Brian Choi

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Issues
● Lack of repeat customers: The profit model suffers due to the lack of commitment the consumer
requires to stay with the service. 70% of Dinr’s customers never re-ordered the service. The
figure of 1.53 repeat customers has to double if Dinr’s customer lifetime value were to surpass the
customer acquisition cost.
● Ad-hoc operations: This prevents planning that can be done by Dinr to prepare the optimal
amount of food ingredients. This eats into profits as some food might go undelivered and wasted.
Moreover, A same-day delivery service does not allow for efficient planning of delivery routes
● Underwhelming market research: A focus group of 10 people that Berger “carefully chose
from his network”. It introduces a serious bias problem of having “yes men” around you. It seems
here that Berger has potentially picked his own target segment from the beginning, instead of
letting proper market research determine the target segment.
● No committed Co-founder: Mahajan has significant technical skills and contact with developers
in India: who ended up beings more of a headache than helping Dinr. Berger is doing too much
work on his own and he is lacking a strong team behind him.
● Saturated market: There are many other companies such as HelloFresh and Gousto who are
looking to capture the same customer segment.
● Do people even want to cook?: according to exhibit 7, only 43% of people cook 3-5 times a
week. The rest of the 57% cook twice, once or hardly ever cook a week.
● Pricing: The 12-dollar uniform price for standard meals is too high when we consider exhibit 8.
The largest number of respondents are only looking to pay 6-10.
● Marketing: Dinr’s current marketing campaign is not sufficient. Berger’s current approach to
working with lifestyle and food blogs begs the question of: If they are not serious home cooks,
why would they browse food blogs?
Alternatives
1. Pivot: Change to a subscription-only model
The main issue, and arguably the most serious one this alternative solution would address is the lack of
repeat customers. Furthermore, this would also streamline operations on the planning/preparation side as
well as the delivery efficiency side. Incorporating a subscription-only model would address the problem
of profitability, but only if it was done in a way where Dinr maintains a competitive edge among its
competitors HelloFresh and Gousto. One way Dinr can do this is by allowing customers to opt out of their
subscription at any time with little to no repercussions. Dinr seems to fulfill the needs of its consumers
well when they end up buying the service. While the cancellation of subscriptions could result in lost
revenue, the potential customers & word of mouth they would capture due to the no-hassle cancellation
policy could result in a profitable outcome. This option would still allow them to differentiate themselves
from their competitors in a saturated market.
2. Persevere: Berger has a passion for education and improving lives, with a goal to teach customers how
to enjoy simple and healthy food at home. This drive will go a long way when the business is stagnating
and demands new ideas. Dinr is also the only company in the prepared meal delivery industry that does
not require a subscription to place an order. This is a point of differentiation. While the venture hasn’t
taken off as expected, the newly designed website with professional photography hasn’t had enough time
to be released and show differences in sales. While keeping most of the service the same, there should be
some changes:
a) Pricing: Have the standard option for mains as 10 pounds instead of 12, This is to capture the most
significant number of respondents on exhibit 8. Furthermore, either price the deluxe meals cheaper or
have an option between the standard and deluxe. The price difference between 12 and 26 is too large.
With that big difference between the options, it demands a much superior product from the deluxe version
from the minds of customers. It induces a huge initial expectation that will only sometimes be met when
customers get the food as the quality between 12 and 26 implies a better than double the quality/taste of
the food. Moreover, the difference in price makes the standard version seem too cheap, which could be a
turnoff for some potential customers.
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b) More market research: Berger seems to be convinced that a subscription-free service will prevail in
the end, which could be true, but he does not have sufficient research to back this claim. The only insights
into the consumer needs are the carefully selected people from his network as well as a small focus group
c) Improved marketing campaign: currently, Berger is trying to form partnerships with companies to
promote Dinr to its employees as well as cooperate with supper clubs and dating companies. Dinr also
tries to work with food blogs, but this doesn’t make sense as the target segment he’s trying to reach,
which is young professionals with little time to cook or shop, probably does not frequently browse these
channels. What Dinr lacks is a strong social media presence on Facebook, Instagram, and Twitter that will
actually reach the intended audience. Rather than shared dining, the leverage that Dinr has in terms of the
no-commitment, no-subscription service as well as fresh ingredients delivered on the same day should be
the point of focus in these social media campaigns.
d) Loyalty program: A main issue was the lack of repeat customers. While a membership option was
added in the relaunch, This is only a monthly service and does not reward customers that stay with Dinr
for consecutive months. A potential loyalty program would benefit customers that stay with Dinr with
12.5% off orders for 3 consecutive months, 15% off all orders for 6 consecutive months, and 20% off all
orders for 12 consecutive months. A month of staying with Dinr would be constituted by ordering food
for at least half of the days of the month.
3. Perish: Currently, Dinr is far from profitable and while a new website might change that, it might not
be in time before the investments from Seedr runs out and Berger runs out of his own capital. With no
committed co-founder to support Berger financially and operationally, it could be a matter of time before
Dinr is a burden and not an asset. The current figure of 1.53 repeat customers is far from what Dinr would
need to surpass customer acquisition costs and that is too much of an obstacle to overcome if Dinr were to
stay in business. Furthermore, Berger should have realized from Exhibit 8 that a majority of his target
customer segment does not incorporate home cooking into their lifestyle. A figure that is too high in order
for this venture to be successful. If Berger ever wants to pursue a business in this industry again in the
future, he must conduct better consumer research before launching the product. Specifically, he needs to
make sure that the service is being offered to those at actually want it, which is questionable in this case.
Reccomendation
I believe Dinr should persevere and continue with operations. I believe their point of differentiation has
enough potential to capture sufficient market share. Furthermore, the passion that Berger has for
educating others and improving lives is a great motivator to see out his vision. With some changes that
still keep its differentiation at its core, Dinr could be very successful.
As soon as possible:
Change the pricing: This should be done right away as it's something that can be done quickly and
should be done with the new website design.
Get started on market research: Specifically, re-test the market to find out whether the current customer
segment is the right one for Dinr. From online surveys to focus groups, start finding about the
demographic that would be most in need of this service by asking questions such as “What is your age,
salary, and number of dependencies (children, seniors)” followed up by “How often do you cook at home,
if so, how much is this impeded by time to go to the store? How much of this is impeded by a lack of
ideas for a recipe? Ensure that these are random participants and not someone in the network of Berger or
anyone associated with the company. Additionally, conduct surveys to find out how much customers
value the flexibility of having a no-subscription model. This will help Dinr decide if they should ever
convert to a subscription-only service.
1 month: Revisions of marketing operations - Discontinue advertising and cooperating with food blogs
and dating companies. Instead, put all the focus on exhibiting the standout features of Dinr on popular
social media platforms on Facebook, Instagram and Twitter. Contact Guy Fieri and Gordan Ramsey on
their Twitter accounts to see if they would be interested in a partnership or a one-time shoutout of Dinr.
One viral video is all Dinr needs to take off.
2-4 months: Introduce the Dinr loyalty program - This is at the last part of the timeline as it is the least
important to the success of Dinr in comparison to the other actions to be taken.
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Appendix 1: Hypothesis-Driven Entrepreneurship Process Steps

1. The vision - Same-day delivery, no subscription required meal delivery service

2. Falsifiable hypothesis - A same-day, no-subscription meal delivery service will be profitable
3. MVP - The first iteration of the Dinr website. This was the smallest set of features needed to test
this hypothesis.
4. Prioritize tests - the surveys and focus groups conducted by Berger
5. Run tests - from the focus groups and the surveys, the hypothesis was validated. According to
Exhibit 7, only 25% of customers are not fond of the idea.
6. Persevere, pivot, or perish: Berger chose to persevere after running the tests. However, he had to
make changes to the Dinr website and the pricing.

Appendix 2: Tom Eisenmann’s Business Model

Customer Value Proposition

- Dinr solves the headache of thinking of a meal to prepare and as well as going to the grocery store
and having to pick up those ingredients.
- For people with less time for cooking, it meets the need of saving time.
- This venture emphasizes differentiation from competitors as it offers consumers the flexibility of
same-day delivery with no subscription required.

Go-To-Market Plan
- The venture target is to double the current customer lifetime value in comparison to the customer
acquisition cost.
- Partnerships with companies promoting Dinr to employees as well as working in cooperating
supper clubs and dating companies.
- Position itself towards the higher end of home cooking market.
- Emphasis on shared dining. Promote this on social netwrokds such as Facebook, Twitter, and
Pintrest.

Technology & Operations Management

- Build/make improvements to the website
- Purchase essential operating equipments such as fridges and freezers, stock up on non perishable
ingredients.
- In house activities: Culinary activities, planning and operations, marketing, research and
development.
- Outsourcing activities: Web development and delivery.

Cash Flow Formula

- Currently, the venture is not profitable as there are a lack of repeat customers and therefore the
customer acquisition costs double the customer’s lifetime value.
- The latest month of operations, in September 2012 was the least profitable yet, with a -146%
gross margin.
- The first month of operations, Dinr had a contribution margin of negative 443 dollars.
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- Fixed costs include the two fridges, a freezer, and shelves. The initial development of the website
is also under fixed costs, though future maintenance will definitely be required.
- Contribution margins are not high at the moment. Customers pay only 12 pounds per meal. With
fresh produce, labour, and delivery costs, the profit margin is probably not as high as it could be.
- A 12% equity given to Seedr is a significant amount given how their investment was handled. A
majority of it likely went to marketing on channels which their intended target did not frequent as
well as development of the website which was delayed time and time again and had to be
completed by switching to a more expensive development team.