“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.
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|
|iTIFFIN||USD 1 MILLION|
|TINYOWL||USD 20 MILLION|
|FAASO’S||USD 20 MILLION|
|FOODPANDA||USD 147.3 MILLION|
|TASTYKHANA||USD 5 MILLION|
|JUSTEAT||USD 89.1 MILLION|
|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.
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.
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.
“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.”
Innovations and Future Plans
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|
Bangalore, Chennai, Ahmedabad, Baroda
|Mobile App||15-45 mins||Online, Faasos wallet||–|
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.”
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 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.”