly evolved in the early 2000s, especially as the world went mobile. Consumers demands and specifications changed as they became more time-sensitive and embraced the conveniece of technology. 

The global COVID-19 pandemic has taken a toll in the hospitality industry, forcing some players in the sector to close shop or restructure operations to minimise human contact and therefore curb spread of the virus.

The growth of online food delivery services has spiked the emergence of several players within this industry who are seeking to leverage technology to maximize their profits. Through the use of smartphones and cashless payment services, apps are creating a new ecosystem.

One such player is FreshPro. The company has partnered with farmers to enable produce to get to consumers. 

Ahmed Ibrahim co-founder of the organization tells us that the company has partnered with over 500 farmers in Kiambu County to enable their produce to get to market.

"We have partnered with several farmers within this County and it is proving to be fruitful. We acquire the produce from the farm on order and delivery it fresh to the customer's doorstep the next day.," said Ibrahim. `

The worldwide trend of virtual kitchens is increasingly a popular operating model for restaurants to take advantage of a growing demand for convenience and to manage their costs.

Virtual or cloud kitchens are basically establishments that primarily make food for direct delivery purposes only, without any physical restaurant set up.

Nairobeans is a local virtual kitchen that has taken advantage of tech and is leveraging the use of a website to receive orders and also to track stock. The company sources and pre-boils pulses like beans, chickpeas and maize before packaging them for sale in various quantities.

"I really heavily on my website and Instagram to receive new orders especially as they have a wider reach. However, this is only during the first order as most clients prefer doing the return transactions by contacting me directly,” said Peter Wachira the founder of Nairobeans.

“The use of tech helps a lot as I am able to know when I need to restock and acquire a fresh batch of a particular product from my suppliers as well as to gauge the most popular order,” he added.

Despite the growth of the technological models however, both agree that the initial impact of the government measures on the pandemic saw increased panic shopping amongst their consumers.

"I saw an increased volume in unit quantities when the national government first announced restrictions due to the Covid-19 pandemic. I guess that this was due to customers panic buying in anticipation that there would be quite stringent restrictions on movement,” said Wachira.

The sentiment is mirrored by Ibrahim who also experienced a spike in business during the initial lockdown period.

“We did experience an increase in the volume of orders during the initial stages but we feel that this is mainly because of panic buying by our customers who were seeking to stockpile,” said Ibrahim.

This finding has been backed by Visa, the global payments firm according to whom many consumers in Kenya started shopping online for the first time during the pandemic.

According to the COVID-19 Impact Tracker, a study recently conducted by the firm, 39 percent of consumers surveyed by Visa say that the pandemic has led to their first online grocery purchase which points to a shift towards online commerce with cash transactions being replaced by digital payments.

The report also highlights increased anxiety with consumers staying away from all but essential retail.

Commenting on the report’s findings Corine Mbiaketcha, General Manager for East Africa at Visa said that the pandemic has ushered in a new era in business.

“The pandemic is impacting business everywhere. The findings of the COVID-19 CEMEA Impact Tracker suggest shoppers have changed how they shop and this is already having a major impact on how merchants do business,” said Mbiaketcha.

“As consumers adapt to the current restrictions, many have changed how they shop and turned to online outlets for their shopping. These changes present challenges but also enormous opportunities for all merchants,” she added.

This new environment bodes well for any players in the foodservice industry who may be thinking about going online as the impacts of the pandemic are enabling the development of a new marketplace which is characterized by far less direct human-to-human interaction and a larger digital footprint.

Covid 19 Time Series


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