Generation Start-up: How Fine Diner emerged from another failed venture amid Covid-19
The mobile app, which lets customers order three-course meals at affordable rates, is now looking to raise $400,000 to fund its expansion
While the Covid-19 outbreak has hurt businesses across the globe, Sami Elayan, founder of mobile app Fine Diner, sees the crisis as an opportunity to be resilient and fill gaps created by the pandemic.
“We can’t sit back and wait for the situation to improve … we have to take it head-on, look for new opportunities and create sustainable business models,” Mr Elayan, 31, co-founder and chief executive of the technology company, says.
After talking to many hotels, we realised there was room for growth. So, we immediately pivoted the entire business model and launched Fine Diner in March.
Sami Elayan, Fine Diner
Mr Elayan and his co-founders, brother Saed Elayan and long-time friend Zaid Azzouka, know all about resilience and adapting a business.
The trio started a food-delivery business in the UAE in December called Boxit, supplying surplus food from hotel buffets to consumers.
However, the venture was scrapped in February as coronavirus raised concerns about food safety.
The founders quickly changed their business plan, unveiling Fine Diner, an application that lets customers order a three-course meal from high-end hotels at affordable rates.
The menu, which is designed by the company, changes every day.
“After talking to many hotels, we realised there was room for growth. So, we immediately pivoted the entire business model and launched Fine Diner in March,” Mr Elayan says.
The idea clicked and Fine Diner tasted success in its very first month of operations.
“Our ability to transform quickly, foresee future opportunities and simultaneously beat the trade challenges scripted our initial success," Mr Elayan says.
"We were aiming to serve 250 meals in the first month but we managed to achieve double the target."
After receiving an order, Fine Diner approaches a hotel nearest to the customer’s location to reduce the driver’s travel time.
“We make sure that the food is delivered hot … and guarantee that the food commute time on the road is no longer than 15 minutes,” he says.
Set up with Dh75,000 in funding, Mr Elayan says the key element of the business model is affordability. A three-course meal on Fine Diner ranges from Dh55 to Dh95, but the same meal consumed in a hotel would cost between Dh250 to Dh500, he says.
“It is a win-win situation for both hotels and customers during this pandemic," he says.
“Customers get affordable meals from a five-star property without even stepping out … [and] hoteliers will get a new revenue stream. Globally, hotels are struggling but we are giving them an option to utilise their kitchens’ idle space and chefs’ expertise."
The coronavirus outbreak, which has infected more than 6.7 million people worldwide, according to Saturday data from Johns Hopkins University, has disrupted hotel operations across the globe after business and leisure travel came to a halt.
Hyatt Hotels, which has closed some of its properties and furloughed staff to cut costs, reported a net loss of $103 million (Dh378.3m), in the first quarter of this year. Meanwhile, French hospitality group Accor said it was closing more than 3,000 of the group's 5,000 hotels and is making more than 200,000 staff temporarily redundant during the outbreak.
“Top-end hotels cannot offer different menus for home deliveries, as it will be in conflict with their brand policy. So here, we come into play. We prepare a new three-course menu everyday for customers using our app,” says Mr Elayan.
Customers using the app gain on the price, because the hotels are saving money on overhead costs, such as paying for waiters, cutlery, power and customer experience, Mr Elayan adds.
Following his pivot from the food delivery business to a fine-dining concept, Fine Diner has delivered more than 1,000 meals to date, serving customers located within a six-kilometre radius of Dubai Marina and Downtown areas. It's a new sector for Mr Elayan, an architect by profession who moved to Dubai in 2013. While the entrepreneur initially worked with different real estate companies, he left his full-time job last September to focus on setting up his own venture.
“We deliberately launched our services in high-density areas … to test the waters. The response is overwhelming and now we are in touch with more hotels to expand our coverage,” says Mr Elayan.
It aims to hit a 60 meals-a-day target in the next four months and 100 meals-a-day by the end of this year. The Arabic version of the app will be rolled out this month to help the company reach more customers.
The company plans to expand its service to all seven emirates in the next few months before opening in Saudi Arabia, the Arab world’s largest economy, in the first quarter of next year.
Fine Diner was selected by Dubai Silicon Oasis Authority’s Dtec (Dubai technology entrepreneur campus) Startupbootcamp in March, from where it raised the initial capital of Dh75,000.
“We were selected out of a pool of 1,400 applicants for the accelerator programme. It was a massive morale booster and gave us a significant edge to get the idea up and running very fast,” says Mr Elayan.
The company, which aims to become profitable by April 2021, is now looking to raise an additional $400,000 to fund its growth strategy. Fine Diner is still “underfunded”, says Mr Elayan, partly because they could not pitch to potential investors during the Covid-19 disruption.
“Our main areas of focus include improving the application and digital marketing across different geographies. So, we are working to raise new capital and we are almost halfway there,” he says.
With $100,000 of their funding target already met by a private investor, Fine Diner now wants to secure the remaining $300,000 before closing the round. “We expect to close it in next couple of months,” says Mr Elayan, without disclosing the names of the investors.
While every Fine Diner order sees 68 per cent of the bill amount paid to the hotel, the company retains 32 per cent, which is used to cover overhead charges – such as app maintenance and food delivery.
However, Fine Diner aims to increase its gross margin to 36 per cent in the second year of operations and 39 per cent in the third year as volume increases, says Mr Elayan.
"We are scaling up fast but we need more funds to sustain this growth and serve customers."
Q&A: Sami Elayan, chief executive and co-founder of Fine Diner
Who is your role model?
This is a very tricky question … I do not have one role model in my life. There are so many people around me who are continuously inspiring and supporting me. They could be my colleagues, previous bosses, relatives or friends. My life’s philosophy is to learn as many good things from others as you could.
If you could change one mistake in your entrepreneurial journey, what would it be?
There is no mistake or incident in my entrepreneurial journey that I want to amend. All of them were important and played a crucial role in building my journey. Making mistakes will teach you better lessons and help you emerge as a more refined individual. I believe the true success of any entrepreneur could be measured by the number of mistakes he has made while taking brave steps during his business journey.
Are you on a hiring spree?
No. Technically, we are only four people dedicated full-time to this start-up. Sometimes, my wife Amy Saraireh helps us with marketing. We are moving ahead very cautiously and making sure we are judicious in our use of money.
Where do you see yourself in 10 years?
As an established entrepreneur with a keen interest in emerging technologies. I want to nourish Fine Diner and see it have a global presence. However, my permanent base will always be Dubai. This future city has given me so many opportunities as an entrepreneur, so I cannot even think of moving away.
What type of entrepreneur are you?
I love experimenting with new ideas and taking bold steps. It could be either success or failure in the end but you will get a valuable life experience that will certainly cement your future success.
How do you envision a post-Covid-19 world?
There will be unprecedented market changes and we cannot risk going back to our old style of working or business models. Old models will be completely outdated. In the post-Covid-19 period, my success mantra will be to keep evolving our business strategies. I am sure it will be more fun.
Updated: June 6, 2020 08:28 PM