EatHit: How a FoodTech Startup Burned Out $15 Million

Contents:

• How I started my journey in the delivery business: A success story
• The path to success: How EatHit faced challenges
• Prospects and lessons: what could be changed

How I Started My Journey in the Delivery Business: A Success Story

In May 2019, I successfully completed the sale of my project "My City", which was a city aggregator similar to "2GIS". Initially, we focused on Zelenograd, but soon decided to expand and enter other cities. This project was my first step into the dynamically developing food delivery market.

While working on the project, I met Maxim Dubrovin from Ruzayevka, who became my business partner. He presented an idea that could radically change the concept of our business: "I have money, you have money, I have experience." Maxim managed a sushi delivery service in his city and had the necessary resources for further development. This collaboration opened new horizons and opportunities for expanding our project in the catering industry.

At the beginning of our project, the prepared food market in our region was practically stagnant. We were faced with the problem of the lack of a service that allowed us to order simple food, such as fish and rice, without unnecessary restaurant decoration. This revealed a unique market niche that we intended to occupy. We wanted to offer a convenient solution for those looking for affordable, high-quality food for every day, without unnecessary frills.

In July 2019, we launched our first delivery service. This change changed my life, as I began dividing my time between two cities: I rented an apartment in Saransk, while my family remained in Moscow. Every two weeks, I would visit them for a few days. This experience allowed me to better understand customer needs and improve our delivery service.

In the beginning, I was heavily involved in customer service, working the cash register and explaining our concept to them. We invested in marketing, organized delivery, and opened a small store with an open kitchen. Our idea was to let customers see the preparation process: "We cook here and put the food in the refrigerator here. You can pick it up yourself or order delivery." This concept became the foundation of our business, allowing us to build trust and transparency in our relationships with customers.

Our success in the beginning was due to our attention to customer needs. We actively took feedback into account and adapted our menu to suit their needs. This approach allowed us to establish a strong position in the market and strengthen relationships with customers.

Today, several years later, we have not only grown our business but also become an integral part of the food delivery culture in our region. We constantly strive to improve the quality of our service and expand the range of dishes to fully meet the growing needs of our customers. Our team is actively working to implement new technologies and optimize processes, allowing us to provide fast and reliable delivery services. We are committed to high service standards to ensure that every order brings joy and satisfaction to our customers.

The Path to Success: How EatHit Faced Challenges

In 2020, when many startups faced crisis conditions, the classic Yin-Yang roll delivery service found itself at the center of these changes. Despite a successful start, EatHit in Penza experienced a sharp decline in demand, and the situation in Saransk was no less challenging. During this critical period, we realized the need to change our approach to business in order not only to survive but also to continue growing and developing. We began implementing new strategies, adapting to changing consumer demands and market conditions, which allowed us not only to maintain but also to strengthen our position in an uncertain environment. After analyzing our menu, we concluded that rolls offered the greatest potential for growth. Therefore, we decided to focus our efforts on their promotion to support EatHit's business. This decision proved pivotal, and by August, after a minor rebranding and an increased advertising budget, we saw a significant increase in sales. As a result of targeted marketing efforts, rolls became more popular among our customers, which positively impacted overall profitability.

Our partner, Maxim, shared our success on Instagram, which led to two new franchisees joining. This was a significant milestone for us, as I had previously sold franchises and successfully sold over 400 units. However, my goal was to create my own network with complete control over the processes.

Young entrepreneurs looking to start their own business often underestimate the complexities of franchising. An example is Dodo Pizza, which is unprofitable despite significant investments. Without a reliable management company, such a structure can quickly become unsustainable, leaving franchisees without the necessary support. Understanding these risks and realities is key to successfully starting and growing a franchising business.

Previously, I didn't consider sushi delivery a promising direction, considering it something mundane. However, after immersing myself in this niche, I discovered numerous opportunities for growth and effective marketing. For example, in Zelenograd, there are only about 20 sushi delivery services, and only three of them have multiple locations. This creates potential for new players. Evening delivery wait times exceed an hour, indicating high demand for this service. Therefore, the sushi delivery market in Zelenograd offers significant opportunities for development and service improvement.

During our work in Ruzayevka, we realized that successfully fulfilling evening orders contributes to our increased popularity. This creates opportunities for developing a hyperlocal business: we can open 23 locations in every district of Zelenograd, and each one will be profitable. The simplicity and efficiency of our business model significantly distinguishes us from competitors like EatHit. We are confident that focusing on evening orders will not only increase our visibility but also strengthen our market position.

Thanks to our focus on sushi, EatHit was able to successfully operate until November. This story became personal for me. I wanted to prove to investors that we were capable of overcoming all difficulties. From a financial standpoint, I could have cut my losses, but my desire to succeed was stronger.

Prospects and Lessons: What Could Have Been Changed

When analyzing my previous decisions, I often reflect on what I would change if I could go back to the beginning of the project. First of all, I would have more carefully assessed the financial model at the start. It is important to realize that the presence of a vacant niche does not always indicate growth opportunities. More often than not, such niches remain unoccupied due to a mismatch in economic indicators. I hoped to develop this area through my own funds and venture investments, but in Russia this can lead to serious risks, since the market changes very quickly. Correctly assessing the financial indicators and analyzing the market situation at the initial stage are key to a successful start and further development of the project.

In today's market, attracting investors requires building a sustainable business capable of generating a stable income. Such a solid foundation will allow you to generate interest from potential investors. Otherwise, you will need to focus on long-term investments, which requires a high level of trust and a strong reputation. These factors will significantly increase your chances of attracting significant financial resources that can be used for further business development. A sustainable business will not only attract investment but also help build trust with partners and clients, which will contribute to the long-term growth and success of your enterprise.

2019 was the last time I sincerely believed in the possibility of growth and attracting additional capital. Despite talk of a crisis, I remained confident that the prepared food market would remain in demand. I assumed that the crisis was temporary and the demand for prepared meals would not disappear. However, I failed to take into account that this crisis turned out to be not only economic but also a new challenge for the entire industry, one that no one was prepared to face. This experience has shown that changes in consumer preferences and external circumstances can dramatically impact the market, and it is important to be ready to adapt and innovate.