This is the first piece of our new China Tech innovation series, which concentrates on introducing innovative business models and products emerging these years in China, regardless of the size of the company, the size of the market or the market share it takes. Stay tuned!
What is Home-cook: Home-cook(回家吃饭，Huijiachifan in Chinese pinyin) is a location-based food delivery service with which users can order food home-cooked by neighbors or chefs at their home.
Categories: Cooking, Food, Food delivery
Founded date: October 2014
Cities in Operations: Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, Wuhan
Founders: Tang Wanli, former Alibaba employee
Operating status: in operation, B+ series funding round(completed in Nov. 2015)
Number of Employees: around 600 as of Sept.2016
Slogan: “share meals with your neighbors”
Rivals: Home-cook’s primary rivals are similar startups that boast neighboring home cooks. They emerged between the end of 2014 and the first half of 2015; however, unfortunately most of them have died out. Home-cook, as a new model in the food delivery business, also directly competes with the likes of Meituan Waimai (the food delivery arm of Meituan) and Ele.me (backed by Alibaba).
How to use the app:
Customers: Users open the app, browse kitchens recommended by the app that are within a 3-kilometer distance, and order food from the app (they usually need to schedule meals two hours in advance because the food often sells out quickly). Users can choose either the food delivery service (in which case the user and cook split the delivery fee), pick up the meals themselves, or go to eat at the cook’s. Payment[DW1] methods include WeChat Pay and Alipay.
Cooks: there is another app specially designed for food providers, on which retired seniors, cooking enthusiasts, or stay-at-home moms can register as cooks, upload their menus, and take orders from users. They prepare meals in their own kitchens.
Food-sharing apps in the US: Eatwith, Feastly, Josephine
Apps like Eatwith and Feastly, called Eat With Strangers Apps (EWSA) in the West, want to make dining tables into a social network. They encourage chefs to host private dinners at home or designated places, and guests are welcomed to register for dinners, while Home-cook in China wants to turn home kitchens into restaurants and facilitates neighboring home-cooked meal sharing.
Another American startup, Josephine, is similar to Home-cook. It promotes neighborhood home cook sharing, and the only difference is they only allow users to pick up meals themselves. The coincidence is that Josephine was launched the same time as Home-cook.
What problems is Home-cook addressing?
Users, especially those in big cities, are too busy working to cook for themselves;
Users are tired of the taste of restaurant take-out；
Users are worried about the food safety and food hygiene ordered from food delivery apps;
Some users have a special craving for food that tastes just like mom’s home-made meals, especially since many mega-city dwellers are from different provinces and have been away from home for some time.
Solutions of the app:
In order to ensure food hygiene and food safety:
1. The app sets a rigid screening process for cooks. A cook isn’t allowed to provide food service until he/she goes through these processes: first, register on the app with one’s cell phone number; the operation team will check the kitchen through video calls and then will conduct a follow-up visit to the kitchen for a spot check;
2. Cooks will “intern” for two weeks to experience the process of providing food service on the platform; they must acquire a health certificate in hospitals and register before officially starting to take orders;
3. The operation team will conduct random spot checks from time to time;
4. Users can choose to dine at cooks’ homes, which could serve as a supervision process from the users; there is a complaint hotline for users to make complaints;
5. The platform has bought PICC (People's Insurance Company of China) insurance for every meal.
In order to guarantee healthy food with distinctive tastes:
1. The platform only allows individuals to register. Merchants and restaurants are forbidden;
2. When applying to become a cook, the applicant is asked to fill out which province they are from (for different provinces have different cuisines) and what specialty dishes the applicant can make;
3. The operation team will have a taste test when visiting the kitchen;
4. Cooks are ranked by the ratings of users, which decides their exposure (or say orders and traffic) on the platform.
Praisable product design:
They have two apps, one for users to place orders and one for cooks to take orders. Here are some details of its product design:
In total, there are three tabs: The Front Page, Discover, and Me. The frontpage tab allows one to browse offerings of online restaurants opened by registered cooks, which are mostly within 3 kilometers of the user’s location. There are three entrances on the top where restaurants are classified by different cuisines, by the frequency the user has ordered meals from, by the ratings by users and by sales volumes.
They have a well-operating review system that serves as both a metric of shop sequencing on the app and a channel for cooks and users to interact. On the comment page, users can write a comment and rate the meals from one to five. The cook will reply to every user comment, whether it is a compliment and thanks or negative feedback. In an interview with a retired grandmother who now works full-time on Home-cook, she told us that she cares about user comments a lot. She will particularly take some time each night to reply to each comment. Good feedback does give her a sense of fulfillment and they are the motivation that keeps her cooking for strangers. When receiving negative comments (which are very rare according to her), she would feel rather frustrated, for it not only it impacts her ratings, but more importantly, “it makes me feel sad. Some negative comments are just irresponsible and unreasonable.”
Their recommendation scheme of home-cooks on the app: 1. The total score of a home cook(based on a slew of metrics, including users’ ratings, repurchase rate, rate of order cancelling, punctuality, among others); 2. Individual users’ preference( for instance their likes and their purchase history. Overall, the recommendation scheme is based on the quality of home cooks’ service and the quality of the food, except that the newcomers will have front spots for exposure on the app.
Cooks: Types: according to the profile pages of registered cooks, most are retired seniors, chefs, stay-at-home moms, and gastronomes. They either love cooking or want to earn extra money.
Customers: Types: according to interviews with people who have ordered meals from the platform, most of them are the target audience of food delivery platforms (who are too busy or too lazy to cook for themselves). However, they choose Home-cook because either they think home-made foods are more to their taste, or they think meals provided by Home-cook are healthier;
Channels of customer acquisition:
Offline ads in buildings, metro stations, elevators, and neighborhoods; flyers distributed by the marketing team; word-of-mouth advertising; online advertising, rewards for new user registrations; subsidies
several million total users as claimed by the company as of Oct.2017
around 100,000 total registered home cooks as of Oct.2017
100,000+ DAU as of Oct. 2016（other media reports）
50,000 to 60,000 daily orders as of Oct. 2016;
>45 RMB per customer transaction as of Oct.2016
5,000 RMB average monthly income of a cook according to interviews and other media reports
Edge over rivals:
It satisfies the personalized needs of a group of people who have a craving for home-made food, for healthier food (compared with greasy meals offered by some restaurants), or for tastier food (some customers think home cooking tastes better than those served in restaurants);
It also differs from average food delivery services in that customers and meal providers have the chance to bond with each other;
Cooks don't need to assume the cost of high rent and employment;
It does a good job in many product design details and has a more elegant user interface for the app than other platforms;
Income: The platform takes a 10% cut from every order made on the platform since last July according to Chinese media reports
Cost: mainly in R&D and operations. As claimed by the company, all cities expect the headquarter have broken even.
As far as we can see, the market seems a bit gloomy as most of the app’s rivals have died out. The reasons could be that it still takes time to educate the market because home-made food served by strangers is still a new concept. Many might still feel uncomfortable to have food offered by strangers made in their home kitchens. It takes time to build trust with them. Besides, Home-cook also has regulation hurdles to overcome, and for now it is still kind of in a “legal gray area.” However, it’s comforting that Home-cook survives out of its many rivals due to effective marketing strategies and well-done operations, and its overall measurement figures are stable.
Possible sources of income in the future:
incubating food brands on their platform (we have seen such cases on Home-cook that some cooks are building their own brands); a segment for fitness meals and diet meals; social dining; ads income from bidding ranking of kitchens.