Despite Egypt’s economic challenges, including four currency devaluations since 2022, Breadfast, the Y Combinator-backed fresh bread and grocery delivery platform, has emerged as a standout success story. The Cairo-based company has defied the odds, surpassing $150 million in annual recurring revenue (ARR), a testament to its strong business model and local market advantage.
According to the latest statement from VNV Global AB, one of Breadfast’s investors, the Egyptian startup has demonstrated impressive growth, with its ARR increasing 38 times since 2021 in constant currency. VNV Global highlighted Breadfast’s “best-in-class dollar retention” rate, with over 100% gross merchandise value (GMV) retention after 20 months on the platform — an achievement that surpasses many of its global peers.
Breadfast’s rapid expansion contrasts with the struggles of similar quick-commerce companies in Europe and the U.S., where profitability has been elusive. The company’s strong unit economics, largely driven by Egypt’s long-standing culture of home deliveries and a large middle class, have enabled it to keep delivery costs low while achieving high average order values comparable to European markets.
While many businesses in Egypt have struggled under the weight of devaluations and inflation, Breadfast’s fully integrated supply chain and efficient business model have helped the company not just survive but thrive. The startup, founded in 2017 by Mustafa Amin, Abdullah Nofal, and Mohamed Habib, operates 28 fulfillment centers in four Egyptian cities — Cairo, Giza, Alexandria, and Mansoura — delivering a wide range of grocery items, from fresh bread to household staples, in under 60 minutes.
In 2023 alone, Breadfast doubled its revenue in U.S. dollar terms, thanks to high customer retention and an expanded product portfolio. The company handles 500,000 orders per month from approximately 150,000 active users. This impressive performance has boosted investor confidence, with VNV Global valuing its 9% stake in Breadfast at $23.1 million as of December 2023.
Breadfast’s Differentiated Approach: Owning the Supply Chain
Breadfast’s success stems from its decision to build a fully integrated supply chain, a strategy that differentiates it from many quick-commerce competitors. Instead of acting as an intermediary between customers and local bakeries, Breadfast chose to produce its bread in-house and control every aspect of the supply chain, from production to last-mile delivery. This approach has enabled the company to maintain product quality, manage costs, and achieve economies of scale.
Mustafa Amin, Breadfast’s co-founder and CEO, recalls how the company’s early decision to “bake its own bread” was met with skepticism from investors due to the capital-intensive nature of the business. However, Amin insists that this strategy has proven essential for long-term sustainability, especially in the grocery delivery category, where thin margins can make or break a company’s viability.
“Building a marketplace for groceries in Egypt wouldn’t work,” Amin explained. “Owning the supply chain was necessary because the margins are very thin, and reliability in emerging markets is key.”
A Focus on Hyper-Localization
One of Breadfast’s key strengths is its ability to adapt to local market conditions — a concept Amin calls “hyper-localization.” Breadfast has tailored its operations to suit the tastes, preferences, and consumer behaviors in each of the cities it operates in. This adaptability has helped the company cement its presence in Egypt’s diverse markets, with plans to expand into eight more cities in 2024.
Equally important is Breadfast’s commitment to customer satisfaction. With a retention rate of over 80%, the company has focused heavily on providing a seamless user experience. Breadfast offers a combination of on-demand grocery deliveries and scheduled early-morning deliveries, catering to various customer needs. Its emphasis on fast delivery and a wide product selection — from fresh produce to household goods — has further strengthened its relationship with consumers.
Expansion into Fintech: Breadfast Pay
In 2024, Breadfast will diversify beyond groceries with the launch of its fintech arm, Breadfast Pay, which will offer cash deposits, withdrawals, and savings products. Breadfast Pay is set to include a Breadfast-branded card, marking the company’s entry into Egypt’s burgeoning fintech sector. This strategic pivot echoes the trajectory of Southeast Asia’s Gojek, which started as a ride-hailing platform and later became a major fintech player. Investors believe this move could significantly enhance Breadfast’s future growth prospects.
Breadfast’s journey from a small delivery startup to a key player in Egypt’s grocery market highlights the importance of adaptability, customer focus, and operational control in navigating an unpredictable economic environment. With strong financial backing, a resilient business model, and expansion plans in both grocery and fintech, Breadfast is poised to continue its growth trajectory, despite Egypt’s economic challenges.
Investors are optimistic about the company’s potential. VNV Global notes that if Breadfast continues on its current path, the company’s growth could become a significant driver for the investor’s entire portfolio.