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Breadfast: Egypt's King of Quick Commerce

From Bread to Everything

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Mikal Khoso

Dec 02 2021

6 mins read

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Egypt has always been famous for its rich history and culture and the subject of numerous Hollywood movies. But in the past few years Egypt is increasingly making a name for itself for something else - startups. Egypt has seen venture capital funding to startups in the country soar from a miniscule $6 million in 2015 to nearly $200 million so far in 2021, and things are only accelerating. 

With a population of 100 million people, Egypt is the largest country by population in the Middle East and North Africa (MENA) and a high priority market for regional startups from across Africa and MENA to expand into. But in Egypt - as in India, China and Pakistan - local founders with local context are leading the charge and building the first-generation of leading technology companies. One of the flagship companies of Egypt’s new wave of technology innovation is quick commerce startup Breadfast.

Breadfast is a quick commerce startup offering same-day and next-day delivery of a range of household items from groceries to electronics and cleaning supplies. Breadfast was founded in 2017 and since then has scaled rapidly: 

  • Growing 25% month-on-month
  • Serving 200,000 households across Egypt
  • Offering over 2,500 different products (SKUs)
  • Targeting 6 million deliveries over the next 12 months
  • Raised over $30 million to date 

Breadfast has emulated quick commerce models pioneered worldwide by startups like Getir, Rappi and GoPuff and is the market leader in Egypt today with significant regional ambitions in the years to come. 

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Products

Breadfast - as its name suggests - started as a delivery service for bread. The founders of Breadfast realized that bread is the most basic unit of the household and decided to start by perfecting the delivery of bread. In fact, in an effort to guarantee quality and a great customer experience Breadfast decided to bake all the bread it delivered in house and still continues to do so to this day. After honing their logistics and supply-chain with bread, Breadfast quickly expanded to other grocery and household items. Today, Breadfast offers same-day and next-day delivery of over 2,500 different items. 

Typical of most players in the quick commerce space Breadfast owns all of its logistics infrastructure and is the only quick commerce player in the world that manufactures part of its own inventory. In emerging markets like Egypt the warehousing and last-mile delivery infrastructure remains limited and unreliable, which pushes companies like Breadfast to build and own their entire logistics infrastructure in-house in an effort to maintain a high standard of quality. Today Breadfast has 30 dark stores across Egypt and manages its own sourcing and last-mile logistics fully in-house. 

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Market

Egypt is MENA”s most populous country and the third most populous country in Africa behind Nigeria and Ethiopia. This large population has created a large and fast-growing food and beverage market which in 2021 is estimated to be over $50 billion. This is set to grow by over 30% in the next two years and cross $65 billion in 2023.

Today Breadfast is live in Cairo - Egypt’s former capital and economic hub - as well as Giza, Alexandria and Mansoura. Cairo is Egypt’s beating heart with over 20 million people living in the greater Cairo Metropolitan area alone. In 2022 Breadfast plans to launch in additional 6-7 cities in Egypt, broadening its footprint across the country. 

Despite Egypt’s large population, its rate of urbanization is relatively low with only 42% of Egyptians living in cities today, compared to the 60-75% rate for other countries in the region such as Algeria, Morocco and Turkey. This presents a challenge to Breadfast’s logistics model which relies on urban customers today. However, the good news for Breadfast is that urban residents have higher incomes and spend more food than rural residents. 

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Growth Opportunities

Breadfast’s strong logistics know-how and recognizable brand is a strong foundation to fuel further expansion. The company has two main possible growth paths in the years to come beyond simply expanding to new cities in Egypt: 

  1. Geographic Expansion
  2. Expansion into the B2B wholesale segment for groceries and other supplies

While Egypt is MENA’s largest market by population, it is not the richest market in the region. The six countries of the Gulf Cooperation Council - particularly Saudi Arabia - are significantly richer than Egypt and present compelling opportunities for expansion. The size of the food and beverage market in Saudi Arabia is estimated to be over $50 billion - similar in size to Egypt’s market - despite having a population of only 30 million. Saudi Arabia’s population is also heavily urbanized with 84% of Saudis living in cities today. 

In addition to the countries of the GCC Pakistan is a major market for Breadfast to potentially enter. Pakistan’s population of 220 million people is 2.2x as large as Egypt’s and the rapid growth of the country's tech ecosystem over the past year has attracted hundreds of millions of venture capital financing. Many startups across the MENA region have ambitions to expand into Pakistan to take advantage of the huge potential of the market and many already have such as Jordan’s Abwaab. Despite its huge population Pakistan’s food and beverage market is also estimated to also be worth about $50 billion. However, Pakistan’s rate of urbanization is even lower than Egypt's at 37%, reducing the potential addressable market for the company. 

Aside from geographic expansion, Breadfast has a significant potential opportunity to expand its business beyond direct-to-consumer delivery and into the business to business (B2B) segment. In particular the HoReCa segment (hotels, restaurants and cafes) is a natural next set of customers for Breadfast’s range of products. According to Egypt’s most recent census in 2017/2018 there are 179,000 food service establishments across Egypt and nearly 2,500 establishments providing accommodations. However, the vast majority of these establishments are very small. For example, 75% of food service establishments in Egypt have only 1 employee and 20% have under five employees. Less than 4% of these establishments have more than 10 employees. Breadfast’s warehouses, fulfillment centers and network of drivers can with relatively limited effort be repurposed to also serve the B2B segment. By focusing on the largest businesses in the food service and accommodation segment Breadfast has the opportunity to significantly increase its sales and revenue in its core business. 

Overall, Breadfast is Egypt’s leading quick commerce business and rapidly expanding across the country. It can now take the foundation it has built and use it to expand regionally, expand into the B2B segment or open up a whole new line of business with financial services. It’s still early days for Breadfast and for Egypt’s technology ecosystem. The best is yet to come!

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