One of Canada’s fastest-growing startups is ramping up its international expansion, including a move into the geopolitically volatile Hong Kong market.
Toronto’s Ritual Technologies Inc., whose mobile app enables consumers to order and pay in advance for takeout from quick-service restaurants, will announce on Monday its move into its first non-English-speaking markets: Berlin, Hamburg, Amsterdam and Hong Kong. It has signed up hundreds of restaurants in the four cities, which will be its jumping-off points for further European and Asian expansion.
Ritual co-founder and chief executive Ray Reddy said the turmoil in Hong Kong over fears of mainland China’s growing influence over the autonomous territory – resulting in violent clashes between protesters and police – began after the company had set up operations there last spring. That delayed its launch by a few weeks and “was a good learning for us on expecting the unexpected. We had to start building out a lot of plans on how to deal with [matters] if the situation were to escalate.”
The past few months of protest have made the restaurant business more charged in a city where revenues in the sector topped US$20-billion last year. Demonstrators have looked for restaurants seen as sympathetic to their cause and avoided or even vandalized those seen as opponents. Sales “have dropped considerably” because of a decline in tourism, closings due to street violence and customers opting to not go out, said Simon Wong, president of the Hong Kong Federation of Restaurants and Related Trades.
Mr. Reddy said he believes the situation for business has stabilized. “If the situation [worsened], we might have paused our launch there, but our read of it was that most businesses are operating as usual on the ground and a lot of other food-delivery operations continue to work,” he said.
Ritual has been on a growth spurt since raising US$70-million in venture financing led by Toronto’s Georgian Partners last year. At the time, Ritual had 150 employees and 3,000 restaurant customers in 10 North American cities. It has since doubled staff, expanded to 50-plus cities in Canada, the United States, Britain and Australia, and tripled its restaurant count.
Ritual typically focuses on densely populated neighbourhoods in large cities full of office workers within walking distance of numerous takeout eateries. For example, its app lists 86 restaurants in three central neighbourhoods of Ottawa, a market it entered this year. “It has definitely bumped up our busyness,” said Ashley Cannon, general manager with Fiazza Fresh Fired, a pizza chain whose two central Ottawa locations use Ritual.
“You do get extra traffic” including surges from discount promotions subsidized by Ritual, added Karina Hayston, co-owner of Le Moulin de Provence KD, a bakery-café near Parliament Hill. “You’re losing margin [by paying a share of receipts to Ritual], but it’s not big; you have to move with everyone else. Lots of people are ordering by mobile and it’s convenient for customers.”
Mr. Reddy said Ritual, which competes against delivery apps Foodora and Uber Eats, as well Starbucks’ and McDonald’s own order-ahead apps, “turns every restaurant that doesn’t have a drive-through into one with a ‘walk-through.’” Ritual is free for consumers, with restaurants paying a cut of orders. “It’s not that we’re more convenient than delivery,” he said, “but that we’re more convenient than the alternative of walking in and waiting in line.”
Ritual also offers a social ordering feature that connects workmates so they can “piggyback” orders when one heads out for a pickup. The feature, which rewards the runner with points toward free food, accounts for more than one-third of Ritual’s orders from 150,000-plus officemate “teams.”
With Ritual’s success in four English-speaking markets so far, Mr. Reddy acknowledged the move to Asia and continental Europe “will be the first test of [whether] it transits over to different languages as well.”
Despite the chaos in Hong Kong, operators there interviewed by The Globe and Mail said they were intrigued by the idea of an app-based pickup service. In a densely packed market, it is often easier for customers to go out for their food rather than waiting for a delivery person “looking for my address, calling my security guards and passing through a few gates – just to give me a bowl of fried noodles,” said Gloria Chung, a popular Hong Kong food and travel writer.
Christopher Mark, a Canadian whose Black Sheep Restaurants has more than 20 locations in Hong Kong, said the proliferation of food-delivery companies including Uber Eats, Deliveroo and foodpanda has “been very disruptive,” costing restaurants a hefty percentage of sales and distancing them from customers.
Local food writer and entrepreneur Janice Leung-Hayes, founder of the Tong Chong Street Market, said “People will pick up if it’s convenient, and if the cost is significantly less than delivery.”
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