‘The hoopla around foodtech will declutter and clear segments will emerge’: Alok Jain, Yumist
The food delivery space has been rife with activity. Startups have popped across the country with varying models, and investors have also shown a heavy inclination towards food tech startups. Yumist is one such startup in Gurgaon which was launched by ex-Zomato CMO Alok Jain and Abhimanyu Maheshwari, a person with experience in the F&B space. The startup has been backed by Rehan Yar Khan’s Orios Ventures. We have earlier explored questions like what really is foodtech. This time we speak with Alok and Abhimanyu about the space, from an entrepreneur’s point of view and the opportunities that exist.
Here are edited excerpts:
YS: How do you define foodtech? What are the various aspects to this?
Alok Jain: Traditionally, food tech has been defined as the use of science and technology to improve food production, processing and preservation. The space has come a long way though with technology, in its various facets, playing an important role in enriching processes and enhancing customer experience across F&B verticals.
Foodtech now includes a wide spectrum of companies. On one end, there are food companies using technology in all forms to fix age-old problems in the industry. On the other, there are pure technology players solving one or more problems in this vertical.
YS: What is happening in India at the moment? Where is most of the activity according to you?
Abhimanyu Maheshwari: F&B is one of the largest markets and yet hasn’t seen much innovation in India until recently. Today’s consumer is tech savvy and demands convenience and quality without having to pay a premium. Add to this the rise of entrepreneurship and access to capital, India is seeing innovation across the board in the food vertical. Whether it’s tech-only startups making dining in/out seamless or food startups deploying technology for improved products or customer experience, it’s all happening out there. This is an exciting time for the space.
There’s significant activity in the dining-in segment with customers demanding convenience like never before. Whether it’s your daily meals, groceries, restaurant deliveries, recipe kits or gourmet food prepared by home style chefs, there’s a lot happening.
YS: You mentioned that there’s a revolution underway. Can you tell us more?
AJ: The revolution lies in how the bulwark of traditional brick and mortar F&B is quite literally being torn down. In recent times, this space has faced significant challenges due to rising costs. As an example, the CAPEX and OPEX involved to build and scale restaurants have produced many casualties.
On the business side of things, the trend of Internet first kitchens promises to override these challenges by bringing these costs down by as much as 80%. Add to it the scalability of the model and the growing market for delivery, we will witness seriously large companies being built out of this trend.
From the consumer perspective, getting food delivered in India has always been a pain. There are four touch points while getting food delivered - how you order, how you follow up on your order, the first interaction with the brand when the delivery boy brings in your order and finally when you consume the meal. Traditionally, brands have focussed on one or two of these touch points resulting in a sub optimal experience.
Internet first kitchens that own the entire lifecycle are significantly elevating that experience. Never before was it possible to order food in a matter of seconds, get it delivered without any follow ups by a well mannered delivery executive in 20 mins and that too, at a perfect eating temperature of 55 degrees.
YS: How does Yumist differentiate from the other players? Do you think you have an upper hand in any way?
AM: Yumist operates in the daily meals market that has not seen any change over decades. The customer has evolved but his experience in this market has remained static. While a lot has happened on the restaurant side of things, the daily meals market has forever been neglected.
With price, quality and convenience as the key attributes, we are attempting to build an F&B brand in the daily meals segment, something that has not been attempted till date.
Of course, building a business that can gross upwards of 30% at price points of Rs 60-80 requires ownership of every touchpoint, challenging all traditional wisdom, and effectively tie in technology at every level - from the use of food science in production and delivery to algorithms and data science that ties it all together.
We didn’t find ready-made solutions to the problems we had set out to solve in India or globally. We had to innovate on every aspect of the supply chain to do what we’re doing in a sustainable and profitable manner.
YS: There are so many players in this market, how do you see this panning out?
AJ: If you look at food tech in its true sense, there are tons of players doing innovative stuff across food production, preservation, packaging, delivery, discovery, and accessibility etc.
For now, I’ll limit myself to food delivery as it’s more relevant to Yumist. This space has been seeing a lot of action and customer is clearly the king right now.
There are largely three business models:
1) Pure tech play enabling online ordering from restaurants
2) Tech and logistics play through a transparent or white label marketplace of restaurants, home chefs or commercial kitchens
3) Full stack with ownership of the entire value chain, including food production.
The first model has seen significant success globally and now picking up steam in India. The tricky bit in this model, however, is that you own just one touchpoint out of the four and in a market like India, where very few restaurants have the delivery DNA, it becomes difficult to give a wholesome experience to the customer.
In the second bracket, those delivering from restaurants are clearly adding another touch point compared to tech-only plays and I see merit in that. Alternate marketplaces of home chefs or white label ones are adding another dimension to the market; but time will tell how these models evolve and whether they can provide consistent quality and experience while ensuring healthy unit economics.
If you are in the third bracket like Yumist, you are clearly out to build a tech powered F&B brand. Call it what you may, it is first and foremost a food business. An evolved one though that is capable of quickly catering to much larger markets at significantly lower costs through smart use of technology.
As with any other fast growing space, convergence and consolidation will happen in this vertical too. Also, while only one or two players will dominate in the aggregation models; there will be multiple large players with a full stack approach. The hoopla around food tech will get decluttered and clear segments will emerge.