The joke in food delivery platform Zomato is that teams sometimes come to know of new plans and strategies after Zomato founder Deepinder Goyal announces them on social media.
While his latest project – food delivery in 10 minutes – didn’t come out of the blue, stakeholders were still said to have been taken aback when he went ahead and announced it before tying up the loose ends.
“The discussions were on for the last two months at least, but the feedback that Zomato got from cloud kitchen owners was for a 20-minute delivery,” a person familiar with the development said. “The 10-minute announcement took many by surprise. They (Zomato) are at least 30-40 days away from execution.”
The person said the initial discussions on speedy food delivery centred on using bain-marie counters with a range of combo meals close to delivery locations. A bain-marie is a vessel of hot water in which a container of food is placed for slow cooking and keeping warm over a period of time.
“You will need seven minutes of preparation time and a delivery radius of 1 km,” the person said, asking not to be identified because the discussions are confidential. “Think hot rice bowls that can be quickly assembled and lunch combos. This will need 20 minutes to deliver overall. Ten minutes is possible for bakery items and frozen foods, the type that you get at airport counters or in stores abroad. But delivering egg puffs and banana cakes in 10 minutes isn’t food tech, it’s something you can Dunzo from your local bakery.”
The plan that Goyal tweeted to the world was very different.Hello twitter, good morning :)
I just want to tell you more about how 10-minute delivery works, and how it is as safe for our delivery partners as 30-minute delivery.
This time, please take 2 minutes to read through this (before the outrage) :D
(1/2) https://t.co/PKKn97NhTf pic.twitter.com/NAfw20K1rF
— Deepinder Goyal (@deepigoyal) March 22, 2022
Goyal hopes to compress the 30-minute delivery schedule by shrinking kitchen preparation time to 2-4 minutes using limited, fast-selling menus and predictable demand to deliver food within 1-2 km, which will take 3-6 minutes to cover. Goyal believes it is possible to deliver biryani, momos, bread omelette, poha, coffee, tea, and even instant noodles in 10 minutes.
Zomato’s plan to disrupt online food delivery and steal a march over rivals such as Swiggy has worried restaurateurs, angered gig worker unions and outraged social media users, who believe the company is putting the lives of delivery partners at risk.
“10 min mein Fresh bana kar deliver ho jayega? Why put risk to the life of delivery boy? Pro 30 min delivery itself was ok, 20 min bacha kar jyadatar log Whatsapp, FB/Twitter par hi to spend karenge? (Will you be able to make fresh food and deliver in 10 minutes? 30 mins was fine, the 20 minutes that people save will be spent on social media),” a Twitter user wrote after the Zomato founder unveiled the plan to deliver food in 10 minutes on March 21.
Another user wrote: “To cover 5km stretch, it takes more than 50mins and I live in NCR. The roads all dug up for upcoming express way. Neither do I need this quick delivery nor prefer to order every day.”
Goyal’s Twitter timeline has been flooded with messages questioning the strategy and intent behind Zomato Instant, the recently listed company’s new offering through which it wants to deliver food in 10 minutes. A pilot is planned with four finishing stations in Gurugram next month.Moneycontrol spoke to cloud kitchen owners, supply chain vendors and others tracking the market to assess if Zomato’s plan is feasible.
“Why even announce this first, without starting the pilot?” a cloud kitchen owner asked, raising doubts of whether the announcement was a gimmick and a way to justify its recent investment and planned acquisition of Blinkit, a startup that promises grocery delivery in 10 minutes.
The move comes when 10-minute grocery delivery has seen heightened activity. Blinkit rebranded itself from Grofers in December but has struggled, prompting its backer Zomato to extend a $150 million credit line, with plans for a merger.Quality worry
Executives insist that Blinkit’s backend or 10-minute delivery infrastructure will not be used for Zomato Instant, which will be implemented exclusively by Zomato.
Restaurant owners are already worried about the quality of food that can be prepared and delivered in 10 minutes.
“I just hope that the restaurants don’t have to pay the price,” said Riyaaz Amlani, a restaurateur and trustee of the National Restaurant Association of India. “Good food takes time to be prepared. With 10 minutes, they will have just five minutes for packaging and five minutes of delivery time… there could be some degree of automation with cooking food but at the end of the day, you can’t get the entire process automated. Cooking will still be required to be done to some degree… nobody can cook and serve fresh food in 10 minutes.”
While quality is likely to dip, these businesses are choosing convenience over freshness, Amlani said.
Frozen foodGoyal, in his announcement, mentioned ‘finishing stations’ a few times. The plan is to set up a dark store-like structure, which will contain instant food items from where delivery will start for Zomato Instant, said a person privy to the development.
“Most brands have centralised kitchens and other outlets are used as a delivery hub, where last-minute finishing is done,” said an analyst tracking this market. While there is appetite for 10-minute food delivery, execution is very tough and will require a lot of learnings to make it feasible, the analyst said.
“Scalability of this is a question,” the analyst added.
Whether it is cloud kitchens or quick service restaurants, 80-90 dishes are based on frozen food, which makes delivery easier. Wraps, momos, pizzas and burger patties are among the popular frozen food items.
“In Indian cuisine, the latest is biryani. Frozen biryani has seen strong growth in the past few months,” said a frozen food manufacturer who works with top cloud kitchens.
After the pandemic, growth in the frozen food business has been strong.
"Pre-pandemic we could talk only to the organised cloud kitchens who were starting from scratch. But, now we have grown 16-times (in terms of order volume) in the last six months,” said the founder of a frozen food brand.
Automated preparation
Zomato’s business-to-business venture has been focusing strongly on frozen food supplies to partner restaurants and has also helped them with processes and other infrastructure. Recently, Zomato invested $5 million in food robotics company Mukunda Foods, which designs and manufactures smart robotic equipment to automate food preparation for restaurants.
“The food industry is moving towards standardisation. Even if delivery of such items in 10 minutes can be done, the burden will be on the smaller restaurants and kitchens, which do not have the capital to invest in automation or other machinery,” said a Bengaluru-based cloud kitchen owner.
Depending on the cuisine and the volume of orders, restaurants or QSRs generally invest Rs 30,000-Rs 3 lakh, says a founder from the robotics space.
“The 10-minute delivery will be for specific nearby locations, applicable to food items that are popular and standardised,” said Goyal.
“Based on predictive analytics, these businesses know exactly the type of cuisines and volumes which are likely to be ordered,” said a person who has worked at a food delivery platform. The person added that this play is a mix of semi-processed or semi-assembled food, analytics and supply chain. The average time of delivery for both Swiggy and Zomato is currently 20-25 minutes.
Not the first timeTo be sure, this is not the first time that food delivery platforms are trying to crunch delivery times. In 2015, Swiggy tied up with cloud kitchen operators such as Eatongo and Brekkie to deliver food in 15 minutes. But it faced challenges in unit economics and in serving hot and fresh food and decided not to scale up the venture without all the answers.
Around the same time, Ola Cafe, the food delivery business of Ola, experimented with 10-minute delivery within a specified area.
“They had 2-3 partner restaurants, dedicated drivers, fixed time slots and limited selection. For example, if I was in the Embassy Golf Links area, I would get chicken and rice for lunch in 10 minutes,” a former employee said.
But the offering didn’t scale up and Ola Cafe shut down in a year.
“Ola was also in a bruising competition with Uber and saw this as a non-core business, which it exited,” the person said.
While many believe there is a value proposition in delivering food faster, execution and cost remain key.
“The delivery and supply ecosystem is much bigger now, so that is an advantage. But there is also the risk of wastage and losing money,” an industry observer said.Inside Zomato’s 10-minute delivery gamble: A value proposition and risk - Moneycontrol
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