Opportunity Execution Project

FOOD ROUTES-

Food Routes

TEAM FORMATION

Maria Botchkova, Francisco Kattan, Adrianne Chen, Abdullah Sukkar

Four strangers, scattered across the globe:Saudi, Australian, Honduran & Russian

Meeting for the first time through the Stanford Venture Lab course.

Diverse range of skills and experience:

Combine over 50 years in product development & management,

marketing, strategy, HR, IT, systems implementations, finance, sales, operations, project management,

and consulting

And a shared interest in : Travel and Food!

Food Routes

How the business model works and makes money

Interest in : Travel, Food and New Experiences!

We connect people who want to experience an authentic home-cooked meal

to hosts who want to provide one .

The problem this company solves is:

For guests: being able to get authentic local meals when traveling. Targeting to those travelers who want to experience local cuisine and local environment beyond what can be offered in the restaurant.

For hosts: being able to earn extra income from assets they already have: a home, cooking skills and local food knowledge.

The company makes money by taking a booking fee and a percentage of the meal price on meals organized through the site.

Food Routes

How the business model works and makes money

“Guests” register for free, and can organize meals with hosts or join a scheduled meal. The value they get includes ability to search and set up meals in their destination country with the host of their choice, read previous guest reviews and hosts' ratings, research host neighborhood information, etc.

Hosts register by paying a nominal registration fee for their identify and address verification, and can then advertise their food/experience to guests. The value they receive is the ability to reach a large audience of interested customers.

Each meal booking is charged a booking processing fee. 24 hours prior to the meal the full booking fee is charged (which is transferred to the host, minus the company margin even if the guest does not turn up).

In the early network building stage all hosts will be verified by company staff, house pictures will be required. The registration fee will be waived for the promotional periods.

Food Routes

Why we are confident this is a profitable business

Market Size.We initially sized the market to include only US and Australian travelers in their top 5 travel destinations. This resulted in a modest market size estimation of1.3m meals worth roughly $45.5m.

However based on customer feedback we believe the proposition has greater relevance than just Americans and Australians. We refocused on adventure-seeking tourists and top 8 destinations determined by largest tourist arrivals and high interest in trying a local-hosted-meal as discovered by our survey and interviews.

Source: Wikipedia chart based on World Tourism Organization Statistics

MARKET SIZE = $ 4.6 billion and growingand growing346.5m tourists * 38% tourist looking for ''off-the-beaten path experience” *$35 meal fee

Food Routes

Why we are confident this is a profitable business

Customers want the productWe asked customers (surveys and open-end interview questions) and got an overwhelming “yes” that people have an interested in using the service (89%). Naturally, not all 'interested' will become a paying customer, but another encouraging outcome is 38% surveyed identified themselves as tourists that prefer to travel off-the-beaten path and 100% of those had interest in service. Those 38% is our main target.

Customers are willing to pay for the productWe tested customer price point and found that “price” was not the main driver for using the service. People are willing to pay $30-50 per person per meal. At this price point we are not looking as a “fast food” or “budget food” proposition. A small percentage (9%) where even willing to pay more, if the experience was unique/special.

Both Fixed and Variable costs are lowOur costs are relatively low and fixed once the concept is set up and running within a country (mainly marketing and IT support). We don't necessarily require outside financing at the early stage. To break even (annualized) we need to get to 6.3k meals booked, representing a 0.005% penetration of our preferred countries.

Food Routes

How we dealt with Business Model Risks?

A core value in our model is TRUSTED HOST Network and VIBRANT travelers community.

Failure to build and maintain either is a key risk. Another key risk to our business is low technical barriers to entry.

To minimize risk our strategy is to :

Focus our host business development by taking a country by country approach - be the ‘first-mover’, lock in the best hosts, and concentrate on maintaining host relationships

In addition to global partners and distribution/marketing channels maintain relationship with country specific partners: local travel sites, travel booking services, B&B hotels

Build vibrant travelers' community, through encouraging blogging, sharing, best picture contests, and various monthly community events

Food Routes

Opportunity Execution and Next Steps

We conducted 5 marketing experiments:

Key Findings

•The social media campaign (Facebook page) was most effective (44% Conversion Rate) and least expensive. • Paid campaigns (Pay4Tweet) performed worst.•Customer Acquisition Cost through Facebook and Email are lowest  and present the best ROI for future campaigns

Key Decisions Made to Improve Conversion Rate

•Sent traffic to new Marketing Page instead of Prototype•Rebranded from DISH Network to Food Routes•Changed Tagline to better reflect value proposition

Food Routes

Opportunity Execution and Next Steps

Based on the results from completed marketing campaigns we believe that we need to concentrate on acquiring additional 3 - 6 hosts first in the top 1-2 tourist destination.

Once 3-6 hosts are signed up and several introductory events are conducted we will proceed to work with 'influencers', to get the articles published about the service on Trip Advisor', 'Lonely Planet' and/or similar publication.

Once we got some support will spread the word using social networks.

Our current conversion rate is 35% and our most challenging issue is directing traffic to the website. Working through ‘influencers’ and having events scheduled to review and discuss will help drive interested traffic to the site.

To facilitate host signed up we plan to have a conference event in the target city. That will allow for face to face communication which will eliminate some hosts concerns that we encountered and also will allow us to personally verify hosts which will minimize guest security concerns. The cost for the event is estimated at $200. The first target location is Malaysia. Once the service is established we will move away from face-to-face marketing to make sure that the acquisition cost for hosts remains low.

Food Routes

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Links to Our:

Marketing Video

Landing Page

FaceBook Page

Prototype

Stats 12/12/12:

69 view of the landing page,

9 signed up for updates, 8 active users on the

prototype sites