Rise of Online Food Ordering Startups in India: Opportunities, Challenges and Innovations

foodstartups

Image Source: Timescity

“India is not simply emerging, it has emerged,” said US President Barack Obama. The entire startup ecosystem in India has changed tremendously over the past ten years. People now opt for the road not taken; they have shunned the conventional jobs by pursuing out of the box ideas as their career choices.

Off late, the trend of food startups and online grocery has been catching the spotlight. India seems to be having a growing appetite for such startups. While online grocery vertical is garnering its own share of ventures, food ordering and delivery is not far behind.

Also Read: Online Grocery: Why it’s a Great Opportunity? Why it’s Still Nascent?

The Funds Hungry

Over the past one year, there has been an exponential growth in the number of food startups. This area is garnering investors’ interest, so much so that the market size of food in India is expected to reach Rs. 42 lakh crore by 2020, reports BCG. Presently, the Indian food market is around Rs. 23 trillion.

 

COMPANY AMOUNT RAISED TILL DATE
YUMIST USD 1 MILLION
FRSH USD 618K
HOLACHEF USD 320K
SPOONJOY UNDISCLOSED
iTIFFIN USD 1 MILLION
TINYOWL USD 20 MILLION
FAASO’S USD 20 MILLION
FOODPANDA USD 147.3 MILLION
EATLO NO FUNDING
TASTYKHANA USD 5 MILLION
JUSTEAT USD 89.1 MILLION
DELIVERYCHEF UNDISCLOSED
BITE CLUB USD 500K

Source: iamWire Research

The above table, names of those food startups have been mentioned which have caught investors’ attention lately. But then there are innumerous food startups functioning, which still haven’t grabbed the limelight.

While these are only the newbies in the online food delivery industry who have raised investments, off late, the already established ones have started carving out a bigger piece of the pie for themselves. It started with FoodPanda gobbling up its biggest rivals in the country, Tastykhana and JustEat. And now Zomato too ventured into food ordering and delivery services.

Additionally, in an interesting twist of events, businesses from different niche have also decided to experiment in this lucrative business. JustDial made its way into online food ordering service and cab aggregator Ola has entered this segment  with the launch of its food delivery service in 4 cities.

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On talking to many startups functional in this area, we came to know about the challenges they faced during their journey, innovation plans, investment and future plans.

Challenges

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Tapan Das Kumar, CEO, iTiffin

Tapan Das Kumar, CEO, iTiffin, (which provides tiffin box with nutritious calorie defined meals to suit their customers’ health requirements), says, “My journey has been full of challenges, right from when I set up the venture till date. One major challenge has been retaining customers beyond 180 days. Although everyone knows the importance of a healthy diet, it is difficult to make people cultivate it into a habit, to be followed on a daily basis. Therefore, it becomes important to present our customers with different varieties of healthy food. Secondly, food standardisation has been another daunting challenge that the Food preparing team of iTiffin has to deal with, in order to give our patrons variety as well.

Saurabh Saxena, CEO, Holachef, having faced similar hurdles said that getting chef’s onboard was their biggest and initial challenge. Along with reaching out to people, logistics was another major concern for the Holachef team.

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Alok Jain, CEO, Yumist

Being in the daily meals market, we work with very low ticket sizes starting at Rs 50/- with no minimum order requirements or delivery cost. Considering the costs associated with food production, packaging and delivery, maintaining a strong unit margin is our biggest challenge,” said Alok Jain, Yumist CEO.

For Nikhil Jaroli, Co-Founder of Bhojanshala, getting a hardworking and creative team is the biggest challenge, since retaining their customers’ trust along with technology and service are their priority.

Food startup, Snackosaur too shares a similar concern.

Eatonomist faced challenges in educating its customers about its business model which slightly differs from others. Its other concerns were managing logistics along with maintaining the quality of their products.

Surpsingly, TinyOwl, which was founded by three ex housing.com employees, on being reached out for the same said that they have had “no challenges as of now.”

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Innovations and Future Plans

healthy snacks

Image Source: idiva Images

Ex- Flipkart employee led iTiffin plans to launch new products by 1st April across India, like ‘Munch Box’ to take care of day snacks and diabetic control ready to cook chapati flour. Also, it is launching salad by 15th May (only in Bangalore). With current manpower of 60, the company plans to gradually expand and grow, starting from Bangalore and then reaching out to other metropolitan cities.

As for Bhojanshala, their priority domain includes ‘Technology, Service and Customers’, and in ‘Customers’, the most important thing is, to retain them. They

TinyOwl’s future plan is to expand across 50 cities by the end of 2015. Holachef, Eatonomist and Yumist share similar future plans i.e. to expand and grow fast. Faasos plan is to expand on the entire Asia Pacific platform.

Holachef and Eatonomist are looking to raise an investment in future.

Eatonomist has adopted an innovation in its packaging style. Their package, as claimed by the company is microwave safe, hygienic and environment friendly.

Snackosaur, who are in talks to raise an investment, recently introduced snack subscription service, which gets replenished automatically for the customer with variety and a box full of surprises every time. They have plans of introducing new munchies and snacks in future.

While most offer free delivery, owing to their respective USPs they differ in minimum order and order placement time, have a look at the table below.

Startup Operations in Order Placement Delivery Time Payment Mode Other Features
iTiffin Bangalore Online, Phone Advance Booking Online, Cheque, cash -
Bhojanshala Pune Website 30-50 mins COD Daily/Weekly/ Monthly Meal Packages, Bulk orders, Party orders, Corporate orders.
TinyOwl Mumbai Mobile App 45 mins Online, COD -
Holachef Parts of Mumbai Website, Mobile App Advance Booking Online, COD -
Yumist Gurgaon, Bangalore Mobile App 30 mins or less COD -
Eatonomist Gurgaon Website, Phone 45 mins Online, COD Meal Planner- 10 day menu available, Nutritionist advice for people following a diet plan
Snackosaur Pan India Website 1-3 days Online ​Introduced a fortnightly snack subscription plan
Faasos Mumbai, Pune,
Bangalore, Chennai, Ahmedabad, Baroda
Mobile App 15-45 mins Online, Faasos wallet -
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Rachna Nath, Leader Retail and Consumers, PwC India

Rachna Nath, Leader Retail and Consumers, PwC India, commenting on the rise of food startups and its future said,”The future of food startups hold a positive potential. Presently the companies are immature, as we can see from a lot of them getting acquired by bigger companies. The trend will increase in future. Eateries like Dominos, Pizza Hut etc alone get 50-60% eCommerce sales. So the future seems a tough competition between the food startups and single brand eateries. The question who will survive is a little tricky as the one who maintains its logistics well will rise. In any company logistics play a huge role.

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Further, comparing the Indian market with abroad she added,”Indian market is relatively new as compared to the foreign market. Their infrastructure is better and thus they can keep up to their promises of delivery time etc. So a comparison between the two market can not be done as there is huge difference among them.”

Ajay Kakra, Associate Director- Agri and Natural Resources, PwC India

Ajay Kakra, Associate Director- Agri and Natural Resources, PwC India

Ajay Kakra, Associate Director- Agri and Natural Resources, PwC India said, “The structure of the food market has largely comprised of unorganized players who do not adhere to high food quality standards and operate mainly in the unbranded space. India is currently witnessing increasing number of food start ups, catering to the changing lifestyle of the modern urban Indian household. These startups are harping upon the need for tastier food with additional benefits such as convenience, health benefits, service delivery efficiency and cost economics. However, these very innovations sometimes becomes  restraining factor when it comes to scaling up and attaining a national presence. Most food startups being brainchilds of an innovative entrepreneurs, often gets sidelined when it comes to capital infusions for growth capital or ban finance.

Further, commenting about the real challenge the startups need to cater to he said, “Overall, the food startups are catering to the changing taste of modern India through its innovative concepts. However, the real challenge lies in the right mix of innovation with strong business sense in order to attain long term sustainability and scalability.

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  • http://www.fatbit.com/ Veenu Sharma

    Well said, there has been a huge rise in the online food ordering & delivering startups. Moreover, at present it has now become the most popular online business idea for the entrepreneurs. Thanks to the e-commerce platforms like Yo!Yumm that has made it very easy to launch new online food ordering and delivering business at economical price and that too at just a point of mouse click.

  • Prakash Roy

    check out http://www.readybowl.com online food tech startup delivers fresh food & serves food in kilo grams

  • Ravi

    Make Ur Thali is a new start up in Pune. These guys are committed to provide high quality home cooked food with hygiene. They provide monthly meal and solving the problem of managing a cook at home. Just one payment and your daily meal is sorted.

  • Murali R

    AhaBiryani.com is the latest online food ordering marketplace in Bangalore.

  • Priya Anandhan

    You have missed http://www.watscooking.com which serves home cooked food and is available in all major cities in india.. watscooking.com ties up with home chefs and provides homely food and regular meal services …home delivery also available……watscooking.com has tied up with 1700 home chefs all over india and has 5000 dishes on offer online

  • http://www.jusfood.com Anil Sharma

    You have jusfood in chennai i with 200+ restaurants and expanding

  • Sunil Kumar

    Mumbai’s best online marketplace for tiffin services @ http://www.takeurpick.com is here too:)

  • Curious

    “No challenges as of now” ..Haha..how would I one have challenges if one is not concerned about earning revenue?

  • vivek

    now add swiggy also in the list