How The Food Delivery Model in India Is Changing Post COVID-19

Entry of new players, tech innovations and diversification will rule the roost.

Suman Mahfuz Quazi

If you think Google has changed the way you search, shop, travel and communicate, wait till you here this – the multinational tech giant is now foraying into food delivery and you will be able to order food from your favourite restaurants directly on Google.com. This will enable us to search for, place orders and pay for food delivery on Google.com, however the delivery itself might be carried out by other players, like Dunzo, a delivery service.


With the line between work from home and work at home increasingly blurring, ordering food online comes as a saving grace and a much-needed breather from our hectic schedules, especially since our favourite restaurants are shut. But there’s a lot happening in the food delivery space, with new players such as Amazon Food and Google entering the market, and a bunch of our trusted apps – Zomato, Swiggy and the now, defunct Scootsy – implementing massive changes at the same time. While change is imminent, the fact that online food delivery has grown to become the major source of income for most F&B ventures, shifts in policy and outlook have become more prominent in the food delivery space , which had touched 3.5 million deliveries in October 2019. 


A conversation around this as such, is impossible without taking stock of the movers and shakers of the industry – food aggregator apps, which are in a state of flux. According to experts, for all restaurateurs, right now, delivery is driving 100 per cent of their revenues versus 8 to 10 per cent before the pandemic. So, online food delivery isn’t just a saving grace for us as consumers, but also, the thread that restaurants are hanging by, with many restaurants across India still shut.




Stay in, stay fed 

In fact, even 5-star establishments have forayed into the delivery space to diversify revenue stream by partnering with aggregators like Zomato and Swiggy, whereas Taj Hotels went ahead and launched their own delivery platform, Qmin.  Despite a few restaurants opening in Bengaluru, Kolkata and Delhi, there seems to be widespread public skepticism and distrust. This has spilled over to food delivery, too, and is evident from the steadily dropping volumes of food order recorded by Swiggy and Zomato – two major players among food aggregators in India . In March, a leading economic daily had reported that food delivery was down by 60 per cent with most restaurants shut and delivery executives opting out for the sake of social distancing. That same month, RedSeer Consulting recorded a 20 per cent decline in food delivery, and forecasted further de-growth. 


Rapidly changing government SOPs (standard operating procedures), new state laws (Bengaluru, Kolkata and Pune went into full lockdown again in mid-July) and fresh demands from consumers, in terms of sanitary and health requirements, have pushed food delivery apps into a state of flux, with new updates each day, on mergers, closures, launches and takeovers of food aggregator apps. 


To begin with, American multinational conglomerate technology company, Amazon, launched its food delivery arm, Amazon Food in June in Bengaluru. Commenting on the launch, a spokesperson told us, “Customers have been telling us for some time that they would like to order prepared meals on Amazon in addition to shopping for all other household essentials. This is particularly relevant in present times as they stay home safe.”


In the meantime, its competitors, Zomato and Swiggy have diversified operations by entering grocery, essentials and alcohol delivery with verticals, like Zomato Market and Swiggy Genie. Offering a restaurateurs perspective, Gauri Devidayal, owner of Mumbai-based The Table, Magazine Street Kitchen, Iktara and Miss T Delivery, tells us, “Aggregators have been supportive, but there have been several impediments, because of a massive manpower shortage. This becomes a big challenge at a time when everything needs to be delivered, considering people are at home.” 




The issue of manpower shortage has been further exacerbated with both Swiggy and Zomato laying people off. In mid-May, Swiggy announced that it was laying off 1,100 employees, whereas Zomato issued a statement announcing that it was to let go off almost 13 per cent of its employees, alongside massive pay cuts for those still on their payroll. Devidayal echoes this when she says, “There has been a lot of cleaning up across the industry. I know Swiggy’s cloud kitchens are shut and they were trying to get rid of their inventories, though I won’t be able to comment on the reasons for this move.”


Meanwhile, Swiggy fast-tracked its takeover of niche-food-delivery brand Scootsy (it had acquired the brand last year) and the transitioning of brand-partners onto its app. “There are certain tech improvements underway, but Swiggy and Scootsy are not the same. The latter catered to a different audience, the app worked differently and had specific features. For example, with our bakery brand, Magazine Street Kitchen, this becomes a huge problem because Scootsy allowed customers to pre-order,” Devidayal regrets, explaining how the absence of this feature is going to posit a big challenge, since baked goods need to be largely ordered in advance. Not to mention, the issue of habit change, considering her brand had a loyal customer base on Scootsy.  


Safety, sanitisation and succour


But at Swiggy, folks remain positive. “Over the last two months, our focus has been fully directed towards leveraging our strengths – our three-way marketplace, technology and logistics infrastructure. Currently, we are working closely with our restaurant partners to help them reopen their businesses seamlessly and maintain business continuity and boost growth,” a spokesperson for the brand said, speaking about the newly launched, ‘Swiggy Jumpstart Package,’ which includes safety kits required for implementing hygiene protocols and business booster programs that improve visibility and drive order volumes for brands. “The packages are being offered at heavily subsidized rates,” they added. 


Seeing that safety and hygiene seem to be the biggest challenge at the moment, both Zomato and Swiggy have tried to curate their home pages to offer increased visibility to brands maintaining protocols. Elaborating on this, Swiggy spokesperson said, “Our ‘Best Safety Restaurant’ curation helps consumers identify restaurants that are adhering to strict safety standards. Moreover, they receive primary visibility on Swiggy’s homepage which makes it easy for customers to choose from a list of safe restaurants.”


Notwithstanding these implementations, restaurateurs seem to continue to want to move away from the aggregator models. Last year, restauranteurs conglomerated to revolt against several practices by these apps, such as deep discounts and data hoarding. That sentiment hasn’t waned. Devidayal asserts, “The idea is to eventually break away from aggregator models.” To that end, many restaurants have apparently begun building white-label websites to create individual portals for food delivery. “There are a lot of tech innovations in place within the restaurant industry. For Magazine Street Kitchen, for example, we tied up with Near.Store. It’s not a white-label website, but more like an online grocery store, and since baked goods fall under this category, it worked for this particular brand. But for The Table and Iktara, we’re working on their individual websites,” Devidayal revealed.




New rules for the new normal

In early June, F&B entrepreneur Karan Tanna and Mumbai-based restaurateur, Pawan Shahri launched Bro Eats, a new food aggregator app, in a bid to mitigate the issues the restaurant is currently facing with traditional food delivery platforms. Bro Eats’ core USP is that it offers restaurant partners a subsidised commission rate of 5 per cent, as opposed to 25 to 30 per cent, which is the norm with apps like, Swiggy and Zomato. “To start off with, we were figuring different ways to do deliveries for our own brands. Considering that delivery is going to account for a massive chunk of our revenues in the coming months, we couldn’t completely depend on the current aggregator models because of the commission percentage they charge. We wanted a model, where customers could reach out to us directly and there is no compulsion on restaurants to depend for an end-to-end service model, meaning they could carry out delivering the food on their own accord, if they so wish,” Shahri says, explaining the genesis of the app. While it may seem like a time for aggregators and restaurateurs to join forces, the issue of high commission rates – and the cumulative setback it is going to create – negates any chances of a détente. 


Increased tech improvements and further diversification is expected in the coming months. Speaking for Bro Eats alone, Shahri reveals the apps’ interest in delving into creating dine-in experiences in collaboration with restaurants – this is expected to be a huge new segment with dining out being a tricky terrain – and tapping into the pool of home chefs and independent F&B players. What else the world of food has in store for us in the new normal, we’ll have to wait and watch. Until then stay safe and stay fed.



Image: Shutterstock.com 

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