The Rocket, a Ukrainian food delivery business, picks up its pace and establishes its international presence. In the midst of the pandemic, the company has added ten cities to its network, partnered with McDonald’s, and is probing new markets. Today the Rocket operates in 28 Ukrainian cities, working with 3,000 restaurants. It has entered Cyprus and the Netherlands markets, cooperating with almost 200 and 50 establishments respectively.
The Rocket’s co-founder Olexiy Yukhimchuk shared the story of how the Ukrainian ‘rocket’ managed to ‘take off’ and cross Ukrainian borders in two years, unveiling some plans for the future.
In 2018 in Dnipro, you’ve founded the first Ukrainian food delivery company, which had its mobile app. How did the idea come up?
By 2018 I and Stanislav [Stanislav Dmytryk is another co-founder of the Rocket ] have already had an experience of creating start-ups. By that time, we’ve already understood that the business with a high frequency of purchases tends to be profitable. The thing is that clients’ acquisition consumes the lion’s share of the marketing budget. If both the frequency of purchases and the profit margin are low, the business is unlikely to become profitable. The same person can order several food deliveries a day, which is a lot. That’s why we went into the food delivery business.
At first, we were developing our enterprise as a part of the Pokupon. However, the company wasn’t ready to make necessary investments. That’s why we’ve found an investor who bought the Rocket and made it an independent project.
‘The business with the high frequency of purchases tends to be profitable’
Had you studied the Ukrainian market before you founded the company? Did you carry out some audience research or something like that?
No, we didn’t do any specific research. We’ve noticed the boom of the food delivery markets in Europe and the USA — the companies such as DoorDash, Takeaway, UberEats. At that time, food delivery services in Ukraine were on their 1.0-stage. The aggregator just collected orders, transferring them to the restaurants, which had to deliver the food themselves. There was no full-fledged intermediary between the client and the food producer.
So the need for more advanced services was obvious. The Rocket became the new generation company in 2018 [the name was changed in December 2020]. Back then, it was the first and the only food delivery service in Ukraine, using the food tech 2.0 model. That meant we took responsibility for the terms and quality of the delivery.
The experts claim you’ve managed to create a successful business because your team of local managers was quick to grasp the situation in Ukraine. Is that true? If yes, what was the situation?
Surely, as locals, we understand the situation in Ukraine. However, it’s impossible to point out the ‘key ingredient’ which made us what we are now. I’m sure that several factors came together: the right timing, product, and the team.
We are building a three-way marketplace and trying to maintain close communication with partners. Each restaurant has its account manager, who can solve the current problems. It allows us to keep close contact.
Besides, I don’t think we’ve succeeded already. We have a lot to do.
‘I don’t think we’ve succeeded already’
What are the top things on that to-do list?
The first thing is to become a global company, which will enter the markets of 10 countries by 2021. There are some other tasks, such as investing in our own restaurants and shops, which would provide food exclusively for delivery.
Now your company operates in Cyprus and the Netherlands. What are the peculiarities of operating in those countries? Which country is the next on your expansion list?
Each country is special and has its regional features, including mentality, legal nuances, etc. That’s why moving to a new market requires detailed preparation. Today we can tell only that the Rocket will soon be launched in Slovenia. The other countries will be announced later.
Can you claim that your company isn’t hampered by internal bureaucracy, characteristic of the big enterprises, which helped you develop quickly?
We launch our service with a small staff. Surely, that helped, as all problems were solved in no time. However, I believe our ‘secret ingredient’ to be a motivated and result-oriented team, no matter how cliché it sounds.
Do you think the internal bureaucracy was the reason for UberEats to exit the Ukrainian market?
UberEats postponed entering the market and lost its opportunity to sign contracts with many partners. As a result, the head office considered the financial performance of the company to be unsatisfactory and halted operations in Ukraine.
‘UberEats postponed entering the market and lost its opportunity to sign contracts with many partners’
Which events on the market became lessons for you?
The main event was the lockdown. We had to adapt our logistics quickly and develop a competitive mobile app.
Another challenge was the simultaneous launch of the Rocket in 10 cities and adding McDonald’s to the list of our partners. We had to scale the business fast to meet the new partner’s high standards.
Which skills were the most valuable this year? Which new ones did you acquire?
Quick adaptation, staying on top of things, agility. Another important skill was personnel management as the company grew in geometric progression. Building the processes inside the team was of prime importance.
What is the number of employees now? How do you motivate people?
We have more than 300 members on the staff and almost 4,000 couriers. Each city where the Rocket operates has its regional team managing the workloads and optimal motivation for the couriers.
How do you manage route planning, especially in new cities, countries? Are there any difficulties?
None at all. Automated systems create the routes. The process is optimized.
Let’s discuss the effect of lockdown in more detail. How did it influence your end customers and partners? What did they start paying more attention to? Why?
Before the lockdown, we almost had to beg the restaurateurs to become a part of our network. Now they are queuing to do that. The restaurants understood the benefits of third-party delivery and will use it even after the restrictions are lifted.
‘Now we have a queue of those who want to partner with our company’
The consumers, who’ve tried a food delivery service for the first time, are starting to do it regularly. It is convenient and saves time.
What are your top priority projects now?
Transforming the Rocket into a global company is on the top of our list. Besides, there are several other interesting projects. For instance, our own dark kitchen and cloud kitchen restaurants. Their mission is to make the menu of the top restaurants accessible in the bedroom communities. That, of course, will allow us to boost the number of customers. In future, we also plan to proceed with the dark store model.
‘In future, we also plan to proceed with the dark store model’
How do the dark kitchen and cloud kitchen differ? How many such establishments do you have? In which cities are they located? What cuisine do they offer?
Dark kitchens are restaurants that only deliver food and don’t accommodate visitors. A cloud kitchen is an extended version of a dark kitchen, uniting several restaurants on one site.
We have five brands of dark kitchens at the moment. All of them are located in Kyiv. They are Kukhnya (European and Ukrainian cuisine), Early birds (breakfasts), Salato (healthy food), Lucky Fish (sushi and rolls), and Shawarma Bar (street food).
Please, tell us more about the dark store model.
It is an innovative retail model. We will have our own chain store, which offers only food delivery. The customer will receive his or her model in less than 15 minutes.
When will the chain open, and what assortment will the stores offer — food or other goods?
The project is still in its initial stage, so we can’t say anything yet.
Some people are convinced that food delivery services became a ‘golden mine’ during the lockdown. Are they right?
Surely, the pandemic boosted the market growth. However, it also brought challenges in logistics, development, and employing more personnel. That’s why it is too early to talk about the ‘golden mine.’
‘The pandemic boosted the market growth’
And what about numbers? What was the client surplus in 2020?
It’s hard to say for sure. The lockdown coincided with the period of our active growth and powerful marketing campaigns. During the first lockdown, the number of orders was growing 100% each month.
Which partners provide the most orders at the moment? Is the statistics in Kyiv different from those in other regions?
Fast-food chains McDonald’s and KFC provide almost half of the orders. That coincides with a global trend. In Ukraine, the “Puzata Khata” restaurant chain also makes it to the top. Those three are the leaders in the cities where they operate.
‘During the first lockdown, the number of orders was growing 100% each month’
And what about supermarkets?
Among our today’s partners, there are Fora, Eco Market, Farmer’s Milk (‘Moloko vid fermera’), and a number of small stores.
How do you expect the market situation to change? How does your company prepare for it?
Ordering a food delivery is becoming a habit in Ukraine. The customers noticed the convenience of such services. They order food not only for lunch or dinner on special occasions but every day for breakfast. Besides, as I’ve mentioned previously, we want to add an innovative dark store model to our business. That is in our focus for the moment.
