The Rise and Fall of Take Eat Easy

In the world of startups, success stories often make the headlines, while the failures are relegated to the sidelines. However, as a startup founder, it’s important to learn from both the victories and the failures of others. In this blog post, we will dive into the story of Take Eat Easy, a once-promising food delivery service that ultimately filed for judicial restructuring. By examining the factors that contributed to its downfall, we hope to provide valuable insights for those who are building their own startups.

The Beginning: A Promising Start

Take Eat Easy was founded in 2012 with the aim of enabling quality restaurants to provide a reliable delivery service to their customers. After testing and proving its concept in Brussels, the company expanded to Paris, raising its first round of VC funding in April 2015, followed by a second round in August 2015.

In just 12 months, Take Eat Easy experienced rapid growth. The team expanded from 10 to 160 members, operations scaled from 2 to 20 cities, restaurant partnerships increased from 450 to 3,200, and the customer base grew from 30,000 to 350,000. 

The end

The company reached a milestone of 1 million orders. However, despite this impressive growth, Take Eat Easy was unable to achieve profitability or secure further funding, ultimately leading to its downfall.

“A couple of days ago we hit the 1 million order mark, yet today we are filing for judicial restructuring. Why are we filing for judicial restructuring? The short answer is that 1) our revenue doesn’t cover our costs yet, and that 2) we haven’t been able to raise a third round of funding.”

Here are the reasons why.

Reasons for Failure

Revenue not covering costs

Take Eat Easy’s business model was relatively simple: they charged restaurants a 25-30% commission on each order and collected a €2.5 delivery fee from customers. With an average net revenue of around €10 per order, they then paid the bicycle couriers for their delivery services. The contribution margin for the company was a function of restaurant commission, average order value, delivery fee, and delivery cost.

Market conditions largely dictated the first three parameters, while delivery cost was directly influenced by “courier utilization,” or the number of deliveries made per courier per hour. Ensuring a high courier utilization rate was crucial for achieving a positive contribution margin, as couriers needed to make at least €15 per hour to prevent churn.

Take Eat Easy’s tech and operations teams focused on optimizing courier utilization by implementing automatic order dispatching, capacity planning, and restaurant operations integration. Despite these efforts, the company’s contribution margin was not high enough to cover its fixed costs.

Inability to raise a third round of funding

Take Eat Easy began working on its Series C funding in October 2015, realizing the need to secure more capital as competitors like Foodora and Deliveroo raised massive funding rounds. However, a few weeks later, Deliveroo announced an even larger funding round, which made it difficult for Take Eat Easy to secure the investment it needed.

After being rejected by 114 VC funds, Take Eat Easy signed a term sheet with a French, state-owned logistics group for a €30 million investment in March 2016. Unfortunately, following three months of due diligence, the logistics group’s board rejected the deal and withdrew their offer.

Operating under an exclusivity agreement and without a backup plan, Take Eat Easy was left with only a few weeks’ worth of runway. The company explored financing and acquisition deals for the next eight weeks, but none of them materialized. With no other options left, Take Eat Easy had to file for judicial restructuring.

Lessons for Startup Founders

The story of Take Eat Easy’s rise and fall offers several valuable lessons for startup founders:

1. Achieving profitability is crucial: Rapid growth and impressive metrics may garner attention, but they do not guarantee success if the company cannot achieve profitability. In Take Eat Easy’s case, despite their impressive growth, they could not generate enough revenue to cover their costs. Startup founders must develop a viable and sustainable business model that can generate profits in the long run.
2. Diversify funding sources: Take Eat Easy relied heavily on a single potential investor during their Series C fundraising efforts, leaving them vulnerable when the deal fell through. Startup founders should consider diversifying their funding sources and avoid relying on a single investor. This approach can provide a safety net in case one investor withdraws or changes their mind.
3. Be prepared for competition: Take Eat Easy’s fundraising efforts were significantly affected by the funding successes of their competitors. Startup founders must be prepared for the ever-changing competitive landscape and be ready to adapt their strategies accordingly. It’s essential to keep a close eye on the market and competitors and to develop contingency plans to stay ahead in the game.
4. Have a Plan B (and Plan C): Take Eat Easy found itself in a dire situation when the French logistics group withdrew their investment offer, leaving the company without a backup plan. Startup founders should always have alternative plans in place for various scenarios. This could include identifying multiple potential investors, exploring different revenue streams, or considering mergers and acquisitions as alternatives.
5. Optimize operations and cost structure: Take Eat Easy’s downfall highlights the importance of optimizing operations to achieve profitability. Startups must constantly monitor and evaluate their cost structures, making adjustments as needed to ensure their business model remains sustainable. In Take Eat Easy’s case, despite efforts to improve courier utilization, it was not enough to offset their costs. Startups should continually seek ways to optimize and streamline operations to minimize costs and maximize profits.

Conclusion

The story of Take Eat Easy serves as a cautionary tale for startup founders, demonstrating the importance of profitability, diversified funding sources, competitive preparedness, contingency planning, and operational optimization. By learning from the mistakes of others, founders can increase their chances of success and avoid the pitfalls that led to the demise of once-promising startups like Take Eat Easy.

In the fast-paced world of startups, adaptability and foresight are key. It’s crucial for founders to remain vigilant and proactive in addressing potential challenges and exploring new opportunities. While the failure of Take Eat Easy is unfortunate, it offers invaluable lessons for other startup founders, helping them navigate the often-tumultuous journey of entrepreneurship and increasing their chances of achieving long-term success.

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