We are past the worst recession since the Indian independence in 1947, which was due to the COVID-19 onslaught. Though the dreadful pandemic hasn’t taken its exit yet from the country, the Indian market has started to boom with the listing of the shares from a bunch of companies, which certainly looks promising enough!
Zomato, India’s food delivery giant, has already launched its IPO on July 23, 2021, and that too with flying colors. Though the company exhibited a mammoth size of IPO at Rs 9,375 crores, the overall subscription of 38x was quite healthy. At the end of day 1, Zomato witnessed a 66% premium at Rs 125.85.
Zomato, with its successful IPO listing, has certainly been the talk of the town but one another company has parallelly been mentioned if not more. This is Uber, which seems to have largely benefitted with this listing of Zomato, and what is stranger is the fact that it hasn’t spent a single penny in the food aggregator business!
As soon as the Zomato listing closed for the day on July 23, 2021, people began talking about the sudden surge of the market value of Uber stakes. Yes, the market value of the stakes Uber has in Zomato, at the end of the day, was announced at Rs 9,000 crores ($1.2 billion). This baffled many, and even more so, when they heard that Uber didn’t spend a penny for such a fortune it made out of the Zomato IPO.
How did Uber become the gainer in Zomato IPO?
The recent gain of Uber may sound like the company has not spent anything to gain a considerable large sum and in reality, it is so. However, we need to recall that Uber has had its 9.19% shares in Zomato due to the latter’s acquisition of Uber Eats, which Zomato acquired back in 2020 at $206 million.
Along with making over a billion dollars in Zomato’s IPO, Uber also resigned from Uber Eats last year, which was on the verge of being a liability. Therefore, it was truly a win-win decision for Uber!
Looking Back at the Uber Eats Deal of Zomato
Launched in August 2014, Uber Eats started as a food delivery platform, which displayed menus from all the restaurants that were partnered with the app and helped the users order their favorite dishes, much like what we do in Zomato and Swiggy.
However, soon after the launch, Uber Eats started to pick up huge losses. The losses for the company started to pile up even more after the Covid-induced lockdown was announced. Furthermore, the losses of Uber Eats were tied to the overall losses that the cab aggregator was seeing, especially when more than half the world was observing lockdown.
During this time, the subsidiary of Uber had to resort to stringent measures like pay cuts and laying off employees. Uber Eats trimmed down its employee strength by 30% in hope that it would help the company get some gear, but when it failed, Uber thought of selling off its food delivery subsidiary.
It was on January 21, 2020, that the Indian division of Uber Eats was finally sold to none other than the food delivery giant, Zomato, in return for 9.99% stakes in Zomato, which was valued at around $180 million back then.
Who knew that this deal would be so profitable the next year itself?
According to Uber, the “fair value of the consideration” that it received for the Indian business of Uber Eats was $206 million, which included $35 million of “reimbursement of goods and services tax receivable from Zomato.”
Along with Zomato and Uber, the IPO was also a huge benefit for Info Edge, whose stocks saw a healthy rise in price and are currently worth Rs 15,000 crores. Deepinder Goyal, Zomato cofounder’s holdings, which were valued at 2,800 crores also witnessed a rise to Rs 5,500 crores.
Overall, it can be said that Zomato made a robust debut on the stock exchanges on Friday, July 23. The shares of the company started at ₹116 on the national stock exchange (NSE) and represented more than a 51% premium over the issue price of ₹76. Only 16 minutes past its listing, at 10.16 a.m., the market cap of Zomato breached ₹1 lakh crore. An amazing feat indeed!
Stocks of Zomato
Conclusion
Launched in 2008, Zomato was one of the startups that have truly emerged strong, standing as the biggest food delivery services in India, ahead of its arch-rivals, Swiggy, have amassed the strength of the years and is pacing towards a brighter future.
On such a successful first-day run of Zomato, the co-founder and CEO, Deepinder stated, “We are going to relentlessly focus on 10 years out and beyond, and are not going to alter our course for short-term profits at the cost of the long-term success of the company.”
FAQ
Is Uber Eats owned by Zomato?
Yes, Uber sold its India business of Uber Eats to Zomato for a 9.99% stake.
When did Zomato acquire Uber?
Zomato acquired Uber Eats on 21st January, 2020.
Why did Uber Eats left India?
Uber Eats decided to quit its operation in India, to cut its global losses as it was fallen behind to keep up with the competition.
The application of technology to food innovation forms the core of the foodtech vertical. Nicolas Appert’s improvement in 1810 of the canning procedure is an early example of foodtech innovation. The emphasis was on safeguarding sustenance. The procedure wasn’t called canning at that point, and Appert didn’t know the rule on which his procedure worked. Canning has majorly affected foodtech conservation strategies.
Louis Pasteur’s exploration of the deterioration of wine and his portrayal of how to keep away from decay in 1864 was another example of foodtech development or food based startups. Other than examining wine deterioration, Pasteur explored the creation of liquor, vinegar, wines and brew, and the souring of milk. He focused on warming milk and milk items to pulverize food deterioration. In his investigation into sustenance innovation, Pasteur turned into a pioneer of bacteriology and paved way for preventive measures.
Food sustenance using tech was dull before 2018; however, it has rebounded from the stagnation. From a daily request volume of 3.7 lakh in 2017, as mentioned by RedSeer Consulting, the number expanded to 15 lakh as of September 2018. Unmistakably, the hunger for Foodtech is developing among buyers and speculators. After a phase where footech ventures like Tiny Owl, Yumist, and Dazo shut operations, things are now looking positive.
“In the last six to eight months, numerous littler players have come in, while taxi aggregators have stretched out their administrations to the Foodtech accumulation space. With Ola gaining Foodpanda and Uber propelling Uber Eats, the challenge has increased in the market,” says Rohan Agarwal, a commitment administrator at RedSeer Consulting.
Swiggy is the market chief in the sustenance accumulation space, timing around six lakh everyday orders, while Zomato is at a close second with near 5.2 lakh orders daily. Uber Eats, given its extension binge, has figured out how to topple Ola’s Foodpanda with around three lakh orders, while the latter serves nearly 2.5 lakh orders every day through its mobile app and website.
In October, Foodpanda propelled its conveyance administration in 30 new urban areas, taking its aggregate to 50 urban areas crosswise over India. The target is to convey foodtech services in 100 urban areas. Foodpanda was acquired by SoftBank-supported Ola in December 2017. At the time, the taxi-hailing stage declared it would put $200 million in Foodpanda’s sustenance conglomeration business. Be that as it may, Ola’s rival has ended up being a considerable opponent in this space. Propelled in May 2017, Uber Eats put its focus on clients and baited them with heavy limits and first-request offers.
Food Tech Industry in India
At present, Uber Eats is accessible in 37 urban areas in India and Southeast Asia and plans to multiply rapidly. “At some random topography, buyers can browse more than 30 foods on a normal,” says a Uber Eats representative. The more settled players, Zomato and Swiggy, have been growing their impressions. Zomato is looking at the level II-III urban areas for development. “We have our services in 59 urban cities in India. Our transient objective is to twofold down on our development by growing to more level of II-III urban areas in India and building profundity in level I advertises,” says a Zomato representative. “We have extended to 37 such urban cities in the past four months, and the reaction has just surpassed our desires.”
Then, Swiggy conveys sustenance in 45 urban areas across India through its conveyance armada of more than one lakh riders. The aggregator claims to have a relationship with more than 45,000 cafés. Regardless of how reassuring the pattern, the reality remains that dedication sidesteps the Foodtech tech space. Purchasers rush to those offering the best arrangements or limits.
Foodtech aggregators get a lot of their income through the commission charged on requests. Contingent upon the request size and the city, aggregators charge 15-30% commission to the eatery setting up the foodtech. Recuperating the expense of activity stays a test. Aside from commissions, in-application publicizing and reliability projects are different wellsprings of income for the aggregators.
Some of them have begun facilitating cloud kitchen systems to get an advantage. Consider the Swiggy Access program, which permits its café accomplices to set up kitchen spaces in territories where they don’t have a nearness. Propelled in 2019, it appears to have worked for the organization. “We have Swiggy Access kitchens in different cities like Bengaluru, Delhi, Kolkata, Mumbai, and Hyderabad. Around 70% of our accomplice cafés are hoping to work with us in more than one Access,” says Vishal Bhatia, CEO of new supply, Swiggy. Over the long haul, Swiggy plans to convey as much as 20-25% of its requests from these conveyances from Access kitchens.
India is a leading opportunity for foodtech companies. That is why many foodtech companies In India have already started their journey. So, the list of food tech companies in India are:
Food Panda
Foodpanda | Foodtech Companies In India
The Big Daddy of em’ all! Foodpanda is India’s most popular foodtech startup. It has a solid national nearness by tying up with more than 2000 sustenance sellers, for example, Wendy’s, Burger King, Subway, Biryani Blues, and Southy. They have a broad scope of worldwide and national cooking styles in their menu. Foodpanda has an effective operational procedure and uses exclusive innovation to follow sustenance request conveyances until the client’s entryway.
Zomato
Zomato | Food Tech Industry in India
Zomato is one of the successfulfood startups in India which is driving sustenance tech organizations alongside Foodpanda and Swiggy. It has more than 42,000 cafés recorded several urban areas in India, and it additionally works in more than 23 nations. On the off chance that it lives up to its guarantee, Zomato will become the principal Indian food startups or organisation. Its technique is substance-driven with low client obtaining costs, and a greater part of its income originates from promotion and publicity.
Swiggy
Swiggy | Food Startups
Bangalore-based Swiggy was established by Sriharsha Majety, Nandan Reddy, and Rahul Jaimini in 2014. Swiggy has more than 9000 eateries under its umbrella. It is one of the biggest food tech startups in India. The client gets convenient conveyances and constant following of their requests using Swiggy’s application at no additional conveyance charge. Swiggy doesn’t have a base request approach for each eatery it is tied up with over its application.
Faasos
Established by INSEAD graduates Jaydeep Barman and Kallol Banerjee in 2011, Faasos food tech startup has its presence in more than 15 noteworthy urban communities over India. An ideal case of a disconnected chain that went on the web, Faasos has a kitchen with master culinary experts.
Established in 2014 by Rashmi Daga, who by chance happens to be a veggie-lover, FreshMenu works in Bangalore, Mumbai, Delhi, and Gurgaon. FreshMenu began with a modest one kitchen and has nearly 30 kitchens today serving universal food. It plans to expand to 80 kitchens in the coming years. It has a proficient group of 500 representatives in their kitchens who cook in-house, and have their very own conveyance group.
Box8
Established by two IIT graduates Amit Raj and Anshul Gupta, Box8 the Indian food startup serves credible Indian food much like how pizzas and burgers are conveyed to clients, for example, quick, simple and in a box Box8 has structured the ‘Across the board’ dinner box, a cutting edge, satisfying Indian feast which can be eaten anywhere at any time. Box8 has given an Indian curve to everything, from wraps and sandwiches to curries. The USP lies in item improvement.
Box8’s paranthas are produced using whole wheat and cooked in a negligible measure of oil. None of its dishes is broiled. It has a collection of frozen yoghurts, feast boxes, wraps, sandwiches, plates of mixed greens, and treats. 85% of the exchanges are from rehash clients, making Box8 a commendable contextual investigation for a long-haul supportable model.
HolaChef
HolaChef is the food startup in India which wasEstablished by IIT-Bombay graduates Saxena, Anil Gelra, and Ritu Rana, Mumbai based Hola Chef is sponsored by Mr Ratan Tata who has been placing his cash in a few advanced organisations recently. HolaChef conveys home-prepared food to its buyers while dealing with the total coordination of the sustenance, for example, bundling, stockpiling, and conveyance. It has developed from a humble 200 requests for every month in 2014 to more than 1 lakh orders each month in 2016. Almost 66% of its all-out requests are through the application available for Android and Apple phones.
Gurgaon-based Yumist was established by ex-Zomato CMO Alok Jain and Abhimanyu Maheshwari, a prepared F&B business person in 2014. At present, Yumist caters to the locales of Delhi, Noida, and Gurgaon. With an intense blend of foodtech, coordination, and innovation, Yumist possesses and controls the whole sustenance conveyance store network. Yumist considers the “dabbawala” and “corporate bottles” as its essential rivals and intends to reconsider the cost of its suppers to draw more clients and beat challenges. Yumist has shut down operations in Bangalore and plans to grow in Mumbai and Pune. It was in the news recently for raising Rs. 12 crores.
Cook Gourmet
This novel Gurgaon-based startup was launched by Sanny Chaudhary and Daman Singh Kohli. Cook Gourmet offers expert-curated plans comprising of different delicacies. These hand-picked plans are conveyed in an ice-pressed box, the cut vegetables and meat vacuum-fixed with the goal that they stay crisp until you cook them in the solaces of your home. They stay fresh up to 3 days when refrigerated. Indeed, even an amateur in cooking can expertly cook with the instructional exercises given in Cook Gourmet’s offerings.
At present, the Indian food services is a $50 billion industry when contrasted with the US Food Services Industry, which is worth almost around $600 billion. Large scale patterns like family units, more ladies joining the workforce, and higher expendable livelihoods are going to make the food tech industry in India develop at a high rate.
With Zomato and Swiggy getting to be unicorn triumphs and online Foodtech conveyance requests crossing 1 million in daily conveyances, it is unquestionable that the Indian sustenance tech and administrations industry is a hot topic currently.
Skip The Queue – Foodtech Industry
Moderateness And Openness
The normal individual expends three dinners every day and roughly 90 suppers per month. Out of this, in India, individuals eat out or get sustenance conveyance possibly 3-4 times each month. In nations like China or Singapore, this can be as high as 50 dinners a month ate out or conveyed, as there are more decisions, quick conveyance, and reasonableness from sustenance organizations.
A normal individual in India might want to spend between Rs 50-200 for their normal supper, and Foodtech conveyance organizations are attempting to hit the sweet spot of this range. Foodtech conveyance coordinations are showing signs of improvement and less expensive, with the growing number of orders and higher thickness of the populace in urban areas.
Expanding Number Of Homegrown Eat-in Chains
Dominos India with over 1,000 outlets, is doing Rs 3,000 crores yearly. Eatery networks like Barbeque Nation are accomplishing more than Rs 500 crores in business every year. There will be a lot more eat-in chains, with more than $1 billion yearly incomes, from India soon. Bunches of these eat-in chains like Farzi Cafe, Mamagato, Saravana Bhawan, and Yellow Chili have started extending outside India to scale quickly.
There are heaps of conveyance kitchens like Faasos, Box8, FreshMenu, and Biryani By Kilo which have more than 10-20 outlets each and is extending quickly. Given the high rental and CapEx required to eat in eateries, no one but kitchens can give better quality dinners at progressively moderate costs to clients, all in the comfort of clients’ homes and workplaces.
Biryani Is The Newest Pizza
Biryani is a conveyance class, specifically in India, will outperform pizza soon because of its taste, flavorful fragrances, and better life span.
Enormous Retailers And Taxi Companies Are Gathering
Premium friendliness brands around the world like Zuma Dine-in/Lounge and Nobu, with a couple of outlets each, do around $200 million in yearly deals or more. Huge organizations like McDonald’s and Starbucks accomplish more than $20 billion in deals. Overall foodtech conveyance organizations like Deliveroo, Delivery Hero, GrubHub, and Just Eat are huge unicorns today. Enormous retailers like Amazon and on-request taxi organizations like Uber and Ola need a bit of the sustenance conveyance for advertisements. Recurrence in foodtech utilization is a lot higher than most other web-based business classes, including taxi administrations.
According to RedSeer Consulting, the foodtech industry grew 150% from $120 million in 2015 to $300 million in gross product esteem in 2016. The business remained at a similar level in 2017 even as the foodtech vertical slithered again into a period of recovery from the unpleasant days. As per RedSeer,, the industry is on course to touch $2.5-3.5 billion by 2021.
The sustenance conveyance space saw 63 arrangements worth $274 million in 2015. The number of arrangements tumbled to 43 in 2016, adding up to $78 million. Although 2017 saw 20 subsidizing bargains, the combined estimation of those speculations was $124 million.
Fund Raised By Foodtech Companies in India
A commercial center totals and publicizes cafés other than maintaining a tech-driven coordinations foundation to convey sustenance. Then again, a cloud kitchen is a fairly intricate instrument where administrators endeavour to fabricate various parts of the foodtech business such as brand, tech foundation, etc.
Zomato, Swiggy, and Foodpanda are the prevailing commercial centres in India, while FreshMenu, Box8, Faasos, and HolaChef are unadulterated play cloud kitchens.
While Zomato and Swiggy keep on commanding the business, Ola’s pledge to infuse $200 million into Foodpanda India to grow its business is probably going to make it the third solid player in the game.
While Ola has the imperative capacities regarding coordinations, organize, and on-ground foundation, it is to be seen whether it can transform sustenance conveyance into a beneficial business. Ola had propelled two sustenance related activities in 2015 (Ola Cafe and Ola Store) and the shut the same in 2016 to concentrate on its central business.
Sustenance conveyance and other foodtech organizations in India commonly work on razor-slight edges. Foodpanda just as its fundamental adversaries, Zomato and Swiggy, are making misfortunes. Foodpanda, in any case, has lost less on each rupee in income than Zomato and Swiggy in 2017.
Bundl Technologies Pvt. Ltd, which runs Swiggy, timed income of Rs 133 crore in 2016-17, a six-crease increment from Rs 20 crore in the earlier year. Its misfortunes extended to Rs 205 crore in 2016-17 from Rs 137 crore the earlier year as costs increased dramatically. The three-year-old startup is one of the most encouraging sustenance conveyance players in the market right now.
As indicated by a few media reports in November, Japanese telecom and Internet aggregate SoftBank was in discourses to contribute around $200-250 million (Rs 1,288-1,610 crore) in the homegrown foodtech conveyance stage. Reports additionally demonstrated that Chinese e-rear Alibaba likewise was investigating a conceivable interest through Ant Financial, its money related administrations member.
Another media report in November recommended that Flipkart and Tencent were investigating alternatives to co-put $100 million into Swiggy. There were additional reports of a potential Swiggy-Zomato merger.
Swiggy has raised more than $155.5 million until this point. It raised $80 million in a Series E round driven by South African innovation aggregate Naspers. Swiggy is additionally supported by Accel India, SAIF Partners India, Bessemer Venture Partners, Harmony Partners, and Norwest Venture Partners.
Zomato posted an income of Rs 332.3 crore in 2016-17, up 81% from Rs 183.9 crore in 2015-16. It limited its misfortunes to Rs 389 crore from Rs 590.1 crore. Zomato, in any case, isn’t only a Foodtech conveyance organization yet additionally offers café postings, table reservations, and different administrations.
The year likewise observed cloud kitchen administrator FreshMenu break into the best-five club of online foodtech organizations, on account of a noteworthy increment in income for 2015-16. It got a fix on the cloud kitchen model much before other foodtech businesses and has adhered to it.
Future Of Foodtech Services In India
Development in the market is foreseen by expanding discretionary cashflow, developing normal family unit pay, and rising pattern of twofold salary no-kids idea. Supported by developing web entrance from 10% in 2011 to 27% by 2015, expanding cell phone clients from 123 million in 2014 to 167 million by 2015, combined with maturing internet business market and rising youthful working populace, the food tech advertise in India is foreseen to develop at a vigorous pace.
Journey And Future Of Foodtech Industry
Another point of interest for foodtech organizations in India is the developing youth populace, fundamentally in urban districts of the nation. The nation has a huge base of youthful buyers who work in offices and don’t have the time to cook.
In India, the idea of requesting foodtech online is gaining pace due to benefits like conveyance of sustenance at the doorstep of the client, choice of interchange instalment techniques, and consistent declaration of alluring cashback/limits offers.
Growth Of Foodtech Industry in India
Based on activity type, the India foodtech market has been sectioned into two classes: café-based and sustenance aggregators. In 2015, eatery-based (i.e., café-based) ruled the general market and is foreseen to keep up its strength throughout the following five years.
The foodtech aggregator section is relied upon to outpace café-based fragments sometime soon. Foodtech aggregators go about as a middle person between clients and eateries and give the alternative of browsing various cooking styles from different café and sustenance outlets enlisted with them.
“Yum Foods, Jubilant Foodworks, Zoamto, and McDonald’s are the main players in India food tech showcase. These players are foreseen to keep up their strength in the market through 2021, transcendently because of their future extension plans. With expanding private value and investment subsidizing, the food tech organizations are centring towards growing their business in Tier II and III urban communities crosswise over India.
With developing challenge, online sustenance requesting organizations are concentrating on giving quicker conveyance in significant metro urban communities to expand their client base.”, said Mr Karan Chechi, Research Director at TechSci Research, an examination-based worldwide administration counselling firm.
Food technology is a branch of food science that deals with the production, preservation, quality control and research and development of the food products.
What is the food tech business model?
the Indian food-tech industry has evolved immensely and engineered new ways to make profits. Prominent companies viz. Swiggy, Zomato, and Uber Eats have built up new business models, which enable them to serve better, besides merely focusing on the food delivery business.
How technology has affected the food industry?
By using tech to improve processing and packaging, it can improve the shelf life and safety of food. The use of machines in the food industry also ensures quality and affordability. By using machines, it drives down the costs of keeping the food fresh and increases productivity.
What are the food tech startup ideas or What are the tips to build food based startups in India?
Tips to build your food based startups in India or food tech startup ideas:
Focus on the product and keep it simple. Get busy in your kitchen to make small batches and go out to make people trying your product.
Start selling from day one & ask for feedback.
Be obsessed with gathering data.
Review feedback and be ready to go back to the drawing board.
Uber has taken a decision to permanently close it’s Mumbai office as a part of the ride-hailing company’s decision to close around 45 branches of Uber globally. However, employees will work from home until December.
Uber Not Coming Up With A Proper Statement
Uber Mumbai Office shuts down
When people tried to contact the spokesperson of Uber he stated, “Uber continues to provide a high level of service to all its riders in Mumbai”.
Gurugram consists of one branch of Uber which is a big one and Uber is also having its technology centers in cities like Bengaluru and Hyderabad. It also consists of small support offices in many cities in India.
Arch Rival Ola Also Facing the Same Type Of Crisis
Uber’s arch-rival Ola has also fired around 1400 employees in May due to the same pandemic situation. Ride-hailing Competitor Ola CEO Bhavish Aggarwal also stated that companies condition is “very unclear and uncertain.”
Adding to it Aggarwal said, “It is going to take a long time for people to go out and about like before. With more companies preferring to have a large number of employees work from home, air travel limited to essential trips and vacations being put off for better times, the impact of this crisis is definitely going to be long-drawn for us.”
Fired Around 25% of Employees Globally
In May Dara Khosrowshai, CEO Uber wrote to all the Uber employees that they are taking a decision to shut down around 45 Uber branches globally. This step has been taken due to the coronavirus pandemic.
Uber also fired around 3700 employees in may which constituted around 25% of the workforce of the company.
“We have made the incredibly difficult decision to reduce our workforce by around 3,000 people, and to reduce investments in several non-core projects, “said the Uber CEO in May hinting the outcomes.
Till now around 6000 employees of Uber has been fired since the start of the pandemic which is creating a difficult situation for the company.
India Consisting Around 8% Of Total Global Employees
India consists of around 8% of the total global employees of Uber. Also, Uber gave a statement that they will be laying off around 600 employees in the departments such as customer and driver support, business development, legal, finance, policy, and marketing verticals.
“We began 2020 on an accelerated path to total company profitability. Then the coronavirus hit us with once-in-a-generation public health and economic crisis,” Khosrowshahi said in May.
Uber Eats Can Be A Silver Lining
Uber eats can be a silver lining
“If there is one silver lining regarding this crisis, it is that Eats has become an even more important resource for people at home and for restaurants,” he said hoping a better future for Uber Eats. “We no longer need to look far for the next enormous growth opportunity, we are sitting right on top of one.”
Although he has said that the profit they hope to gain from Uber eats would not help in the loss they are facing due to their cabs services. He has also warned that the profit can not be earned overnight.
Uber globally also faced a huge loss of around $2.9 billion in the first quarter of 2020. In 2019 they were having a growth rate of around 14% from $3.1 billion to around $3.54 billion.
“Some battles are better left with honour rather than victory.”
21st January 2020, saw a sweeping acquisition which can deftly be called megalithic. Uber Technologies Inc.’s made the decision to retreat from its food delivery business in India, UberEats. Zomato, the online food delivery and restaurant aggregator platform, announced that it has acquired UberEats’ business in India in an all-stock deal giving 9.99% shareholding. The exit from the business can result in annual savings of nearly $750 million for UberEats, numbers from a regulatory filing last year suggests.
The deal had been in progress since months, with wide conjecture over Uber’s decision to completely exit food delivery business in India as a resort from the piling pressures on the ride-hailing company to curb losses especially after it went public in 2018. The move, said a source, vibes with Uber’s philosophy to either lead the business or to leave the business.
Since PizzaHut initiated the first-ever pizza online order back in 1994, online food delivery has become a billion-dollar business. The Indian food delivery industry has exhibited robust growth.
Revenue in the Online Food Delivery sector amounts to US$9.2 Billion in 2020. The market’s largest share is Restaurant-to-Consumer Delivery with a market volume of US$4.9 Billion in 2020. India’s online food delivery market is projected to touch $12.53 Billion (CAGR 2020-2024) on the back of high growth rate, according to a recent report by DataLabs by Inc42.
Compared to the global growth rate of 9.01%, the online food delivery market in the country is growing at 15%, the report said. 56% of all startups accounts for the food startups who have raised $5.24 billion between 2014 and 2019. Food-tech startups contributed 42% of the total consumer services deal count between 2014 and 2018.
Swiggy so far gained up close to $1.5 Billion of funding, Zomato raised close to $800 Million funding. The cloud kitchen market owns the potential to reach $1.05 Billion by 2023. There have been many reasons which propelled India’s shift to the online delivery system. Impale of internet and smartphones have further provided the environment for growth.
The growing role of Indian women in the workforce has also increased the preference for prepared meals and a large young population expands the customer base.
The pioneers in the Indian online food delivery market are Swiggy, Uber Eats and Zomato, which claims to deliver in 500 cities across the country. Innovative marketing campaigns have also conferred the popularity and set a new trend.
Uber stepped into the Indian food delivery scenario in May, 2017.
India, of course, was a huge global opportunity making Uber even more committed to it than the Chinese market. With a growing population of 450 million – 465 million people by June 2017, Uber took the opportunity to connect people, be it to taxis, cars, food and more.
The platform experienced nearly 50% month-on-month growth, in its first year of operations.
But the competition took all its zeal away, UberEats never managed to attract many restaurants or customers in India, despite the company’s ride-hailing. The business dragged down by 2019 with the average net revenue dropping by 0.4% according to the CFO Nelson Chai.
Going by the company’s statement Uber’s total revenue grew nearly 30% to $3.81 billion, while net loss went to $1.16 billion in the quarter ended September 30.
According to regulatory disclosures , UberEats projected a negative revenue of 762.5 crore for the five months ending December 2019. Uber hoped that the business in India will be profitable by 2026, according to a valuation report prepared by KPMG affiliate BSR but looks like the hopes turned to dust.
Uber projected higher operating losses of 2,197 crore in UberEats for the five month period – August to December 2019.
In the last quarter earnings call, Uber chief executive Dara Khosrowshahi said the food delivery market in India is competitive, and admitted to being the number three player in the space. Yet, there is no clear market leader in the space.
According to The Economic Times, Uber had halved its annual cash allocation to its food-delivery business in India to $90-$120 million.
The stiff competition faced by UberEats, compelled it to take the back foot despite the growth and expansion.The two food delivery giants control about 80% of the food delivery market.
Although Uber seems to be at the weak end here , the deal might prove to be an advantage. The multinational will now be able to cut losses and as part of the deal, acquire stakes in a start-up that was valued at $3.55 billion this month.
Zomato said they will now be able to add 10 million monthly food orders to their existing 40 million, they expect to surmount Swiggy.
According to a report by New York Times, for the first three quarters of 2019, Uber Eats in India amounted for 3% of the gross booking for Eats globally and at least 25% of its adjusted operating losses.
The venture also had a setback when co-founder and former CEO Travis Kalanick resigned from its board of directors in December last year. Kalanick, who helped found Uber in 2009, stepped down from the company’s helm in June 2017 under pressure from investors after a string of setbacks.
On the other side, the deal seals days after Zomato had raised $150 million in funding from existing investor Ant Financial, an Alibaba affiliate, at a $3 billion valuation.
It helps in terms of harmony regarding customers, regarding the restaurant supply chain and also very importantly, UberEats had a stronger network in small towns and in the southern region. This will significantly influence Zomato’s customer reach, it will also get about 70,000 active delivery partners existing on the Uber Eats network.
It will raise the combined market share to 52% as opposed to Swiggy’s 43%. Though there’s a looming fear of Amazon’s breakthrough in the food industry, Zomato can enjoy a new zenith if it plays the right cards.
Although, the competition would now be cut-throat between the two pioneers, there might be some tremors for the customers. The companies will now focus on lower discounts and more profits.
Conclusion
As Zomato quoted in its statement, “The obstacles of your past can become the gateways to new beginnings”, the further developments would be interesting to observe.
Zomato has expanded to 550+ cities over the last year, with a commitment to operating excellence. The competition in this space is going to continue to be intense, and Swiggy might already be working on a foolproof plan.
Anagha S
