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The food start-up sector is going through some dramatic shifts and turns. It is time to look beyond Zomato, Swiggy, UberEats and Foodpanda, which deliver food from partner restaurants and make news for their frequent acquisitions and humongous fundraising deals.
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Zomato posts 45% growth in FY18 revenue at USD 74 mnThe food start-up sector is going through some dramatic shifts and turns. It is time to look beyond Zomato, Swiggy, UberEats and Foodpanda, which deliver food from partner restaurants and make news for their frequent acquisitions and humongous fundraising deals.
With the Food Safety and Standards Authority of India (FSSAI) ordering these brands to de-list food business operators that are not FSSAI-compliant, the scenario is likely to get skewed towards a new bunch of start-ups that operate in the “healthy”, “organic”, “farm-to-fork” space by cooking their own set of “calorie counted” and “farm fresh” meals, and delivering the same in an optimised manner to health-conscious consumers.
Margins in cloud kitchen-based food start-ups are greater than 30%, which is much more than what food delivery start-ups that do not operate kitchens earn.
The growing awareness of healthy eating, consumption of pesticide-free organic food is another factor that is working in favour of newbies like Hello Green by Revofit, PurpleBasil and Second Nature.
While major food delivery start-ups appear to be taking a leaf from the playbooks of similar Chinese start-ups, there is enough room for parallel models, says Dhananjai R Kuttikad, founder, PurpleBasil, that serves “healthy food which tastes like fast food”.
The world is moving towards a preventive, rather than a curative approach to health, and the millennials are driving this trend, says Sunjay Ghai, founder and CEO, Hello Green by Revofit, which is into chef-curated healthy meals.
Like the Swiggys, Zomatos and Foodpandas of the world, these newbie start-ups also emphasise on timely delivery of their meals but carry the added bonus of themselves cooking and serving only “healthy” meals.
Ghai says delivery is critical for all phases to ensure freshness for the farm-to-fork model to work. “We do source a large amount of our vegetables directly from farms and then handle the logistics of bringing that to our delivery points and post cooking, we have our own fleet which delivers meals to our clients.”
According to Dipti Motiani, founder and chief product officer, Second Nature, which is into cold extracted fruit juices and veggie blends, since delivery is critical in farm-fresh food, the technology for post-harvest management is well developed, “making it possible to retain the natural taste and nutrition when appropriate packaging and temperate is maintained.”
Kuttikad believes that upcoming start-ups will need to focus on delivering a consistent and high-quality meal and innovating with the food and customer experience delivered. ‘’Innovation will need to happen new buying models such as subscriptions for repeat user increase, a fair pricing range and innovative food in terms of cuisines and choices.”
The food start-up space in India is estimated to cross $2.5 billion by 2021. The sector raised nearly $500 million in funds in the first eight months of 2018, compared to the $135 million raised in 2017.
The newbie start-ups are chalking out major growth plans both of doorstep delivery and being available at retail locations.
Hello Green by Revofit has been growing at 35% month on month. “We want half our revenues from digital orders and the other half through physical stores, shop-in-shop formats, etc. We aim to have 100 touch point for ready-to-eat within the next two years and also be present in 3, 000 locations in retail,” says Ghai.
Kuttikad says PurpleBasil has experienced an “8-10x” growth in revenues and is now looking to scale up.
“This involves franchising as well as expansion into verticals such as kids meals. We will be playing hard on the online+offline model.” Second Nature is targeting revenues of Rs 100 crore in the next five years. According to Motiani, the brand will produce a range of associated food products built around fruits/veggies that go beyond beverages.
Source: DNA Money
