SPECIAL Virtual Bites
The internet has become the launchpad for dozens
of restaurant startups. While they don't have the same burden of overheads as
their legacy counterparts, several other challenges abound.
For Mira Sikand, a 75-year-old home chef, the day starts at 6:00
am, when she starts preparing her orders.
These have to be packed and ready for collection in the next few
hours by the delivery staff of Eatlo, an internet-first restaurant in
Bengaluru.
Eatlo is one of India's 65 internet-restaurant startups that have
mushroomed in under a year, mostly catering to busy urban Indians. To no one's
surprise, the sector has been tempting investors.They pumped in nearly Rs 10
crore into Indian internet restaurants so far this year, already matching their
total investment in all of last year in these companies, according to Traxcn, a
startup analytics firm. Globally, investments into internet restaurants
increased to $500 million (Rs 3,200 crore) this year so far, from $180 million
( Rs 1,152 crore) in 2014.
A host of internet-first restaurants SpoonJoy, Yumist, Hello
Curry, BiteClub, NutriTown, Brekkie, FreshMenu, FRSH, HolaChef, and Eatlo, just
to name a few have become household names, especially among working professionals
bored of their canteens. Each of these are experimenting with various models at
the back end, bringing a range of innovations to production, distribution and
supply chain. Therein lies the milliondollar question: Which internet-first
restaurant model will succeed, delivering scalability, consistency, and quality
food? While Yumist, FreshMenu, Hello Curry and Biryani360 operate their own
kitchens, SpoonJoy, Eatlo and BiteClub work on an aggregation model.
The latter two employ a network of chefs, while SpoonJoy aggre
gates industrial and restaurant kitchens to prepare its menu items.
“This is not a scalable model very few chefs will do 100 meals a
day from their homes, and not many can do it from their kitchens on a daily
basis,“ admitted Rahul Harsinka, 32, cofounder of Eatlo. “There are less
efficiencies in the system individual chefs can't procure raw materials from
wholesale markets and so costs don't work out financially.“ Harsinka is
preparing to migrate to a central kitchen model this month as a platform for
chefs, at least for complicated dishes.
Currently, many of these businesses are single-city operations or
at the juncture of expanding to new cities. The level of scale an
internet-first restaurant can achieve will ultimately determine if its model is
successful. “Fundamentally, we need to look at which company will provide
quality food and at an affordable price. These are the two levers on which you
need to change your model or evolve it to meet these objectives for a customer
to be happy,“ said Manish Jethani, cofounder of SpoonJoy. “The market will
determine it.“
No doubt that food is a complicated business.“A lot depends on how
you organize your back end. It's non-trivial to serve multiple locations with
the same quality and that's where most fail,“ said GV Ravishankar, managing
director of venture capital firm Sequoia Capital. He is on the board of
portfolio company Faaso's, the food technology company known for its wraps
that's pivoting its busi ness to a smartphonebased delivery-only model.
“Today nobody has the scale or the history to have gone through
enough cycles of learning how you deal with logistics, last-mile delivery and
consistency with different chefs,“ said Ravishankar.
With this comes the aspect of safety and quality, given that
food's a perishable commodity.The lack of proper implementation of food safety
norms in the country puts a question mark on the food quality of the various
online restaurants, especially if aggregation is the primary model.
Entrepreneurs, however, are tackling this at a rudimentary level, with their
own benchmarks for quality and freshness.
Yumist founder Alok Jain, 37, said the company conducts rigorous
trials with recipes to ensure a balance of metrics temperature, moisture,
texture, and taste before placing an item on its menu. “At every interval of
15 minutes we check for these metrics this is where food science comes in.
For every five items we test, three make it to the menu,“ Jain said.
Sikand, the 75-year-old home chef for Eatlo, cites an incident
when she packed a certain dish while it was still too hot the gravy was still
bubbling, and thus seemed spoilt when it reached the startup's delivery hub.
She was paid for the order in full, but the company took the dish off its menu
for the day. “Before scheduling a delivery we get a sample of the dish by the
chef. If it doesn't meet (our) standards, we take it off the menu. If it's not
spoilt, we donate it to an NGO,“ said Harsinka.
Therein lies a pressing challenge for internetfirst restaurants
establishing credibility as a food business, given that these ventures do not
have a `food element' as part of their brand.Many of these companies routinely
rotate their menus, and the same dish may not be available again for a few
weeks or even months.Although this brings innovation and variety to the menu,
it could disconnect consumers from the core food element of a brand, say
experts.
“A rotational menu will work, but slowly companies will have to
decide what they stand for,“ said Kanwaljit Singh, founder of Fireside
Ventures, a family office investing in early-stage consumer companies. “This is
a tech-enabled food business and not a technology business. As long as people
understand that difference, they still have a chance to make it work.“
Shonali.AdvaniET15MAY15
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