Syed Tahmid Zaman is the co-founder and CEO of Ghost Kitchen Bangladesh, an internet restaurant platform. Using an asset-light business model and innovative technologies and pandemic-fueled demand for online food delivery, the company has grown dramatically in under a year.
The latest food-tech trend that has been making waves in the food and restaurant industry is the concept of ‘ghost kitchens.’ Due to its lower initial investment, reliable profit margins, and cost savings, the ghost kitchen or cloud kitchen model has paved the way for new entrepreneurs to enter the industry in Bangladesh.
In this wide-ranging interview, Mr. Tahmid talks about his path to entrepreneurship, how GKB came into being, the early days of building the company, the evolution of GKB over the past year, shares how GKB has crafted an innovative model in the cloud kitchen and food delivery space, the operational mechanics of the business, the state of GKB today and its ambition going forward, reflects on the challenges he has faced along the course of his journey so far, the prospect of food-tech industry in Bangladesh and much more.
Interview and composition by Naziba Ali.
Future Startup: Thank you for agreeing to this interview. I wanted to start at the beginning of your journey, could you please tell us about your background and path to entrepreneurship?
Syed Tahmid Zaman: Well, I come from a family business background. In the 80s, my father co-founded Butterfly Marketing Ltd which is a prominent name in the electronics scene of Bangladesh. It won’t be an exaggeration to say that I got my hands-on business at the age of 15. I was helping my father with his Jute export business. That was a time when people had hardly heard of Alibaba, and I was utilizing the platform to bring in orders from Iran, Turkey, and a few other countries. Basically, the early-day story of my entrepreneurial journey is inseparably linked with the story of my father's career.
Since my childhood, I have had a great fascination for graphics design and digital marketing. So, at the very onset of my Bachelor’s degree at Newcastle University, I established my own digital marketing agency. There were just a few agencies in the market at the time, such as Magnito and Analyzen. After that, in the midst of my degree, we started Best Electronics and I was overseeing all the marketing activities from England. I would visit Bangladesh whenever I could and that’s how I got by. In 2015, after completing my Masters, I began working full-time as the Marketing Director at Best Electronics. Apart from that, I was involved with my family’s food and technology businesses too. Fast forward to 2019, I decided to step down from my family business. I came to realize that starting my own startup would allow me to better leverage my ethos and skill set. Long story short, my life transformed for good when I decided to defy the norm.
My vision was to build a customer-centric company that prioritizes customers and their experiences. To that end, I started working on multiple projects but ended up with Ghost Kitchen Bangladesh. Cloud kitchens were already very popular outside of Bangladesh and people were investing in the space.
In Bangladesh, Kishwar Hashemee, CEO of Kludio, is definitely the pioneer of the cloud kitchen space. Finally in 2020, with the pandemic creating a mayhem in the traditional food industry and a spike in consumer preference for home delivery, I decided to try my luck in the vertical.
Future Startup: When and how exactly did you come up with the idea of Ghost Kitchen Bangladesh? What went into building the initial operation of GKB? How did you put together initial investment and other things to get started?
Syed Tahmid Zaman: GKB has a pretty interesting backstory. So, one evening in 2019, I was having a chat with two of my friends at a burger joint in Dhanmondi. While having burgers, we were casually discussing the prospect of setting up a delivery-only burger joint - you won’t have to incur any sort of operational cost linked to dine-in space or staff salary. It was an inconsequential random conversation, but coming back home, I gave it some more thought. On a whim, I designed the logo for my hypothetical brand ‘Friggy’s.’ As an enthusiastic graphics designer, I couldn’t help but design the packaging as well. Last but not the least, I thought of a few menu items for the brand and called it a night. I really had no plan to pursue the idea of Friggy’s further.
A couple of months later, I traveled to Canada and came across an early-stage cloud kitchen company called ‘Ghost Kitchen Brands’ in Toronto. I texted the company’s founder on LinkedIn and asked if I might come over and take a peek.
The founder was very welcoming and he invited me to his own kitchen. That's how I learned about the intricacies of a cloud kitchen - it should house multiple brands; it should be tech-driven, and it must be efficient in terms of inventory and supply chain management. Right at that moment, I realized that a cloud kitchen model is quite similar to the one at Best Electronics where we showcase electronic home appliances of a vast array of brands.
Fast forward to March 2020, I pitched the idea, secured the pre-seed funding, and incorporated our startup as Ghost Kitchen Bangladesh Limited. Apart from investor funding, I have bootstrapped as well.
I am lucky to have Md. Ashraful Hoque Chayon as my co-founder and Director of Operations at GKB. Back in 2019, I had shared the idea with Chayon bhai as well. But back then, I was only considering a single brand. After securing the investment, I reached out to Chayon bhai again and conveyed the idea of creating a multi-brand cloud kitchen, with each kitchen using the same ingredients and being totally automated. He immediately agreed to come on board. Thus, GKB officially started its journey with its maiden brand Friggy’s in June 2020. We delivered our first order in October 2020. Till today, Friggy’s is our most popular brand.
Future Startup: Can you walk us through the first few months of your operations? Also kindly elaborate on how you shifted from a delivery-only company to an internet restaurant platform.
Syed Tahmid Zaman: Forming a company is relatively easier. The real struggle starts with operating the company. At first, we opened a kitchen in Tejgaon followed by two more in Moghbazar and Banani. Meanwhile, the month of Ramadan had arrived and as expected, the demand for fast food had dropped to some extent.
A manager at Pathao, suggested that we launch a Haleem brand since the brand building is our forte. It occurred to me that we might face a burgeoning demand for our delectable haleem. And if that happened, we wouldn’t be able to get by with only three kitchens. So, it would be ideal for us to supply our Haleem from 7-8 different locations in and around Dhaka.
Instead of establishing more kitchens, we devised a new business strategy. I knew a few restaurant owners who were particularly hit hard by the pandemic. So I decided to incorporate them in our new framework enabling them to earn some profit.
We prepared everything related to Haleem at GKB’s production kitchen at Tejgaon and the restaurants only had to assemble the Haleem, replicating the McDonald’s model. We were able to deliver 500 orders with three restaurant partners in Moghbazar, Dhanmondi, and Banasree.
To me, it was a phenomenal success that gave me the courage and confidence to consider this as a real business model. You can call this a ‘Virtual Brand Franchising Model.’ Before that, in February 2020, we tried out the KaaS (Kitchen as a Service) too. The KaaS model needs hefty funding for building cloud kitchens and its operational cost is equally daunting. So we dropped that idea and focused on the ‘Haleem and McDonalds’ model.
Luckily for us, this model was instantly appreciated by the restaurants. In Bangladesh, eateries’ dependency on food aggregator apps is growing and restaurants are facing a cash crunch to undertake extensive marketing. At this point, the only way to survive is through collaboration and this is exactly what we are offering.
By leveraging GKB’s brand identity, they are getting the scope to earn additional revenue by filling online orders for GKB’s brands. The model is also helping restaurants make the best use of their existing kitchen spaces. In this way, GKB transformed into an internet restaurant platform for restaurants and cloud kitchens.
Future Startup: As you have mentioned, restaurants can benefit from GKB’s digital branding. How did you build your brand in the first place?
Syed Tahmid Zaman: Since the age of 16, I’ve been interested in digital marketing. Apart from that, I’m also a graphic designer with a passion for food. These were definitely plus points for me while building up GKB’s multiple unique brands.
While devising our brand-building strategies, we took a ‘data-driven approach.’ We obtained important customer data, such as the most frequently ordered items, with the assistance of our delivery partners. They also suggested a few menu ideas, for instance, the idea of Haleem was proposed by a Pathao manager. Before deciding which brands to sell, we considered the basket size as well as the time of the day. For instance, a fusion of a wrap and a Kolkata kathi roll may be a great workplace lunch, so we developed our brand Wrappo and we positioned it as the ‘ultimate office lunch’.
Next, we utilized the fundamentals of market segmentation. Based on that, we introduced Friggy’s as a premium burger brand whereas we will soon be launching Burger Jr as more of a mass-market brand. Here both brands are catering to different target markets.
Furthermore, as you can see, our brand names are very unique, catchy, and easy to remember, such as CheekyBite, Moolkshake, etc. Then comes the most crucial component of GKB’s branding, which is, packaging. We made sure our unique packaging gave off the vibe of a global standard brand. We also mention some phrases on our packaging which are Instagram friendly. We follow an exclusive brand philosophy for each of our cuisine-focused brands.
And lastly, there are numerous points of interaction between a customer and a physical restaurant. However, the reverse holds true for cloud kitchens. Customers will only put their trust in a cloud kitchen if you can guarantee safe food prepared in a hygienic environment. So, at GKB, kitchen hygiene tops our priority list and it also serves as a branding tool. If you go to YouTube, you can take a look at our kitchen videos.
Future Startup: How have you attracted customers? Tell us a little about your customer acquisition channels and strategies.
Syed Tahmid Zaman: At GKB, we basically have a blogger squad, honorably referred to as the GKB Social Critics. These bloggers provide us with favorable and, more importantly, unfavorable opinions about the foods that we prepare at our kitchens. Their transparent feedback helps us to develop dishes that meet and exceed the expectations of our customers. After the completion of our R&D for each brand, we ask the bloggers to write to build up some traction organically.
In the initial days, we also sent out our items to acquaintances and solicited feedback from them. Furthermore, we ensure that each of our brands has a web presence. That is, if you search Friggy’s on the Internet you will find its presence, and will also be able to order online from its website.
Other than that, we also run targeted Facebook ads. The ads include a call to action button which is linked to the websites of each of our brands. Thus we keep track of our return on marketing spend. Alhamdulillah our retention rate is skyrocketing. This is a reflection of the three-month R&D effort we put into each brand.
Future Startup: How does the tech part work? Could you tell us about your kitchen automation?
Syed Tahmid Zaman: We don't call ourselves a tech company, but we are definitely tech-enabled. We created ‘Onnow.io' to help us keep track of our inventory, production, purchases, order, and accounts. This is, in reality, a fundamental function.
What distinguishes Onnow.io is that after a customer places an order on any food aggregator platform, the order is sent directly to our system. We have a display in each kitchen where we receive orders for all of our brands i.e. we don’t require a separate tablet or smartphone for each brand. If you have 5 brands and 5 delivery partners, you usually wind up with 25 tabs in the kitchen, which is difficult to manage. We have brought order receiving onto a single dashboard with Onnow.io.
At GKB, we monitor every phase of production. Starting from order placement, order confirmation to order dispatching - everything has a timestamp. Each item in the kitchen has a standard time for production. If a staff member takes longer than expected to prepare an order, we take steps to retrain him. Onnow.io thus allows us to measure performance.
Based on prior sales and future projections, Onnow.io notifies the purchase manager to buy the essential items within a certain time span. To place the order, all you have to do is click a button and the supplier will receive the order. This eliminates the hassle of calling the vendor.
Recently, we have won the Food Frontiers contest and received a grant of USD9000. Since we have the finances, we are attempting to incorporate the necessary hardwares and IoT-enabled solutions in our kitchens. For example, in every kitchen, we are installing sensors to monitor the temperature of the food, refrigerator, and chillers. If there’s any sort of abnormality, we are notified immediately. We had previously experienced a loss of BDT 40-50K caused by equipment failure. We can supply this solution to any restaurant that requests it. We're doing it for the sake of the planet. We hope to contribute to environmental sustainability and boost the efficiency of food systems by minimizing food loss and waste. This philosophy has earned us praise from the World Food Programme, The Global Alliance for Improved Nutrition (GAIN), and SUN Business Network.
Future Startup: While onboarding restaurants as your partners, what are the parameters you consider? Also, how do you determine which GKB brand to deliver to a particular restaurant?
Syed Tahmid Zaman: To begin with, location is the biggest factor while choosing restaurant partners. Every 200 meters, we seek to find a restaurant partner. Second, we evaluate their facilities, including whether or not they have the necessary equipment and the level of their hygiene standard.‘Hygienic Kitchen' is at the top of our priority list. In fact, we have an SOP in place for carrying out day-to-day operations in the kitchen. Third, the restaurants will ideally have a physical dine-in space, and not to mention, they must have a level of experience and expertise in the QSR industry. Above all, our mindset should be in tune with that of the restaurant owners.
We maintain a very decent rapport with our partners. The six restaurant partners we presently have are young entrepreneurs as well. To conclude, we are happy to collaborate with any struggling restaurants, particularly those affected by Covid, as long as they meet these criteria.
To answer the second question, we select a GKB brand for a specific restaurant based on the availability of the equipment needed to prepare that brand. When determining which brand to serve, we also consider the area. A wrap, for example, makes an excellent office lunch. Since Banani is a commercial area, we figured that Wrappo would be the best brand to deliver in that area.
Burgers, on the other hand, are in high demand in the Banasree area. If a restaurant can produce BDT 5-10K in sales per day for a single GKB brand, we will consider allocating another brand, given that the restaurant has underused facilities. We also make certain that no more than one partner sells the same brand within a 200-meter radius. Otherwise, there would be a conflict amongst partners.
Future Startup: Would you like to share your revenue model?
Syed Tahmid Zaman: Our revenue model is straightforward. We charge our partners a 15% to 20% markup. We handle all of the technology, R&D, branding, and supply chain. The restaurants only need to assemble and sell, similar to the McDonald's approach. This is how we assure consistency in flavor and taste.
By partnering with us, the restaurants can keep around 20-25% markup.
Our delivery partners are responsible for dispatching the orders. Although food aggregators often charge roughly 20-35% commission, GKB enjoys a special corporate benefit, allowing restaurants to cut their delivery expenses. We redistribute every Taka we save to our partners.
Future Startup: How much has GKB evolved over the past few months? What is the current size of your business?
Syed Tahmid Zaman: To be honest, I never thought that in just 8 months, we would have sold over 50,000 items and accomplished 11,000 deliveries. I was quite skeptical initially about our sales since we are a virtual brand without any physical presence whatsoever.
Currently, we have 5 Brands (Friggy’s, Party Pizza, Wrappo, CheekyBite, and MoolkShake), 2 own kitchens at Tejgaon, and Moghbazar and 6 Restaurant partners. As we have decided to partner with 20+ restaurants in just Banani, we have shut down our own kitchen in that zone so that our partners have a market to play in.
As I previously mentioned, our business model has evolved significantly since we began operations. We started as a cloud kitchen with our Friggy’s and Party Pizza brand, then explored the KaaS model, and finally became an internet restaurant platform focusing on virtual food franchising.
As a startup, we must ensure that our firm is scalable since we pledge the investors a very high return. In this regard, the KaaS model is often difficult and time-consuming to scale. So we abandoned that notion in favor of collaborating with restaurants to create a sustainable ecosystem — restaurants can improve their ROI on their existing fixed assets without spending a single penny on Branding, R&D, and Technology.
Future Startup: How big is your team now?
Syed Tahmid Zaman: At present, we have 22 members working with us on a full-time basis and 15 more on a temporary contract. I oversee the technological side, finance, and marketing. Chayon bhai is in charge of Operations like purchase and production.
We also have a Partner management team, Quality Control team, Branding team, Accounts team, and Business Development team.
We intend to expand the team as soon as we secure our upcoming seed round, to rapidly increase our partners and brands.
Future Startup: How do you ensure Kitchen Hygiene in your partner restaurants?
Syed Tahmid Zaman: Almost 90% of restaurants in Bangladesh do not fully adhere to strict food standard guidelines. GKB, on the other hand, has an SOP in place to ensure a ‘Hygienic Kitchen.'
We have collaborated with an edtech startup and curated a course called ‘Food Safety and Hygiene in Restaurants and Commercial Kitchens’. Each of our restaurant partners has to pass this course and get a certificate.
Our Quality Control team supports our partners regularly. The members of the QC team initially work in our kitchens for 2-3 months, and then get involved in fieldwork.
At Moghbazar Kitchen, we provide training to the kitchen crew of our restaurant partners. Apart from that, our chefs also provide on-site training.
Future Startup: What are the challenges you have faced over the course of your GKB journey?
Syed Tahmid Zaman: Best Electronics, as a traditional business, was relatively simple to me. GKB, on the other hand, presented unique obstacles.
First of all, a startup, owing to its significant investment in growth, takes a considerable amount of time to reach breakeven. You won’t be making any money but you will require funds to scale your business i.e. you have to deal with investors on a continual basis.
Bangladesh has been more investor-friendly in recent years, but it still lags behind Indonesia, Vietnam, and India, among other countries. Next, finding the right investor who understands the founder's vision is equally challenging.
Local investors' expectations often differ greatly from those of foreign investors. Last but not least, assembling the right team is crucial. Not everyone on your team will match your own dedication and speed of work.
Working with a startup is equivalent to racing against time. You need a team that understands the value of time and is willing to put in the necessary work. I’m fortunate to have found dedicated team members who understand our commitment to investors and our restaurant partners. People are staying with us because they believe in our vision.
Future Startup: What are your future plans for GKB?
Syed Tahmid Zaman: Well, we have plans for cross-border expansion in the future. But, for the time being, we will concentrate on expanding coverage in Bangladesh. Our vision is to empower 60,000+ restaurants with our technology, unique food concepts, and branding. We are basically OYO of the Restaurant industry. This year, we hope to onboard 50 new restaurant partners.
Along with new restaurant partners, we will keep on increasing our product and brand portfolio. In the coming months, our unique fried rice bowl brand ‘Fuiyoh’ is going to be launched. It will be followed by an Australian Halal Snack Pack (HSP) brand called ‘Snackmate’.
In terms of kitchen expansion, we will open a production kitchen in Uttara soon and form partnerships with nearby restaurants. Since we follow a hub-and-spoke model, as the number of restaurant partners increases, our production kitchen numbers will increase too, to provide supply-chain support to them.
Few years down the line, we will launch our B2B service ‘Today's Lunch', ensuring optimal utilization of our resources. For example, if you have an office in Mirpur, we will collaborate with the nearby restaurant which will deliver the meal to you in accordance with our SOPs. We will be offering two types of lunch to offices: (i) Regular lunch and (ii) Healthy lunch. In addition, we intend to introduce a premium Shingara brand named ‘Shingara Express.' If we are successful, this will be our first brand that will be launched beyond Bangladesh.
As far as international expansion is concerned, we have already received an offer from a cloud kitchen venture in Pakistan to incorporate our Friggy’s brand. After raising Series-A funds, we plan to launch our brands abroad through partnership. We will have a production kitchen partner through which we will supply to our restaurant partners. I’ve experience working with global brands in various partners of the world which should help. In the meantime, we have built a good network in countries like Nepal and India where we plan to expand at first.
Future Startup: What are your thoughts about the prospect of the food-tech industry in Bangladesh?
Syed Tahmid Zaman: It is very necessary to understand that cloud kitchens or food techs aren’t detrimental to the traditional restaurant industry. Restaurants that have a unique menu concept and offer a beautiful ambiance have nothing to worry about - they will survive in the long run. Cheez, Chillox, and Madchef have made a mark in the market with their unique brands. In contrast, restaurants that incorporate every other cuisine in their menu are destined to fail, since they don’t have any specialization.
At GKB, we keep a maximum of 15 items under each brand. This is because the more choices you offer, the more perplexing it becomes for the customers, and the kitchen staff.
Bangladeshis are food fanatics, to say the least. When it comes to amusement, people barely have any other option other than exploring restaurants. However, the restaurant industry is lagging in terms of technology.
The majority of restaurant owners aren't aware that technology can help them improve their bottom line. The negligible number of companies that sell restaurant solutions do not provide any sort of information related to data analytics either. That is, there remains plenty of scope for innovation in both food and tech in Bangladesh. Rather than serving ordinary cuisines, the owners should focus on data-driven food innovation and build a competitive moat.
On another note, in Bangladesh, restaurants’ dependency on food aggregator platforms is jeopardizing their profitability as some of these platforms charge a significant commission. The impact can only be minimized if the restaurants have their own platform for taking direct orders from their loyal customers.
To that end, we have created a D2C ordering platform within Onnow.io which we plan to launch in August this year. Similar to Shopify or WordPress, restaurants can build their online shop within just 10 mins by using our DTC platform, Onnow. All they need to do is upload their product images, MRP, and description on a mobile app which will then generate a link. When this link is shared with the customers, the restaurants can see the orders directly in their kitchen dashboard. This will not only save 25%-35% delivery commission for the restaurants, but they will also get some insights regarding their customers.
And based on the customer data, they can further design their marketing strategies. We are using this solution for our own brands and all of our restaurant partners have free access to this platform.
To sum up, innovation in both food and technology has the potential to make this industry sustainable giving enough room for both restaurants and cloud kitchens to excel parallelly.
Lastly, if any restaurant wants to partner with us, they can contact us.