Zero to R500m since 2006 — the story of Yuppiechef

Savvy dressers know how to mix cheap brands with high-end items. So too do the yuppie chefs among us

Andrew Smith and Shane Dryden were web designers with backgrounds in technology, online marketing and brand-building, but they wanted to sell products and not just their time.

After an initial foray into bug zappers and flags (Smith’s mom was their first customer), they realised the market was craving a specialist kitchenware retailer. So, in 2006, they created Yuppiechef.
This past week, the partners sold it to the mighty Mr Price Group for nearly R500m.

You can see the appeal: Yuppiechef has a stellar reputation as an award-winning e-commerce retailer, and sells more than 10,000 products from nearly 700 brands.

It also shifted into bricks-and-mortar stores in 2017, recognising the potential power in omnichannel retail.

As it turns out, shoppers in this country like to see and touch what they’re buying a lot of the time.

While it took two years for Yuppiechef to generate its first R1m turnover as an online company, it took only a few days to reach that at its V&A Waterfront store in Cape Town. Smith says SA shoppers prefer to visit physical stores, which might explain why the country has one of the highest number of malls per capita in the world.

But it is also an unlikely marriage between the listed value-oriented clothing and homeware group, and an aspirational kitchen and homeware business.
Mr Price, after all, sells jeans for under R200, while at Yuppiechef, pots can go for more than R5,000 and a KitchenAid mixer will set you back about R12,000.
“Yuppiechef is a business that we believe will give us the right offering as an opportunity,” says Mr

Price CEO Mark Blair.

That means a higher-income customer base and a greater share of their better-padded wallets.

Mr Price didn’t want to invest in a segment that competes with it but rather one that complements it.

So while other operators have been targeting the lower end (TFG recently bought Jet, and Mr Price itself bought Power Fashion), it seems the more aspirational side has appeal too.

This strategy started to emerge last November as Mr Price mapped out areas for growth in the SA market, which it has now largely confined itself to.

Daniel Masvosvere, equity analyst at Sanlam Investments, says the deal is “incrementally positive”.

With a stroke, it will ratchet up Mr Price’s online platform and extend the reach of its homeware offering into the premium end of local retail.

As for the cost of the deal, Masvosvere says: “I can’t opine on whether they over-or underpaid, because we don’t have a true sense of the extent of the profitability of [Yuppiechef]. We do know the deal is relatively small at about 1% of the market capitalisation of the Mr Price Group.”

But for Smith and Dryden, it’s arguably every savvy start-up owner’s dream.

Their interest in kitchenware began when Dryden, who’s something of a foodie, wanted to sell the types of tools that international cooking shows were popularising but which weren’t easily available in SA.

A chef friend recommended including Cuisipro tongs in their must-have list, and the first Yuppiechef sale was a pair to Dryden’s dad. It took months for them to sell to someone they didn’t know.

In its first year, Yuppiechef sold only 200 items from its selection of 32 products.

There was little money coming in, but Dryden and Smith had jobs and they were working on Yuppiechef from a lounge in Plumstead, Cape Town. It took five years before they were able to draw a salary from the business.
International hedge fund Tiger Global, which has also invested in Takealot, Bidorbuy and Private

Property, then bought in.

It’s not as if it’s been a one-way track up, though. Yuppiechef used to deliver to customers in Namibia, Mauritius, Botswana and Zambia and briefly also operated in the United Arab Emirates, but turned back to focus on SA, pretty much as Mr Price has done.

Still, you clearly can’t keep a good entrepreneur down.

Yuppiechef has branched out in other directions — including the launch of its own brands, such as Humble & Mash and Jimmy Public. The retailer also sells gift boxes and online cooking courses, and now offers a wedding registry service too.

Masvosvere says this is by no means a transformational acquisition for Mr Price.

“I don’t see that the business will change its model and make a full pivot into the premium end of the market. At the core of the group is value, as seen in the Mr Price apparel business.” Smith and Dryden will continue to run Yuppiechef with their existing team.
But they’ll be able to draw on Mr Price’s balance sheet and homeware skills, which should bring in a wider homeware assortment.

The standalone Yuppiechef stores will remain. There are seven at present, and more will likely be added.

“We see this as a great opportunity for the business to scale and showcase its offering to customers in physical stores as well,” says Blair.

The executives at Mr Price have known the team at Yuppiechef for a while, but sale talks only started over the past year.

“We hold a strong partnership value in our business, and it is important to us to get to know people before doing business with them,” says Blair.

He tells the FM that the more they spoke with Smith and his team, the more they knew it would be a good fit.
Smith says: “Shane and I have invested more than 14 years in this company, and we still have so much more that we want to see happen.

“It’s far too exciting a time to consider doing anything else. Our homes have become our worlds in

the past year, and there are some categories within it that we haven’t even started competing in, and many more that we haven’t fully grown into yet.”

Smith says they popped some bubbly with the Mr Price team during the final signing, but there are likely to be more celebrations to come. “It’s going to take a while for it all to sink in.” And they’re still awaiting final Competition Commission approval.

The names of Yuppiechef’s first customers are frosted on a window, and while the hand-written notes customers have received over the years no longer accompany every order, as many as possible notes are still handwritten each month.

That’s going to be a lot of letters.

QUESTION ONE [20] Planning is the first primary management task conducted by managers. Using examples related to the case study, discuss the steps in the planning process.

QUESTION TWO [30]

2.1. Marketing refers to the process of communicating, creating, and delivering the (15)

organisational function to their valuable clients. Discuss how a company such as Yuppiechef can make use of promotion or marketing communication. Use examples related to Yuppiechef to motivate your answer.
Include the following in your discussion:

– Advertising

– Personal Selling

– Sales Promotion

– Publicity

– Direct Marketing

2.2. According to Strutner (2020), at its core, financial management is the practice of (15)

formulating a business plan and then ensuring all departments stay on track. Discuss the types of financial managers at a company such as Yuppiechef. Include the following types in your discussion:
– Controllers

– Treasurers and finance officers

– Credit managers

– Cash managers

– Risk managers

– Insurance managers

QUESTION THREE [20] Most major companies and even some government organisations have a purchasing or procurement department as part of everyday operations. Provide a critical discussion on the purchasing process. Use examples related to the case study to substantiate your answer.
Include the following in your discussion:

– Needs Analysis

– Purchase Requisition to Purchase Order

– Purchase Order Review and Approval

– Requests for Proposal

– Contract Negotiation and Approval

– Shipping and Receiving

– Three way Matching

– Invoice Approval and Payment

– Accounting Records Update

Answers to Above Questions on Yuppichef Case Study

Answer 1: Planning is one of the most important steps that needs to be carried out in order to set up a desired plan to achieve specific objectives. In the given case of Yuppiechef, planning is essential to be carried out which includes clearly defining the objectives initially followed by performing an assessment of the current situation, developing plan, taking up action, implementing the plan and monitoring its performance. As a part of setting up the objectives in case of Yuppiechef, Andrew Smith and Shane Dryden need to initially identify a market gap for a specialist kitchen retailer. They need to develop a niche e-commerce platform initially so that the high quality kitchen products can be easily sold to customers.