Food tech startups leave bad taste in restaurants' mouths

1. Food Tech Startups Leave Bad
Taste in Restaurants' Mouths
Restaurants say high commission not sustainable and quality of
services being offered is poor

2. Contd…
Several restaurants are now backing out from food tech and hyperlocal
delivery platforms such as Swiggy and Shadowfax due to high
commissions and patchy delivery services.While some restaurateurs
said high commission fee of up to 25% on the price of an order charged
by delivery platforms has made it unsustainable, restaurants also blame
delayed pickups, shabbily dressed delivery boys and deteriorating
standards of food delivery for their exit.
“The basic problem with the industry is that they fail to deliver an
experience similar to what we give our customers in the restaurant,“
said Ashutosh Jha, associate vice-president for R&D at TGI Friday's,
which closed ties with food delivery players Shadowfax and FastOx.

3. Contd…
“Many times we have waited for an hour or two for the delivery boy and had
to instead recook the food and send our own staff to fulfill it,“ he said. The
company , which has 13 restaurants across India, is now working on selective
menu for delivery, redesigning their packaging and plans to apply delivery
charges on their orders.
Bengaluru-based restaurant Berry'd Alive has pulled out from Swiggy and
Roadrunnr for certain stores and plans to retract completely soon.
“Their volumes are increasing at the cost of our walk-in crowd. So their
business is not adding to our topline,“ said Aljeesh Siddique, managing
partner at Caboodle, the company that manages Berry'd Alive.
Swiggy and Shadowfax declined to comment.

4. Contd...
According to a Morgan Stanley report, online food aggregation business in
India can grow to $4.4 billion by 2020, implying a 134% annual growth till
then.
As the food delivery market in India is picking up with foodies and
restaurateurs getting used to it, the industry is headed for a new challenge
retaining clients.
Azure Hospitality , which has restaurant chains Mamagoto, Spee dychow,
Rollmaal and Mamapaati under its portfolio, now does most of its deliveries
itself.
The company has stopped using Shadowfax and Roadrunnr.
Westlife Development that runs McDonalds in west and south India, too,
closed its ties with Roadrunnr.

5. Contd…
After heavily subsidising restaurants for the last two years to win their loyalty
, the food delivery startups started raising their commissions from single-
digits to a whopping 25%. They are under pressure to turn profit, say
experts, as the funds are drying up and investors are looking for a sustainable
business model.
While Swiggy clocked in a million orders in a month, TinyOwl, its closest
competitor, got acquired by Roadrunnr. Smaller player Spoonfed shut its
operations in Bengaluru to launch their services in Dubai.
There is a debate globally as to whether the marketplaces should whether
the marketplaces should take control of logistics or not.
The marketplace business model, by its very nature, is high margin and
scalable once market dominance is reached.

6. Contd…
Delivery adds to the cost of transportation and makes the model less
flexible and difficult to expand, as it requires a large enough fleet
during peak hours. But by offering delivery services, a company can
expand its network to even those restaurants that don't offer home
delivery .
Another variant being applied by some companies is to have thirdparty
delivery companies provide exclusive services to the marketplace,
thereby benefiting from both variability of delivery cost and still
maintaining control of the delivery experience.

7. For Details and Appointment contact:-
Parveen Kumar Chadha… THINK TANK
(Founder and C.E.O of Saxbee Consultants & Other-Mother
marketingandcommunicationconsultants.com)
Email :-saxbeeconsultants@gmail.com
Mobile No. +91-9818308353
Address:-First Floor G-20(A), Kirti Nagar, New Delhi India Postal Code-110015