Interview | Wolt Baltic CEO: We should list before turning 40 ({{contentCtrl.commentsTotal}})

Liis Ristal, head of the Baltic branch of Finnish food delivery services provider Wolt, is convinced that the company is doing the right thing in Estonia. While Wolt has managed to grow from one month to the next for three years, the business is not ready yet and a bigger niche needs to be carved out.

The headquarters of Wolt's Baltic business is nestled in an obscure corner of a courtyard on the edge of Tallinn's Old Town. The door opens even before the journalist manages to ring the doorbell. She is personally greeted by the executive manager of Wolt's Baltic businesses Liis Ristal. Wolt's offices are empty as people are still working from home, except for a representative of Wolt's communications partner who keeps an eye on the interview and takes notes from time to time.

The interview is taking place after ERR reported several Tallinn restaurants are unhappy with the company's commission rate and think it is too high. Wolt believes this is undeserved. However, this topic makes up just one part of the conversation.

Ristal talks softly. So softly that the visitor is worried her words might not get picked up by the voice recorder. However, her quiet demeanor hides no insecurity. Ristal is sure in her expression and well in control of what she tells the journalist (and what she doesn't).

How big is your market share and how many restaurants do you have in your network?

Our market share is difficult to pinpoint. We have no surveys, no official information or metrics in terms of our business category in Estonia.

I keep getting asked about our market share – not just by journalists but also our staff. But because we lack third-party information, I honestly cannot tell you.

Talking about restaurants, our platform represents over 600 today. We are active in Tallinn and Tartu today. Our competitors are active in more places, meaning that once again, we have no idea of the size of the market outside of Tallinn and Tartu.

Not even a rough estimate?

It is a complicated question because when I started at Wolt three years ago, the market was still very small and taking baby steps. By today, we have done everything in our power to boost awareness of the service, grow that market and service quality. I would like to hope we are the biggest – what manager would not want that – to be able to tell the team that they're with the market leader in food delivery. But, unfortunately, we just don't have that information.

I very much hope there will be statistics about our category one day and that we will graduate from a simple transport sector subcategory.

What makes up your expenses to necessitate a commission rate of 20-30 percent?

It is 25-30 percent on sales. We charge nothing for using the platform and only take a commission on sales we bring to the restaurant. The list of services we offer for that commission is quite long. Roughly half of it goes toward paying our couriers. We pay couriers per delivery and we pay labor taxes on their income. We also offer real-time customer support in Estonian. Our customer service agents respond inside 30 seconds on average, meaning restaurants do not have to handle clients' requests, preferences and questions.

The commission also covers all payment-related costs and we do not charge any additional fees even in cases where people use stolen credit cards or other types of fraud. We cover these costs using that same commission.

How often does something like that happen?

It happens. Virtual credit card theft is an up-and-coming trend. And those costs are covered.

The commission also includes expenses on finding new clients. We offer restaurants marketing assistance, involve them in our campaigns as much as possible. It is very important for us to bring new restaurant clients because if our restaurants are doing well, we are doing well. We invest the commission back into boosting our client database. There are also platform maintenance costs.

Is there a difference in terms of income for bicycle and car couriers?

Not in terms of what we pay couriers. They are free to choose whether to use a bike, car or scooter. It is their choice.

How much does a courier make per order?

The average is around €4.50 which boils down to around €11-12 an hour. I've been asked whether I think it is too much or too little. We want to make sure people can earn a decent income as it is not an easy job.

Couriers who work 40 hours a week need to make more than the average office employee who spends the day sitting behind a computer in a warm office. Their work is difficult, sometimes inconvenient and they need to make good money.

How many of your couriers work full-time or 40 hours a week?

Not too many, they make up 18-20 percent of all couriers, depending on the week or month as all couriers are free to work as much as they want. Most want to work evenings or two weeks a month when they are not at sea. We get different people.

How many couriers do you have?

We have around 2,400-2,500 couriers with an active contract in Estonia.

Is there enough work for all of them?

That is one thing we are working on every day. We have adopted a moral obligation to make sure people we sign a contract with have enough work. This concerns both our courier partners and our restaurant partners. That is why we actively pursue marketing activities for both bringing back existing clients and finding new ones. We need to perform that moral obligation – that contracts come with work.

How many orders can a courier fill in a day?

That question needs to be put to our operations manager. I cannot tell you off the top of my head.

How much can one earn working full-time?

If we take €11 an hour and multiply it by 40 hours a week, we get €440 a week. Multiply that by 4.33… They can make money.

How are taxes calculated? What else gets deducted from that €4.50 per delivery – what do you pay in addition and what is deducted?

That is gross pay based on a contract for services. We pay social tax – pension and unemployment insurance. And then there's income tax.

How much does an average restaurant pay you in commission every month?

I have not done the math because restaurants are different, their prices are different and what they offer is different too.

I have never considered having an average restaurant because I believe every restaurant owner wants theirs to be more than that. And that is how we communicate with our partners – we do not have average restaurants, we only have brilliant ones.

Naturally, we are talking about the average in terms of financial indicators.

We do not calculate it.

You've said you have not reached profit yet. When do you expect to become profitable and why haven't you?

We are not profitable on the group level because we have been constantly expanding to new markets. We recently launched Wolt in Japan. It is not cheap to start offering the service on a new market. Investments are keeping our bottom line in the red.

What about your Estonian business? Are you profitable here?

The Estonian business is in the black, but the profit margins we're talking about would make most businessmen laugh.

Let's give them a good chuckle then. What were you results for last year?

Competition is too fierce for me to give out such information – it would be grist to their mill.

You do not publish your country results?

No.

(Most recent data for Wolt Estonia is from 2018 when the company made a profit of €47,800 at a turnover of €1.84 million – ed.)

Will that change at some point?

It will change when we become a publicly traded company.

And when will you list?

Once again, I would love to share that information with you but cannot.

I presume it will be inside the next three years.

We hope so. We have an office joke about how we should list before we turn 40.

How old are you?

The shame, asking a woman about her age!

We are a startup and all startups are, to an extent, insanely ambitious. We still have so much to do. Category utilization remains below 25 percent today. That is to say that restaurant food delivery has a market penetration of under 25 percent. Comparing ourselves to some Scandinavian countries – as we like to – we are ten years behind the curve.

How much later did we start?

We also started ten years later, but as Estonians, we are ambitious and like to do things better to catch up. That is my next challenge.

You are in charge of Wolt's operations in three countries. How does Estonia compare to Latvia and Lithuania? Are we to them what Scandinavia is to us?

The three markets are similar but also different. Talking about it from Wolt's perspective, we opened Latvia and Lithuania a year after Estonia was up and running. To compare the restaurant landscape, consumer behavior or market development, Lithuanians are more open to innovation and new technologies than Latvians. They have come around to the service faster.

Coming to food trends, Estonia is definitely at the forefront here. All new popular food types are coming from Estonia today. At the same time, Latvia has interesting eateries popularizing foods which have not gained a footing in Estonia.

Have the Lithuanians overtaken us in terms of their innovation enthusiasm? Or do we remain the most innovative Baltic country?

As Estonians, we would like to hear we're still on top. We are more or less on the same footing today. They have also adopted some ambitious goals in terms of public digital services that they are already offering. They have really kickstarted things in recent years. Lithuania is heading into an election this fall the effects of which remains to be seen. Elections always affect general development.

Am I wrong to suggest you are needed first and foremost by new restaurants that lack a reputation and a client base and are still looking for their place on the market?

Everyone needs us, equally. We benefit both well-known fast food chains and small niche restaurants. We bring new clients who might initially use services through our app but will initially turn up at the restaurant.

Our clients have told us that with our help, they've discovered restaurants they did not know existed even though the latter have been around for decades. We offer restaurants a platform used by over 100,000 people today. It is a big community where we can showcase new restaurants, both existing treasures and newcomers. I would not make a distinction between new and small and older and well-established restaurants.

How many fine dining restaurants do you represent?

We have quite a few fine dining restaurants.

I will not give you a precise figure as it is statistics we do not keep, but off the top of my head, I'm pretty sure we represent all of them in Tallinn.

When going to a fine dining restaurant, I know I'm paying for the white starched tablecloth, tableware, excellent service and the two perfectly placed cherries accompanying my duck fillet. If I order in from a fine dining restaurant, I receive a plastic container where the cherries have left their place and get neither the starched tablecloth nor the good silverware. Why should people order takeout from a fine dining restaurant and how often do they?

Allow me to correct you there. No fine dining restaurant uses plastic containers. They use ecologically friendly packaging where food can be arranged beautifully.

It's still not china.

Indeed, it's not china, but the client knows their food will not be arriving in china, complete with waiting staff and a starched white cloth. The client is after a culinary experience. I believe all restaurants first and foremost use their food to attract clients.

Will there be anything left of that culinary experience if the food gets, shall we say, shuffled around in that container during transport?

The food does not get shuffled around. We guarantee it stays separate and retains the appearance it had when leaving the restaurant. We urge all clients whose food has lost its commercial appearance to turn to our customer support for compensation.

How many complaints do you get? How many returns, clients refusing to pay?

That is another figure all of our competitors would love to know to optimize their activity. We receive complaints, while their number differs from one restaurant to the next. It depends on how the food was packaged, whether the right kind of packaging has been used etc. It also depends on how our courier partners have handled the food.

We communicate actively with our clients, while I cannot tell you in how many cases people refuse to pay.

Which make more mistakes, restaurants or couriers?

Things happen and we cannot point the finger in any one direction. People are people and mistakes get made. It is part of our job to make sure clients have the best possible experience.

Have you terminated contracts with restaurants for failure to meet clients' expectations?

We are not that black and white, we try to help restaurants first – find them different containers, help go over their menus as not all dishes are transport-proof.

You have not been forced to sever ties with anyone?

Not that I know of.

What about couriers?

We have stopped working with couriers because it is important for us that they offer the service how we've instructed them and how they've agreed to do it. If they do not, that is not the kind of service we want to buy from them as we are responsible to our clients and our restaurant partners and have made them promises we need to keep.

How do you work with restaurants or get feedback? Do you have them take regular surveys? Do you have any idea in terms of how satisfied or dissatisfied they are with their contractual relationship?

We have a crew of four people in Estonia whose work it is to talk to restaurants, make recommendations if they see things can be done better. This communication takes place on a daily basis, seven days a week.

How many restaurants, if any, have stopped working with you following their own initiative? And do you know why?

I do not have a figure for you, but the contracts we have with restaurant owners are non-obligatory. We have restaurants that use the platform on certain days of the week, certain hours of the day. We offer them a so-called e-shop service and take care of everything that goes on there. If they want their products on the market, we offer that opportunity. If they don't, that's their right too.

We do not force anyone to use the platform and accept orders. The client can refuse to accept an order. In that sense, I do not know how often restaurants are online or offline so to speak.

Rather, what I meant to ask is how often restaurants end their relationship with you? Not by simply going offline, but by severing ties.

I believe that it virtually doesn't happen. Restaurants aren't obligated by their contracts and because we only charge a commission on sales, they have no fixed costs or obligations as far as we're concerned.

And yet, restaurateurs refer to that contract as a pair of golden handcuffs. They need you, but the conditions are described as harrowing, especially during a time when many were not able to stay open that has virtually cut off their oxygen.

It is an interesting example in that, rather, the trend has been the opposite in recent months – we have received a record number of partnership requests from restaurants that would like to launch cooperation and join our platform.

It is little wonder in a situation where they had no other option.

We cannot really say that. There are plenty of service providers on the market. I could name several off the top of my head in the first 30 seconds.

Also, restaurants are free to offer home delivery if they want and many do. It is not an obligatory service. I cannot comment on that golden handcuffs claim.

You met with that so-called mutineer. Did you manage to bury the hatchet, come to an agreement? Has the uprising to protest courier service conditions subsided?

Using the word uprising suggests we had thousands in the street fighting for black lives. There has been nothing of the sort. It was one particular restaurant owner from your article. A member of our team met with them yesterday (Tuesday – ed.) and explained what the commission goes toward. They had been convinced the commission simply gave them access to the platform and that it does not cover all of our services. It was a case of miscommunication.

So, the hatchet has been buried?

There was never a hatchet to begin with as far as we're concerned. We have not received word from over 80 restaurants that they want to stop working with us. And we do not see anything else there.

What would happen were 80 restaurants to tell you they want out? What would it mean for you?

Everything would continue as it has.

It would not affect you financially?

It would be sad to see our partners go. It would have an emotional effect, but we will go on.

If most Estonian companies lost turnover during the crisis, I imagine it was good for you. How much did your business grow?

The crisis was also a crisis for us. It was a very difficult time as we could see our restaurant partners struggling. We did everything in our power to maintain and boost our restaurants' turnovers. We lowered home delivery prices, expanded delivery areas, invested in communication to let clients know restaurants had not been closed. Because there were rumors that all restaurants have closed. It was a difficult time.

We saw growth, while we have been growing every month for the past three years. There has not been a month where we have not grown. We cannot say we're ready and can rest easy.

And yet, you did not lower restaurants' commission.

We crunched the numbers and concluded that lowering restaurants' commission would equal getting them five additional orders. We decided to take that commission and invest it in lower delivery prices and communication campaigns to boost their turnover.

The message we got from restaurants during the crisis was that we should remain operational, let's work together and overcome this thing. Which is why had we lowered the commission for all restaurants, it would have happened at the expense of turnover. It was important for us to maintain as much turnover as possible, which is why we decided that way.

Did all restaurants get five additional orders?

Most saw more.

That is to say people did not stop ordering takeout in a situation where they were not sure whether they should save money or whether their pay would be cut?

No, our turnover kept growing. And that means the number of restaurant orders also grew.

Nevertheless, they are saying they don't know how to make it through the summer. Why is that?

I believe it is a broader macroeconomic question. Looking out of this very window, we cannot see tourists on the streets of the Old Town. We are still in an emergency with social distancing rules, meaning restaurants cannot make full use of their premises.

Tallinn will not see its annual six million summer tourists this year. And domestic tourism cannot compensate for six million canceled trips. These are broader questions.

How often do you order in using Wolt?

Quite often because I have little time and my man really likes to eat. I have a very large man.

I presume you do not have to pay for delivery as head of Wolt. You must have some benefits working where you do?

No, I pay for the service just like everyone else. We have an employee discount, but there are no massive benefits.

On my way back from the interview, I pass by a black Wolt courier on a bike. Even though it sometimes seems Wolt couriers are exclusively foreign students from third countries, Liis Ristal says that impression is mistaken. Black foreigners make up fewer than 5 percent of Wolt couriers, while almost all of them use bicycles because they do not have a driver's license. This makes them stand out in the street. Bikers make up around 25 percent of Wolt couriers as most of them use a car.

--

Download the ERR News app for Android and iOS now and never miss an update!

Editor: Marcus Turovski

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: