As the UK begins to ease its COVID-19 restrictions, London's Chinatown is coming back to life. But with dining at restaurants still off the menu, Chinese businesses, such as Feng Wei Shi Tang, are having to rely on home deliveries to cover their losses. 

That's changed its business model, pushing it into a much deeper partnership with a new breed of Asian food delivery app – HungryPanda. 

"We've been working with HungaryPanda for about two years," the restaurant's owner Sai Qi tells CGTN Europe. "Before the coronavirus, takeaway was a supplement to our overall business and we only used them as a delivery platform." 

But since the start of the pandemic, he says the Chinese language app has essentially become "the only platform for our takeaways and delivery," accounting for more than 70 percent of his business. "Hungry Panda's role has obviously been special," he says.

 

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Relatively unknown outside Asian communities, HungryPanda provides similar services to other higher-end food delivery apps such as Deliveroo – except it's more focused. It operates on a global basis, but mainly in Chinatowns, in Mandarin, almost exclusively targeting the world's Chinese diaspora with "authentic" Chinese food. 

Amid the coronavirus pandemic, CEO Eric Liu says that like so many online delivery services, the company has prospered: "Because of the pandemic changing the way people shop and a very high demand for ordering food and groceries online, the industry increased sharply in the past year."

"It's been the same for HungryPanda," he adds. "We increased by 200 to 300 percent across nearly every city."

In part, thanks to the explosion in demand for home delivery, the company's total orders increased by 600 percent in the U.S. alone, and last November it raised $70 million to help its global expansion. But Liu says even before the pandemic, business was booming.

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The rise of HungryPanda

Tapping into a potential market of more than 50 million Chinese living abroad, HungryPanda has expanded more than 30-fold since the 26-year-old computer science graduate came up with the idea in 2016. 

Arriving in the UK to study at Nottingham University, "like most Chinese people, I had the habit of ordering food and groceries online," says Liu. "So I downloaded some local platforms like Deliveroo and Just Eat." However, he found them difficult to use because they weren't in Mandarin. 

 

 

He adds that since the companies tended to cater for Western tastes – promoting European-style dishes like chicken chow mein and sweet and sour pork – they weren't offering the kind of Chinese food he wanted. Spotting a gap in the market, he and some friends set about creating the software for a new delivery app with Nottingham's Asian restaurants as a priority partner. 

 

 

One of the key decisions early on was to suggest the eateries – which often have one menu for locals and one for Asian users – use what Liu calls their "traditional" menus to improve the food's quality. The other was to target the UK's ever-growing number of Chinese university students, many of whom he says don't know how to cook for themselves.

"The model was very successful in Nottingham and we made a profit very quickly," says the CEO. "After that, we used the profits to launch in more cities in the UK." 

Five years later, the app boasts more than 300,000 users the UK, where its headquarters are and has become the global market leader in Asian food delivery. It's now live in 60 cities around the world, in countries as far flung as the U.S., France,  Australia, and Japan.

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Expanding its reach

The company hasn't only increased the diaspora's access to traditional Chinese food, it's also imported business practises common in China but relatively new to the West, such as group-buying. 

Many of the app's student users often live in the same area of a city – usually the center – and sometimes even in the same building. HungryPanda allows them to make individual orders, but together, in bulk, sending hundreds of different deliveries to designated collection points at these hubs. 

 

 

"They'll put some restaurants on [Chinese messaging app] WeChat and we can order food together and they deliver it at the same time," says Muto Chen, a 19-year-old university student. He adds that while "there can be some arguments over which food belongs to who," it's made delivery costs much cheaper for him and his friends.  

The service has now been extended to grocery deliveries, part of the start-up's plans to expand their focus by targeting Chinese immigrants on the city's periphery. Liu says these users generally have a low demand for takeaway, but need Asian food products to cook.

"In the beginning, it was very easy to expand at the universities, but now, we've found a big potential user base in immigrants that live further away from Central London."

 

 

He also wants to lure this market by setting up more "dark kitchens" – cooking sites without storefronts or seating areas, created purely for deliveries. "We supply the dark kitchens in some areas and they're very close to the user," says Liu. "They just have to hire some chefs, cook the food and then we help them do the promotions and supply the delivery service."

While dark kitchens can help cut costs, their expansion is worrying some in the Chinese food industry. With expensive rents and few walk-in customers, there are fears some restaurants may close shop to work out of the cheaper premises. Feng Wei, Shi Tang's owner, says that if such a practice is unregulated, it could potentially damage HungryPanda's reputation for serving high-quality food.

"If the people working in dark kitchens have some sense of morality and take responsibility for customers, they'll use good materials," says Sai Qi: "But if they don't and use bad ingredients, if there's anything goes wrong, not only could these businesses get in trouble - the platform might also have problems."

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What's the future of Chinese takeaway?

Despite the company's growth, Liu says in some ways COVID-19 has been a double-edged sword: "Demand has increased, but our potential users may have gone down... lots of them can't study abroad now."

This dip in student numbers has bitten at some areas of the start-up's expansion, forcing it to delay plans to integrate more restaurants outside Chinatowns. However, the CEO is expecting that with the roll-out of vaccinations, even more students will return this year.

"The Chinese government is supplying free vaccines if you need to go abroad to study," he says, adding that many Western universities are working hard to get Chinese students back. Some are even offering free accommodation to those that need to quarantine. But even when travel restrictions are eased, the end of stay-at-home orders could see desire for takeaway drop. 

 

 

And beyond demand, labor may also prove to be a problem. Having played a vital role during the pandemic, many delivery drivers are starting to call for better pay and more rights. Spain's new trailblazing policy of recognizing drivers as wage laborers is expected to gain traction across Europe - and with flexible labor as the lynchpin of online platforms like HungryPanda, their bottom line could take a hit. 

However, Liu says these bumps in the road – especially in such volatile times as the pandemic – come with the territory of being a start-up. "We're happy to work with riders, governments or even our competitors to meet the riders' new demands. The world changes every day, and as a tech company, we need to change with it," he says.

 

 

He adds that no matter what, business will still be coming HungryPanda's way, "when restaurants reopen, only a few people will be using the dining service, but we can help them deliver their food 10 miles away." But is there a risk that HungryPanda's rise could in fact hurt the Chinese food industry?  

 

 

First of all, its services aren't free. HungryPanda charges restaurants at least a 15 percent commission, with industry reports that delivery platforms sometimes take as much as 35 percent of the sale. Money aside, there's also the potential that an expanded Chinese takeaway service could eat away at the vital diaspora ritual of communal eating at restaurants.

"In the long run, I don't think delivery will affect the dining service," says Liu. "It's actually an extra revenue for restaurants and it will also increase the dining revenue ... because our platform will help them to do lots of promotion." 

In London's Chinatown, Sai Qi is one of the restaurant owners who agrees. "I feel positive about the future of takeaway ... With the pandemic slowing down and vaccines starting to be more widespread, I think that by the end of this year, things should have eased, but takeaway will still grow by at least 50 percent when students return," he says.

Thousands of Chinese restaurant owners around the world – and especially HungryPanda – are likely hoping he's right.