Food start-ups on a success spree


Foodtech start-ups have been changing the way we eat. Hot meals, savouries, drinks and desserts reach our homes at the click of a button. And as food aggregators promise quick deliveries and compete with each other to offer huge discounts to customers, it is the latter, who is spoilt for choice, says Swati Sharma.

Food is now a widely available commodity, and in forms tweaked to the‘t’ and delivered at your doorstep. Foodtech start-ups have been changing the way we eat. And food being a basic need that one simply cannot live without, it’s only inevitable for the product to sell widely.

With the rise of food-tech and the sea of suppliers promising and delivering at the click of a mouse, hot meals, savouries, drinks, desserts, and even ice creams reach our homes within moments.

Spoilt for choice

There are a host of other food start-ups too across urban India. Founded in 2014, FreshMenu operates in Mumbai, New Delhi, Bangalore and Gurgaon. This entity focuses not just on good food but fresh food as well. The menu is changed daily and curated by a team of highly experienced chefs making a variety of world cuisines. Meals are delivered within 45 minutes since they want their customers to eat only ‘fresh’.

And then there’s InnerChef, founded in April 2015 by three entrepreneurs and located in Hyderabad, Noida, Mumbai, Delhi, Bangalore, and Gurgaon. Today, it has become one of the fastest-growing food companies in India offering a variety of cuisines including Indian, Asian, European, and Mediterranean. Also, on offer here are detox cleanses and diets with salads and soups to boot.

With a presence in 15 major cities of India with 200plus locations, Faasos allows customers to order food online even after midnight. It is a perfect example of a food chain that went online from offline. Faasos Food Services Pvt. Ltd., commonly known as Faasos, is an Indian ‘food on demand’ company incorporated in 2011 and re-branded as Rebel Foods Pvt. Ltd., in 2018.

Faasos has its own kitchen with expert chefs, and offers a great range of meal options and combos delivered right at one’s doorstep in no time, on all days of the year.

Another emerging start-up is ‘Biryani By Kilo’ (BBK) available in a few cities that include Mumbai, New Delhi, Chandigarh, Gurgaon, and Noida and across 14 locations in these cities. ‘Biryani By Kilo’ offers authentic Hyderabadi, Lucknowi and Kolkata Biryani that’s a big hit with people.

Having received an overwhelming response from Mumbai’s food connoisseurs and celebrities, ‘Biryani By Kilo’s’ biryanis and kebabs make for the most fresh, hygienic and convenient takeaways for the home as well as corporate parties.

Competition hots up for food aggregators

And, on the pan-India front, now armed with a whopping $500mn (Rs 3,500 crore), Amazon is all set to take on Zomato and Swiggy in the food delivery business. There are all indications of a head-on confrontation, like Amazon’s rivalry with Flipkart in the online retail. The war will be fought on several fronts. And, why not? After all, the business is a formidable one too. (use this as an highlight as the article is short.)

It was in 2013, that the Seattle-headquartered company launched its India operations, entering a market where the country’s most successful start-up Flipkart was busy fighting Snapdeal and the e-commerce arm of Paytm. Today, Flipkart has been sold to Walmart, while Snapdeal and Paytm are not formidable too.

To break into the market, Amazon is expected to charge restaurants one-fourth of what incumbents bill as commission. Swiggy and Zomato charge up to 20 percent from restaurants. For subscribers of its loyalty programme — Prime, food will be delivered for free.

Flexing its e-muscle, Amazon will set up cloud kitchens (for delivery-only and no option to dine in), hire delivery agents and reduce the time for food delivery. Lower prices and cash-backs through the Amazon Pay wallet are set to make the competition tougher.

According to Pune-based Market Research Future, the Indian food delivery market is forecast to be worth $17 billion by 2023.

Swiggy, on its part, has raised $1.3 billion so far including a billion-dollar round in December 2018 when it was valued at $3.3 billion. South Africa’s Naspers is the key backer of the Bengaluru-based company founded by Sriharsha Majety (CEO), Nandan Reddy and Rahul Jaimini.

And, so far Zomato has raised $750 million at a valuation of $2 billion and has China’s Ant Financial as its main investor. The Gurugram-headquartered company and Swiggy are on the lookout for more funding.

Besides the world giants, the Indian foodtech and services industry itself has been quite hot. Reports suggest, Swiggy and Zomato make up 63 per cent of the total market share in food delivery as per app installs.

Issues such as traffic, parking problems and time constraints have worked to boost food delivery for convenience. That apart, consumers want to have access to quality and variety at the same time. And, even as the demand continues to increase, India faces a big supply gap where consumers in metros and especially tier 2/3 cities not having a wide range of cuisine options.

Running a cloud kitchen is often considered a ‘cheaper’ option than running a dine-in, in terms of costs such as furniture, decor and space management. Yet, these costs get swiftly substituted to lofty expenditure on cooking equipment, chefs and extra shifts. A huge advantage of the cloud kitchen is the capital-light and cost-effective model. Low risk, rentals and workforce requirements for cloud kitchens along with easy access to customers through online aggregators like Zomato help provide the right ingredients for success.

There are huge issues when it comes to online delivery. For one, the food cannot be delivered late; it cannot be cold; the packaging has to be good and there should be no leakage. Simply put, there is no time to recover from a delivery error.

Also, with most ordering happening during lunch and dinner times, agents are underutilised during the rest of the day and stretched beyond limits during peak times.

So, the leader Amazon has opted for predictive technology to help solve the problem of uneven demand for delivery. Also is being examined the option of putting delivery agents to the tasks of delivering parcels for the retail business when they are not delivering food, providing Amazon a colossal advantage simply not available to others.

Swati Sharma

Swati Sharma works with DraftCraft International as a Consumer Rights Activist and writes mostly on issues affecting consumers, trends and the law. She has a keen interest in global trends and relief processes in India.