|Current Status||Concept / Business Plan|
|Funding Required||RM300,000 or less|
|Description||Ygg – Connecting People Through Food
Ygg is an online platform that connects producers of home cooked food (Chefs) with consumers. We aim to be the first large scale consumer-to-consumer (C2C) company in the food and beverage (F&B) industry. Our competitive advantage will be the network effect generated by our first mover advantage in the food C2C market as well as our focus on delivering satisfaction to our ecosystem which includes Chefs, consumers and employees. Just like how Airbnb is dominant in spite of competition, we aim to have such a wide base of users that it will not make much sense to switch to a different competing platform.
Aside from a platform for Chefs to list their food, Ygg will also provide a delivery service. Revenue will be earned by charging a commission from the listed price and a flat rate delivery fee. Assets will include a motorcycle fleet while the main operating expenses will be wages, fuel and maintenance. If our coverage of Malaysia reaches our objective of 80,000 meals delivered daily, our gross margin in the long term can exceed RM 100,000 per day. This long term target will require venture capital financing. It naturally follows that international expansion is planned once the Ygg business model has been proven successful.
The Ygg team, comprising Royston Tieh, Perry Chen, Luke Lim, Shaun Yeap and Ellis Choy are excited to spearhead the next revolution in the F&B industry and are committed to sparing no effort to ensure that Ygg will be successful.
|Business Opportunity||The Food Technology Industry
Americans spent US$210 billion on take-away food in 2016 (Morgan Stanley, 2016) which makes up a quarter of all US restaurant sales (National Restaurant Association, 2016). Only 5% of this market is captured by online food delivery services (Morgan Stanley, 2016) which explains why food technology (tech) companies raised US$6.8 billion (Rosenheim Advisors, 2016) globally in 2015. The largest amount of capital raised by the food tech industry in 2015 was the US$2.23 billion raised over 3 rounds of funding by Ele.me, a Shanghai based online food delivery company serving the Chinese market.Food tech companies have much to do to grow the slice of market share which online food delivery represents as a proportion of the total take-away food market. Whilst companies such as Deliveroo and Foodpanda have similar target audiences for restaurants and consumers in a business-to-customer model (B2C), Ygg is differentiated by offering delivery of home-cooked food in a customer-to-customer (C2C) model which no other company provides at this moment.
The sharing economy has proven that spare capacity of people is a valuable resource with existing market players being strongly challenged by the new C2C businesses. We believe that Ygg can be to the food industry what Airbnb was to the hotel industry. Our first mover advantage in the food C2C business will give us a good chance to gain the network effects that can serve as a powerful barrier to entry to others seeking to copy our business model.
We plan for Ygg to serve Johor Bahru first, before scaling up to the rest of Malaysia. Eventually, we hope for Ygg to be serve the world, with every family having installed our Ygg app.
|Revenue / Business Model||Our Service
The Ygg business consists of 2 main parts, an app-based online marketplace and a delivery service. The online marketplace is where our Chefs list their food offerings and users can place orders. Ygg will have our own in-house delivery service.
Ygg will generate revenue by charging for its services. There are 2 main sources of revenue, which are the commissions from the chefs and the delivery fees. These will be in line with the industry norms.
Taking a conservative view, if our delivery coverage in Malaysia after 2 years can reach the coverage which Deliveroo has in Singapore after 1 year, we could be delivering 80,000 meals a day in Malaysia and generating a gross margin in excess of RM 100,000 daily.
|Management Team||Royston is the one who first gave serious thought to commercialising the food C2C business and he put together a team to make it a reality. Royston went through the school of hard knocks after he drop out of college and is now a small business owner. He is currently a partner in a car workshop business and his other past business ventures include a used oil trading business. Royston hopes that he can one day contribute to society by finding sustainable ways to help the underprivileged. He is always on the lookout for scrumptious foods. Royston will lead the overall planning for Ygg.
Perry Chen has a double honours degree in engineering and business from the National University of Singapore. Perry has worked 3 years for oil giant ExxonMobil where he led numerous projects and troubleshooting efforts which saved millions of dollars and earned him multiple awards. Also a decorated former national level athlete, Perry enjoys strategy games, travelling and savouring good food. Perry will lead the business development and operations strategy for Ygg.
Luke Lim is accredited by ACCA to be a Certified Accounting Technician and has experience in the logistics and supply chain sector. Luke has managed vehicle fleets and has led customer service and operations teams. Luke will lead the sales and operating team for Ygg. His love for the pork rib dish bak kut teh is legendary.
Shaun Yeap has a master of science degree in Computer Games Programming and also a degree in interactive software technology. He developed the core of the Ygg application. Shaun is by nature a thinker and he believes that everything has a reason for existing or happening. Shaun will lead the full-stack development for Ygg.
Ellis Choy graduated with a degree in Interactive Software Technology and has 3 years experience with mobile programming specialising in SMS mobile payment and 2D multiplayer games. His two loves are aesthetics and food and as a result, he likes to discover food that evokes a sense of beauty. He studied that because it gives aesthetic pleasures and he loves to create it with codes. Ellis will ensure that the Ygg application has an intuitive user interface and a fantastic user experience.
|Company Background||About Ygg
Ygg was founded to meet the craving for home-cooked food. The founders were lamenting how late hours at work led to eating out during one leisurely yum cha session and discovered that we missed the food cooked at home, especially after too many days eating at hawker centres or ordering food delivery. Home cooking, a labour of love, was still the most healthy and delicious. Having had meals at one another’s homes in the past we agreed that all our families cooked tasty meals. What if, we asked, there was an app where we could order fresh home cooked meals delivered to us instead of the common restaurant options available on existing food delivery apps?
|Funding Milestone||Funding Requested
We request an initial funding of RM 200,000 to prove our concept in the area of Molek, Johor Bahru. A quarter of these funds will go towards asset purchases of delivery, kitchen and office equipment. The rest will be working capital for 6 months to fund wages and operational and marketing activities.
This proof of concept testing will differ from our envisioned full scale service in several key areas. Firstly, there will be no home-based chef to provide food as their offerings will likely be limited in variety and their availability window for food preparation is likely to be small. Our full-time chef will ensure that all orders will be met. Secondly, we will only accept cash until we have sufficient scale to justify adding electronic payment. Lastly, we will provide the distance between the central kitchen and the location of delivery but no time estimate until we reach the right scale.
The location of Molek is ideal for testing the Ygg concept. It is a commercial district with limited food outlets and travelling in and out of Molek as well as parking are inconvenient. Office workers make do with average and crowded food establishments or send people out to take away food for consumption in the office. By targeting several blocks of offices in Molek, we will be able to carefully control the exposure of Ygg and hence ensure that our fledgling cooking and delivery team will not be overwhelmed. Scaling up within Molek will simply be a matter of increasing the Ygg exposure to more office blocks.
We aim to be cash flow positive (from operations) by month 3 of our operations and have the capability to break even within 6 months. The basic monthly fixed costs amount to RM15-20k. In the median scenario where we deliver 250 meals/day, our monthly operating profit will be RM10k. Our stretch target of 750 meals/day would mean hiring additional chefs and monthly operating profit may hit RM50k.
|% Equity Allocation||12%|
|Expected ROI||Break even of seed funding in around 8 months to 1 year.|
|Risks and Mitigation||Threat Of Substitutes
As mentioned in the ‘Bargaining Power Of Buyers’ section, there are many substitutes to food delivery.
However, for the specific service which Ygg provides, which is a C2C food platform, there are limited substitutes aside from eating at home or being invited over for a meal at a friend’s or relative’s home. Even for these options, a certain degree of reciprocity and compromise is expected. A person cannot keep visiting their friend every day even if he loves their cooking without being unwelcome after long.
That being said, the threat of substitutes is deemed to be low.Threat Of New Entrants
The threat of new entrants is high. If we prove that food C2C is something which consumers are willing to pay for, there will inevitably be other companies which seek to emulate our model. The set-up cost is low as if delivery is outsourced or riders are required to own a vehicle, it does not cost much to set up a competing C2C platform. Existing food delivery companies such as Foodpanda can also enter this market with minimal cost.
However, the real barrier to entry is network effects. The first company to saturate the population with their app and host a large number of home cooks will be dominant. Home cooks would prefer to list on a platform with high traffic and consumers would search first on the platform with the most options. The network effect is the same reason that eBay, Amazon and Airbnb have been so difficult to displace although the cost is minimal to set up a similar system to theirs.
Ygg will work hard to saturate the market such that companies contemplating entering the market would need to be wary of the network effect and Ygg’s dominance.Competitive Rivalry
We expect the competitive rivalry to be fierce, for both recruitment of chefs and for consumers.
Network effects will be the key to success and the company with the most chefs and consumer traffic will be dominant. Within the food C2C market, which does not yet exist, companies will compete to get chefs to list on their platform. Speed will be of the essence to ensure chefs will list on Ygg first.
For customers which view Ygg as just another food delivery company, they have multiple options. They have a checklist of requirements including price, quality, freshness, variety, ability to customize and speed of delivery which every company that delivers food will try to show that they are the best at.
|Business Address||19, JALAN UNGU 6 TAMAN PELANGI 80400|
|Contact Person||ROYSTON TIEH CHIA SHENG|