The food-tech segment is catching-on with unprecedented pace in India. Experts of the segment say that the space is getting crowded with a host of startups evangelizing it. However, some believe competition in food was always there and cannot be avoided.
Ritesh Dwivedy, the ex-Founder and CEO of JustEat.in, says,
The space was as crowded five years ago as it is now. The formats and processes keep evolving and there is always going to be room for someone who solves real problems.
Ritesh has joined hands with Abhishek Mandal and Kumar Setu to float Petoo. It is a smart Quick Service Restaurant (QSR) focusing on super fast deliveries of conveniently packed Indian cuisine. Petoo (pronounced: pay-too) is a Hindi word which essentially means glutton in English.
The company’s vision is to grow Petoo into being one of the most loved food brands in India by focusing not only on great food but by also offering a fantastic consumer experience.
The food industry in India and the brain behind Petoo
Currently, the restaurant industry in India is largely unorganized. The Indian food category (which is about 80 per cent of the industry) is worse-off since most organized restaurants cater to international cuisine. Ritesh points out,
Despite the category being extremely large, there is a lack of a clear leader in this space.
Prior to starting Petoo, Ritesh led JustEat.in’s India Operations (as CEO) and was involved in the initial iterations of ideation to actual implementation. Abhishek is a chef (an alumnus of IHM), and he earlier headed ‘Operations’ for JustEat.in. He brings 14 years of operations experience across various industries (Hospitality, ITES/BPO, Business Compliance and E-Commerce).
Setu is an engineer by education and a technologist by profession. He is a serial entrepreneur and founded OffersForShoppers (a Groupon kind of website) way back in 2006 when no one had even heard of that kind of a business model. After running it for sometime he realized that the market was still in its infancy and launched another business named Nuclei Marketing.
Size of potential and traction
Speaking about size of opportunity, Abhishek adds,
At Justeat.in we worked very closely with thousands of restaurants and got to experience the challenges they face, the inefficiencies they work with, and eventually realized that this is an extremely large opportunity waiting to be disrupted.
The trio believes that with better focus on technology, standardization, quality and process, Petoo will be able to build a very large business.
Started in April, 2015, the company scaled to 13 locations in Bangalore, and on an average claims 1000 orders on a daily basis. Ritesh says,
The average order value is Rs. 200 and our 30 day reorder rate is around 40 per cent.
Localized menu and focus on Indian food are Petoo’s USP
The company focuses on the Indian food category. “It is the largest cuisine category in the country and hence has the largest market share,” states Ritesh. Petoo's menu is localized and is based on the most popular dishes in the ‘zone’ being targeted.
Talking about USPs, Abhishek adds,
Each city will have a different menu because food is a hyperlocal phenomenon. For example, we cannot expect a Bengali foodie to gorge on vada pavs.
Petoo has one or two kitchens in a particular city, where the food is prepared centrally by a team of chefs. These chefs use very detailed and standardized recipes to prepare the dishes, and every ingredient used in the preparation of the dishes is measured. All this ensures that the quality and taste of the food prepared is consistent.
Foodtech is an extremely abused word in the startup world
Today, food-tech is an extremely abused word in the world of startups. Ritesh explains
Any startup, whether it’s a restaurant aggregator, a full stack QSR, a dish/chef curator, a hyperlocal food delivery service or any other business that is remotely associated with food is called food-tech.
All these businesses have different challenges, different unit economics, and requires deep understanding of the different stages in the lifecycle of a dish. It was tough for the startup to get good people on board during its early days since Petoo was seen as another me-too food business.
Do VCs understand foodtech startups?
The situation is very similar even when we talk to the VCs; and many of them do not understand the space well. A daily meal provider's economics, positioning and processes are extremely different from a quick service restaurant - this fact is not very well understood.
Retention of delivery boys are a big headache
On the operations side, the most difficult part confronting Petoo is the hiring and retention of delivery boys. Setu adds, with a laugh
We have a joke at Petoo - hiring a delivery boy has suddenly become more difficult than hiring a developer.
The startup had raised a very small seed round from friends and is now looking to raise Series A to scale up.
The food delivery market is around $1.6B to $2B in India. Indian cuisine constitutes 80 per cent of the entire market size, and is growing at a yearly rate of at least 20 per cent since a decade or so. It will continue to grow at the same rate into the foreseeable future.
The Tier 1 cities make up 60 per cent of the overall market size in the country, and surprisingly, more than 90 per cent of the orders are still placed over the phone. Transitioning this volume to online ordering is a big potential for food-tech startups.
Petoo seems to be the result of some very insightful research, and is likely to be able to solve consumer pain-points significantly. The rise in consumerism, strong economic background, busy lifestyles, and relatively better incomes are encouraging Indians to order online like never before.
Like Mumbai based BOX8, Petoo owns the entire value chain from sourcing raw materials to delivery. And this gives an edge to Petoo over the competition. The company primarily competes with BOX8; however, it also differentiates itself from BOX8 through its hyperlocal approach. Petoo crafts local menus based on specific food habits, of the locals, etc.
The food-tech industry is going through an exciting time in India. However, the present euphoria will subside once the category undergoes a blood bath along the lines of the product-based e-commerce in the last couple of years.