Dining in, cashing in

Hey there, time traveller!
This article was published 15/12/2016 (3212 days ago), so information in it may no longer be current.

Four years ago, Josh Simair and two brothers came to Winnipeg to talk about setting up a company around an idea they had using technology to enable couriers to deliver restaurant meals in a cost-effective and timely way.

On Thursday, their company, SkipTheDishes, was acquired by the U.K. firm Just Eat PLC for $110 million, likely making it the largest tech deal in Winnipeg since David Graves sold Broadband Networks to Nortel for $600 million in the late ’90s.

SkipTheDishes has been one of the fastest growing technology companies in Canada for the past couple of years, now employing about 250 people, including more than 200 in Winnipeg. The company also has a small operation in Saskatoon.

The deal includes $100 million in cash on closing and $10 million payable in 12 months in the form of new Just Eat shares. An additional $90 million will be added to the acquisition price if the Winnipeg company can reach aggressive growth targets.

SkipTheDishes has developed a technologically enhanced delivery platform that targets lower-density cities such as Winnipeg, Saskatoon, Edmonton. It also operates south of the border in cities such as St. Louis, Cincinnati and Buffalo. It’s servicing 20 cities now and continues to grow its geographic footprint.

The company is currently delivering orders for more than 2,900 restaurants and has more than 350,000 active customers. This year to date the company has grown by 186 per cent with expected revenue of $23.5 million.

Josh Simair, 29, CEO and one of the co-founders of the company, said the target is to double revenue and order volumes in 2017.

“We have built one of the fastest-growing tech startups in Canada, and we are absolutely passionate about what we are building,” Simair said. “What we have here is the opportunity to accelerate that growth by joining with Just Eat to access their resources and knowledge. They are the world leader in the space. We are really excited.”

London, England-based Just Eat, which also spent close to $400 million gobbling up a U.K. competitor Thursday, is the world leader in the food-delivery business with sales this year expected to be more than $600 million.

Just Eat already operates in Canada and is the clear market leader. But it is much more focused on dense urban centres such as downtown Toronto and Vancouver. Not only is there little geographic overlap in the deal, SkipTheDishes’ platform includes its own technology-enabled delivery people. Just Eat utilizes restaurants’ own delivery staff.

‘Everyone talks about building companies here. This is the outside world standing up and taking notice’– Marshall Ring, CEO of Manitoba Technology Accelerator

“SkipTheDishes has cracked the code to deliver profitable growth quickly in lower density urban and suburban markets,” said Howard Migdal, Just Eat’s country manager in Canada. “Their technology is unbelievable. That has enabled their exponential growth in those low-density markets.”

Migdal also raved about the company’s Winnipeg team that is expected to stay in place and continue to grow. (Simair said the company is currently hiring more staff.) The SkipTheDishes operating brand will also remain in place.

Marshall Ring, the CEO of Manitoba Technology Accelerator, has been working with SkipTheDishes since the Simairs moved to Winnipeg from Saskatoon earlier this decade to start the company. He and others said there is no one in the business who work harder and with more passion than the SkipTheDishes team.

“We always believed they had impressive technology, and they are so focused on growth. They are all in,” Ring said. “This is so great for Winnipeg. Everyone talks about building companies here. This is the outside world standing up and taking notice. It is real great validation.”

And there is plenty more room for growth. Migdal said the main competition in Canada is the telephone where 70 per cent of take-out meal delivery is still transacted, as opposed to 50 per cent in Europe and the U.K. where Just Eat is dominant.

“We — Just Eat and SkipTheDishes — are best positioned to gain that market share as consumers swarm to migrate from telephone to web and mobile apps to order their food,” Migdal said.

In its brief history, SkipTheDishes has not only been successful in growing its business but has attracted high-profile angel investors such as the founders of Ottawa-based Shopify as well as the Toronto-based seed venture capital fund, Golden Venture Partners, run by former Winnipegger Matt Golden.

“They’ve done a terrific job,” Golden said of the founders. “They are excellent, talented, hard-working, driven, super-smart, efficient humble guys… all the things we look for in a founding team. They are also the classic traits of great Prairie guys. It’s great to see a big win for the Winnipeg technology ecosystem. We hope to see others in the future.”

martin.cash@freepress.mb.ca