Josh Magidson's first startup Eatstudent.co.uk, a takeaway marketplace whose genesis reportedly happened during a drunken university conversation, was sold to Just-Eat in 2010. Magidson and co-founder Mark Schlagman now plan to corner the Chinese takeaway market with new restaurant chain Zing Zing.
They team has already raised £900,000, are currently crowdfunding and have been backed by a stellar board. Here's their story.
1. What is your investment status?
We have raised just under £900,000 to date from a combination of equity finance and shareholder loans and are now looking to raise £350,000 through a crowdfunded raise.
2. Describe your business in one paragraph; what’s its vision and what problem does it solve?
Zing Zing delivers fresh Chinese dishes with a modern and healthy twist. We are revolutionsing the substandard £1.4bn Chinese takeout market by offering a high quality alternative. Our vision is the change the industry by having a Zing Zing on every relevant high street in the UK.
3. How did you come up with the idea for your business?
In 2010 I (Josh) sold my start up business to Just-Eat.co.uk. While there we noticed two things. Firstly, the country shared our passion for Chinese takeout. No high street is complete without at least one local outlet providing an array of dishes that have now become household names. The second thing that occurred to us was how low standards (of both food quality and service) were becoming across the industry.
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We became obsessed with putting this right by finding a way of providing Chinese takeout to the masses using high quality ingredients and offering 21st century standards of service. The idea was to start the best Chinese takeout in the world.
4. What’s your addressable market?
The UK Chinese delivery industry is £1.4bn in size. We are a mainstream, consumer facing brand. Our stores are both based in North London with small two mile delivery radiuses. We have a database of 40,000 customers who have placed 170,000 orders since we opened.
5. What’s great about your team and do you have a mentor?
We have around 35 people in our team. From 20 years worth of Domino’s delivery experience to master wok chefs and ecommerce experts, we’ve tried to bring together people that can offer unique insights.
Without a doubt we took a big risk throwing ourselves in at the deep end like this.
We are lucky to have really experience board members, like Jamie Barber, the restaurateur and founder of the Brazilian Barbeque chain Cabana, and Maurice Abboudi, former head of business development at Domino's, who also works with in several restaurant companies including Gondola Group, Wagamama, Le Pain Quotidien, Tortilla, Chipotle, Ed’s Easy Diner, and Smith & Wollensky.
Across the team, we encourage people to learn and develop and many of those at the top of the business started much lower down the ladder. We have ex-delivery drivers who are now managers and prep chefs who now head the kitchen. Best of all, the culture is amazing – the team know what is expected of them, work exceptionally hard and get rewarded well for doing so.
6. What key challenges have you faced and how have you overcome them?
Coping with the demand has been a big challenge. We launched our first store in mid-2013 and at first we became victims of our own success – due to much higher than anticipated levels of demand from day one our kitchens were overwhelmed. To survive we ploughed ahead with expansion, opening a second outlet in Kentish Town in late 2013.
Without a doubt we took a big risk throwing ourselves in at the deep end like this, but it meant we learnt lots and learnt quickly. As a result, today our processes are efficient, the operations streamlined and the systems well invested and more importantly scalable.
7. How have you funded your startup and why did you choose this route?
Historically we have raised finance from a close group of private investors. They have great experience within the industry and have offered us a lot of mentorship and advice. However, for the next stage of our growth we have chosen to go down the crowdfunding route.
This is a tough one to answer because we have made a lot of mistakes since we started at every level of the business.
This is for two main reasons. Firstly, we have had many requests from customers who want to get involved in the business. This was a great way to include them and actually enable them to claim an equity stake. Secondly, it helps us to publicise the Zing Zing brand. Crowdcube had a ready-made customer base and the PR we have received so far has been of a high level.
8. How do you market your business and how successful has it been so far?
Our business lends itself to a variety of old school and new world marketing techniques. Leafleting and menu drops are very effective as is general word of mouth. However, we overlay these with strong social media campaigns and the use of online intermediaries such as Just Eat.
Unlike a traditional restaurant, we collect a large amount of data. Our database is 40,000 strong across both stores, which allows for sophisticated targeted email campaigns.
9. What are your plans for the future?
As a founder of a start up it is very easy (and important) to get sucked into every element of the day to day running of the operation.
Chinese takeout is popular across the UK, and we plan to grow Zing Zing accordingly. This starts with our immediate goal of dominating the London market. New stores are easy to find and relatively cheap to set up and we have conservatively estimated to grow to 11 stores by 2018.
10. If you started again, is there anything you would do differently?
This is a tough one to answer because we have made a lot of mistakes since we started at every level of the business. However, every mistake has forced us to learn and adapt our systems quickly. Possibly the one thing I would re-consider is setting up the first store a little quicker. We spent quite a few months developing the product pre-opening when are greatest strides forward came from customer feedback and our own mistakes post opening.
11. What advice would you give to entrepreneurs that are starting a business?
Remain structured and try to have regular meetings about the bigger picture plans of the business. As a founder of a start up it is very easy (and important) to get sucked into every element of the day to day running of the operation. The downside of this, however, is that you can often get bogged down and lose sight of why you founded the business in the first place. Don’t lose focus on the macro goals by having a good balance in your mind of the short and long-term business goals.