SugarMoo isn’t the first project that Alan Honein and Raki Phillips have embarked on together.
Over the eight years they’ve known each other, the co-founders of what might just be Dubai’s coolest dessert maker have launched a night club in DIFC, organised concerts with renowned DJs such as Sasha and even brought one of the world’s foremost Michael Jackson impersonators to the region.
The Lebanese-American duo’s current venture could, however, prove to be their most successful and enduring. Now in its third full year of operation, dessert maker SugarMoo is profitable and on the cusp of several developments that could, according to Phillips, “take this business to the next level”.
SugarMoo came about because there was a burgeoning food delivery business in the UAE, but almost none of it, Honein and Phillips realised, consisted of desserts.
Initially, the partners were looking into licensing a doughnut franchise, but, after meeting with a potential partner in North America, decided the concept and the company just weren’t right for them.
“Out of frustration, we came up with our own concept and the reason we decided to call it SugarMoo is the two ingredients for most desserts are sugar and milk. The F&B delivery business is a US $750 million business in Dubai, of which desserts were almost non-existent,” says Phillips.
“We thought it was a great niche, let’s launch a dessert business that only does delivery. We realised the market is over-saturated with cupcakes and Arabic sweets, so we decided to launch the anti-cupcake establishment. All our desserts are funky hybrids.”
Thus, the name SugarMoo was registered towards the end of 2013 and operations began in November 2014. The intervening year was spent doing research & development, raising money, hiring, tasting and testing. As Phillips points out, “There’s so many dessert places around town, so how are you competitive, how are you different?”
The duo figured that two things would be key for their new venture. One would be to make very active use of online as their primary sales channel. “I think the fact we wanted to be online differentiated us from competitors,” says Honein. “Two years ago, if you wanted to order dessert online, you really couldn’t.”
Although the company has now opened physical outlets, which it calls Dessert Labs, online remains its main sales channel. “Due to popular demand, we decided to open up these Desserts Labs. I think what really solidified our presence though is the online aspect of it,” adds Honein.
Until today, more than half SugarMoo’s revenue comes through online sales. It has even developed its own SugarMoo app, a response to analytics that revealed 80% of orders were being placed from iPhones. The company aims to deliver anywhere in Dubai within 90 minutes of ordering; hence its motto: ‘You crave. We deliver’.
The other key way the company would differentiate itself would be by offering a different kind of dessert to what was already out there. “I think our desserts are very different,” says Phillips. “You go a to a lot of places and it’s the same thing over and over.
“We re-invent our menu on a monthly basis. We have all our campaigns, whether it’s Valentine’s Day or Mother’s Day. If something doesn’t work, we take it off the menu.” Phillips tells how he once enthusiastically tried to push a local favourite from his native Florida, but had to take it off the menu when customers didn’t go for it.
A look at SugarMoo’s current menu shows six dessert categories, ranging from ‘Arabic Sweets’ to ‘Sweet Bundles’ and including a healthier line called HealthyMoo. Its products carry premium prices, are visually appealing and some have unusual names like Cupookie and Lotuslicious.
Typical prices are AED 15 for a single Red Velvet Oreo Secret cookie and AED 300 for a 10-inch version of the Choco Loco Cake.
The company uses natural ingredients, avoids mixes and does not use chemicals or preservatives. The company’s HealthyMoo line offers five items, with sugar-free and dairy-free options. Phillips says the line is, “not a huge seller, but we think it is important that we have it”.
The partners are constantly on the lookout for new trends in desserts, mentioning Japan and Australia as two major innovators. “You look at what’s hip and happening and you try to reinvent it in your own way,” says Phillips. “How do you get there? It’s a lot of food tastings, it’s a lot of experimentation, it’s thinking this is great, but how do we make it something different that tastes great?”
SugarMoo may have started out with an offering that was a little different, but it was still a dessert maker and was still up against a raft of established competitors. Its attitude was to just get out there and spread the word.
“We were in every single event you can imagine, from Ripe Market and SoleDXB, to Beach Canteen and mom & pop markets,” says Phillips. “We were there from early in the morning till late at night.”
One month before operations even began, SugarMoo was at SoleDXB selling its products. As well as raising brand awareness, presence at events proved to be invaluable in getting customer feedback that could be used to finetune and evolve SugarMoo’s menu.
Fittingly for a company driven by online sales, SugarMoo also did a lot of online marketing through social media, search engine optimisation and search engine marketing.
Once up and running, one of the company’s greatest challenges has proven to be fulfilment, as desserts require far more delicate handling than other kinds of F&B product. “Delivering a hamburger or pizza is not as delicate as delivering a full-size cake,” explains Honein.
“As part of the logistics and operations, there was a lot of research done in finding the proper packaging, training the bike riders, taking the best routes with the least bumps. Getting a product to its final destination intact has been a challenge and you will still get complaints every now and then, but that’s really just down now to human error.”
To help ensure it gets storage and delivery right, SugarMoo maintains its own fleet of vans and bikes and a team of ten drivers. It has also made a sizeable investment in thermobags to keep products cool in transit.
Sugarmoo’s temperature controlled vans mainly handle B2B deliveries, with clients as far afield as Al Ain and Fujairah. Bikes are used for B2C deliveries and the greater manoeuvrability of bikes is key to meeting the company’s goal of 90 minute deliveries within Dubai.
“I think we’ve proven ourselves,” says Honein. “How we handle the customer is what’s kept us strong and has kept them coming back.”
Although direct online consumer sales account for the bulk of its revenue, SugarMoo has built up a healthy list of business clients, including cafes like Caribou Coffee. It now services around a hundred of these B2B accounts.
Despite its success in building up a corporate client base, online sales to customers still account for around 65% of SugarMoo’s business and the company prefers to keep it that way. The reason is that margins can more easily be maintained on consumer sales and customers who have become fans of SugarMoo will keep on re-ordering.
The company’s average order size is AED 190 and a typical day will see around 150 orders come in. A low volume, but very profitable, part of the business is customised cakes, which can go for up to AED 1500 a time.
SugarMoo has already moved once since inception, relocating from an 800 sq ft facility to a facility in Al Quoz around three times the size. The last year has seen the number of employees grow from 12 to 30 and revenue has increased around 350% year on year.
The number of Dessert Labs, the company’s small retail outlets, has grown from one to four, with sites in Mercato, Yas Mall, MCN Hive in Barsha Heights and Dubai Parks & Resorts. More Dessert Labs are in the pipeline.
Raki Phillips left a stable 15-year career in the hospitality sector to start SugarMoo. The native of Florida started out at Universal Studios in Orlando, before moving to the region where he has spent more than a decade with Ritz-Carlton and, most recently, Fairmont. As he says, “I left my cushy, fun corporate job to pursue my dream in launching this business.”
Alan Honein is a native of Lebanon who spent his formative years in the US, studying in Boston and Arizona. He started in hotels, at the Phoenician Luxury Hotel & Resort in Arizona, before embarking on a career in Middle Eastern media that included a long stint with Al Jazeera News Network.
The partners raised US $1.5 million to start the business, all of it from themselves, friends and family. Now operationally profitable, SugarMoo is now planning its first overseas expansion.
“We will be launching in Saudi Arabia before the end of the year, physical and online, with staff, a team and online delivery. That’s a JV with a partner and we will manage that ourselves,” says Phillips.
The move into KSA does not depend on taking on extra funding, but the partners are now seriously considering accepting outside investment. Any funds injected would be used to fund expansion.
“We can continue running this business and growing organically and doing well with what we have right now,” says Phillips. “But if we want to take this business to the next level, we need to be able to put a cash injection in from a VC or strong partner to expand it a bit faster.”
For example, SugarMoo delivers to Abu Dhabi and Sharjah, but does not offer 90-minute delivery as it services those emirates from its Dubai facility. Taking on extra funds would allow the company to put infrastructure on the ground in Abu Dhabi.
“In Dubai, we deliver anywhere in under 90 minutes. On average, most deliveries are around an hour,” says Phillips. “We want to do the same thing in Abu Dhabi, set up a central kitchen, have a couple of Dessert Labs and be able to offer the 90-minute delivery.”
“We’ve had advanced talks, but nothing has converted yet,” adds Honein. “They would be institutional investors.
And one final question: Do the partners do any baking themselves? “We’re not bakers,” Honein admits. “We do jump in and help the kitchen, but leave the kitchen to the experts and let us run the business,” adds Phillips.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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