The E-commerce conundrum in Food Delivery

I was present at the India Retail Forum in 2012 at Mumbai’s Renaissance Hotel. The annual event was a carnival of sorts for Retailers across the country. Images Retail, the magazine publisher’s flagship event attracted thousands of retail enthusiasts every year and the year 2012 was a landmark one. This was when there was a cooling down in the Indian Retail story which scaled peak heights at the time. An estimated 350+ Malls were operational all over India and another 300 were in the making. India was touted to have 1,000 operational Malls by the year 2020 (which didn’t happen, obviously). Each mall would have atleast 250+ vanilla stores, 5-6 Anchor tenants and High Street rents had doubled in less than a decade. 

During an interactive session, Mr. Kishore Biyani, Founder and CEO of the Future Group was asked what went wrong with the group – this was the period the Group saw one of its toughest times in their history ever since they started operations in 1987 with their first ever company Manz Wear Pvt. Ltd. which sold suiting and shirting in Calcutta by the name and style of “Pantaloons” which was a combo-word of Pants and Patloons. Kishore Ji quipped that “they wanted to be everything to everyone” and hence a few things collapsed while a few stood tall and successful. The group’s e-commerce outing FutureBazaar.com was a colossal failure and couldn’t compete with a start-up named “Flipkart” (in 2012-13). So ironic looking back now. Their attempts to go “phygital” just didn’t work. Grocery e-commerce was unheard off and hyperlocal as a strategy didn’t even exist or was scripted. 

From running neighbourhood grocery shops measuring 1,000 sft. to running the Central chain of Malls across India, a hypermarket which redefined grocery and household products shopping in India, food courts and home improvement stores, joint-ventures with F&B chains and even a chain of kiosks by the name “ChaMosa” , which as the name suggests sold Chai, Samosas and may things more, the group was in to every format of retail which was in the book and which wasn’t. But the smart and suave entrepreneur that he is, Kishore ji exited his first love – “Pantaloons” store chain for Rs. 1,600 Crores to Aditya Birla Retail and pared an equal amount of debt driving the company back to success, profits and growth, eventually. 

Same is the case right now with many restaurants who wish to manage door delivery of food to customers. Off late, there has been a growing disquiet between the F&B houses – chains as well as neighbourhood standalone ones with the Food Tech companies such as Zomato, Swiggy among others. And the main bone of contention is that the tech platforms are overcharging the businesses – ranging from 20-45% towards discovery, discounts and delivery of food items to customers. What the restaurants believe is that these companies are mere delivery platforms. What the Food Tech companies are – are much beyond that. 

In India, eating out is “entertainment”. People dress up, wear make-up, connect with family and friends to step out for a meal – whether it is to celebrate a birthday or anniversary, salary weekend or just a casual outing. The premium that bars, pubs and restaurants have been commanding for “dining in” in India is not just for the great food, but also for providing an enjoyable and safe setting for individuals and cohorts of people to spend their time. So, more the premium a location is, the more expensive is the food (a cup of Coffee or Dal-Roti at a local restaurant vs. a  premium restaurant in a Mall, or a Star hotel & so on!). 

Assuming that patrons would keep paying more for the “setting” coupled with decent food, many restaurants across India have been charging a premium which has only been on the rise over the years. Even in a fiercely competitive category like pizzas – where Dominos specialises in take-aways vs. PH offering world-class dining options, prices of pizzas have remained more or less the same though Dominos saves immensely serving pizzas even to in-house guests in corrugated boxes with plastic chairs and tables. The likes of McD or BK have not been able to churn out profits like elsewhere in the world due to this continued focus on the restaurant format, the ambience and expected service standards. For Ex., India is probably the only country where we consumers expect someone to clear the paper packaging on which Burgers and Colas are served. So, the “cost of housekeeping” increases the business cost.

Now that consumers have been used to door delivery of F&B, mostly during the last 12 months and even before the pandemic began, the footfalls at restaurants for dining has dwindled. Sadly, most restaurant chains have not kept up with times and have followed their traditional ways of operating the business with the same kind of dine-in behaviour which today, unfortunately is becoming an expensive affair. With a total lockdown announced across some of the major towns in the country, restaurants are unable to operate the dining facility though the Government has allowed multiple delivery options. 

Now, what the Food-Tech companies have done, obviously is to charge consumers for deliveries and also charge a hefty commission from restaurants to catch-up on their hereditary losses – though am not sure if this model is sustainable. Even when the “Unlock” began around Aug. ‘20, many restaurants failed to convert their business model with a deeper focus on takeaways and deliveries, instead waited with bated breath for customers to keep pouring in. Until the second wave hit us and which has hit us very, very hard that there is no looking back now and consumers becoming weary to venture out, even after the so-called second wave slows down sometime in Jun. ‘21.

The ongoing tussle between the Restaurants and Food-Tech companies (I refuse to call them delivery partners because they are not just that) has reached a tipping point now that many restaurants are pulling off some of these platforms and are instead using pure-play delivery partners such as Dunzo, Shadowfax, Delhivery among others and / or are merely using their staff and waiters to deliver the food items. To opine the least, this is a disaster in the making.  The waiters and staff are not the “delivery person” material as their skill sets are quite different. But now, due to an imminent loss of livelihood, I believe they would double up their roles until they find their fitment elsewhere. 

To believe that each one is cut-out for the other’s business model is a myth. We saw how many so-called “Cloud kitchens” were created by the Food-Tech platforms which have not grown beyond a point. I am no one to judge but I guess, it’s best for the service providers to simply focus on their core skills so we consumers can keep at it without breaking this chain of discovery, ordering and reordering. Whether the players are listening to, is anyone’s guess.

Travel Retail at Regional Airports

I am seated at Madurai Airport and my Spicejet to Chennai is delayed by 55 mins. It’s a swanking new terminal built a few years ago when the local heavyweight MK Alagiri, (eldest son of Late M. Karunanidhi, the former Chief Minister of Tamil Nadu) was an MP in the UPA Cabinet. Being his hometown, he pushed for this infrastructure development a decade back when the DMK was a key ally of the UPA led Congress Government between 2004 - 14. That was when Bangalore & Hyderabad came up with new greenfield airports while Mumbai and Delhi had a massive makeover – all four now being run by private partners. While the UPA Government selectively upgraded regional airports, the present Modi Government led by BJP along with NDA allies has given a further push to unlock aviation opportunities at over 40 unused airports under the ambitions UDAN – Udega Desh ka Aam Nagrik (Common man will fly). 

The Prime Minister inaugurated the Gangtok Airport recently, unveiling a host of opportunities for tourism to the Eastern hill state of Sikkim (although excessive tourism is a bane for ecology, but I will save this for another article) along with numerous airports across India taking the tally of operational airports in India to 100. A further 50 airports are yet to take off even as many airlines have wound up operations at some of these airports due to various reasons – poor patronage by passengers cited to be the most favoured response even as I reckon that it is due to careless Business management by these operators who took up routes which they knew were unviable and continued to bleed operationally without building parallel commercial opportunities other than not marketing the cost of time to the locals to fly, rather than take up a rail or bus journey. Truejet has ceased operations to Salem while Air Deccan (yes, they were resurrected by Captain Gopinath) ceased operations in the East. And many such examples.  

I had to rush to Madurai on an urgent personal work and took a day trip by Air. After my work was over, I reached the Airport four hours in advance since I had a 2-hour Video Conference with a Client. I was dreading the thought of being seated in those most uncomfortable standard airport-seating. But to my own surprise, there was an oasis – a Lounge before Security hold area. It was prohibitively expensive for Rs. 900 per pax with unlimited time one can spend plus some food and snacks on the house. They wouldn’t accept Mastercard or Visa’s Complementary Lounge options either. But my call was more important, so I chose to pay and use. Didn’t realise how I spent the three-hour period at this well maintained Lounge with polite and courteous staff. Thankfully, I was the sole occupant all along so had the entire 20 seater Lounge for myself.

Took my boarding pass from the Kiosk and walked around and upstairs to be greeted by unexcited staff who were clueless why their “shops” existed what with not a single passenger glancing inside. I noticed local delicacies – Halwa and Milk Khova from neighbouring Tirunelveli and Srivilliputhur respectively. Once inside the waiting area, there were the usual food Kiosks savouring watery coffee, dip tea and oily snacks with sugary bakery stuff. Absolute gold mine of an opportunity to cater to the 3,000 plus passengers who fly off daily from the domestic terminals. Being sensitive Tier 2 cities like Madurai, it would make sense to engage passengers with affordable F&B and Retail options. Perhaps a Levis or Nike may not work, but Indian brands with a regional appeal could do well. 

Tourism development in India is usually seen as an activity to be undertaken by a particular Department of the Government. Worldwide, I have seen a cohesive collaboration between the Public and Governmental agencies to promote tourism – from Singapore to Switzerland, Bangkok to Berlin. It’s only in India that we compartmentalise the potential opportunities. There wasn’t a single poster or a visual that speaks about Enchanting Tamil Nadu which is the spiritual and cultural capital of India. At the Departure hold, passengers and visitors are already travelling back, so instead of promoting the city, why not promote the State? We would sell more Coffee, Tea & much more at neighbouring airports too!

Highway Dining & Holiday rush!

I was among the lakhs of people who left our homes last Saturday as the long Christmas weekend and Christmas holidays began. Reports from all over the country in major cities mentioned long traffic snarls at the Toll booths located just outside the city. At Chengelpet Toll booth which is about 70 kms from where I live in Chennai, the queue of vehicles was for almost a kilometer with over 300 vehicles standing to pass through. We managed to cross in about 20 mins but that was just the start. For the next 100 kms all the way up to Villupuram, I was driving at an average speed of 70 kmph. Perhaps the slowest I have ever driven on this highway that I traverse once a month, at least.

Almost every notable restaurant on the way was filled to the brim with vehicles and people who were piling up like there was some major catastrophe coming up in Chennai. Almost all of us, like really, thought leaving before 6 am would help. Alas. Just that too many of us thought the same thing and ended up crowding toll booths, roads and restaurants. When I finally managed to stop at 9am for breakfast, there were about 70 vehicles and at least 200 people in the restaurant where we ended up. We were informed 30 mins waiting time to get a table. So, I preferred to walk up to the adjacent restaurant which is self-service, hoping things would be faster. When I finished breakfast with family, it took us almost the same time as it would have at the other restaurant. Murphy’s Law. We left after an hour plus break and drove for 3 hours and ended up at India’s top Restaurant Chain for South Indian food and glee, things were not better. This place was even more crowded than we had anticipated. Table service again and it took almost an hour plus for us to finish the grub and leave.

I asked Murugan (name changed), a waiter at the restaurant whether they expected such large turnouts and he replied in the negative. Yelling customers were a norm at most of these places who perhaps didn’t realise that some of the staff haven’t even had their breakfast, forget their lunch. As a Retail guy for 20 years, I truly empathized for the staff but I could do nothing more than wait patiently. Kamala (name changed) was frying fresh Vadas at the restaurant where we had breakfast in the morning and she said she’s been at it since 5.30am. Felt bad for the thankless staff members who ensured we, the customers got out food on time, fresh and tasty.

What could have been done differently was a bit of planning. Here’s my short list;

• ·      Make a simpler, lighter menu. Keep just the basics available so customers don’t have to think too hard to order, and at the same time, the kitchen staff are quick to prepare the stuff ready. Items like Idli and Vada, French Fies, Samosas and so on must be prepared almost continuously so it acts as a filler when patrons order
• ·      Add more temporary tables and chairs, plastic ones or metal or whatever. Most customers wouldn’t really care the quality of your furniture when their main motive is to rush out of the restaurants
• ·      At one restaurant where they profess self-service, I saw that the staff were adding accompaniments like chutney and sambhar to each plate along with the main dish. I suggest this could just be done away with. Focus on the main dish and leave the add-ons to the guests. Keep the chutney and sambhar on the tables and let the customers take as much as they want. Yes, there would be a bit of wastage but we all save time together. Also, avoid four varieties of chutneys, no one just cares, just one would do. Ensure you give less choice to guests but what just matters.
• ·      Hire local boys and girls temporarily to clean the tables & toilets faster. Use good quality cleaning liquids so the tables don’t stink for the next guest. Toilets must be spic and span. Efficiency and speed are the key.
• ·      Restaurants with larger spaces and staff can perhaps have someone to usher or a sort of token system or tables assigned against request. This would ensure guests don’t pile up at each table and keep staring at those dining, instead wait patiently till their table is ready.
• ·      Kids – the biggest challenge to be addressed. Keep them engaged. Have a magician or a story teller or folk art. Nothing free to be offered but something to keep them engaged. Have some crayons and paint books at bay, so the kids can keep coloring and be a bit more engaged. Tried and tested is a large Tv screen with cartoon channels. Be sure the kids would be glued in. But ensure there is no remote around, so there is no flipping of channels and fighting amongst young ones.
• ·      Men – keep them engaged as well. Set-up boys who can wash the windscreens and bumpers. A good driver always likes his Car clean. Well, almost. A tie-up with local shops to sell additives, car cleaning fluids etc. will ensure the boys and men spend more time there than waiting impatiently at the tables.
• ·      Ensure your staff are taken care well. Meet each one of them personally and ask if they had breakfast, coffee or tea, lunch, snacks and dinner. And their medicines, if any for some may be diabetic or have other ailments. Show empathy, they need it now more than ever. They are, after all your Brand Ambassadors. Shower them love and they will pass it on to the Guests. Ignore them and that’s what the customers will get as well.
• ·      At the end of the weekend, if your cash registers ring more than usual, send them home with small gestures such as gift packs of sweets. Make them feel proud that your guys achieved ever-highest sales during this weekend and motivate them. Remember, most people don’t work just for money, they need recognition.

These are some very simple hacks but can go a long way in Guest satisfaction. Holidays are always about memories and we as Retailers, especially the F&B guys make a dent on the memories that guests carry. If there is a delay more than usual time, people fret. But when you throw in something extra, customers mostly remember only that “extra” whether it is “extra happiness” or “extra irritation”. With increasing mobility these days, people are travelling more than ever and they will continue to remember what you offered.

Once again during the upcoming New Year weekend, the restaurants and highways are going to get full. I really hope some changes are undertaken by Restaurant owners small and big to ensure better handling of customers and of course, their own staff. Happy New Year!