Ordering from aggregators is a bit of a gamble, as customers cannot be sure about the quality of food being delivered
Impresario Handmade Restaurants, which owns café and restaurant chains Social, Smoke House Deli and Mocha, among others, has built its own delivery platform to reduce the reliance on food aggregators. Riyaaz Amlani talks to Devika Singh about the challenges in the food delivery model, expanding into small towns, and how the company is getting back on track.
How likely are consumers to choose a restaurant’s delivery platform over a food aggregator app that hosts numerous options?
We have seen the rise of direct-to-consumer businesses in recent months. Consumers are moving away from offer-led discovery models and want to order from a brand they can trust. We have launched a tech-enabled platform to build a direct relationship with the customer. Ordering from aggregators is a bit of a gamble, as customers cannot be sure about the quality of food being delivered. Hence, to have a good meal, consumers return to their old favourites. Our strategy is to cash in on this trust. Customers, too, get better deals and secure end-to-end delivery when ordering directly from a restaurant.
Also, we understand that customers do not need another app on their phone; therefore, we have created a web link that can be used to order from Google, WhatsApp and our social media pages. We want to be able to serve customers across platforms. In pre-Covid times, we would get about 10% of our revenue from deliveries; it has now gone up to 25-30%.
The average order value (AOV) on Swiggy and Zomato is below Rs 500. As a premium brand, how difficult has it been to scale up online deliveries?
The challenge with aggregator platforms is that there is a constant push to drive transactions instead of AOVs. But in this model, nobody ends up making money. Our pricing is uniform across platforms, and the AOV for our brand has always been above Rs 500 on food aggregator platforms. When customers are ordering directly from our platforms, the order value goes up to Rs 800-900. This shows people are willing to pay for quality.
A restaurant’s ambience is integral to the dining experience. How do you make up for the lack of it with home deliveries?
Of course, the vibe and buzz of a restaurant cannot be replicated, but the customer can be reminded about that experience with the packaging of the food and cutlery. At times, we recommend a playlist to consumers to listen to while they are having the food. But, trust and quality of the food matter the most to consumers at the moment.
How lucrative is the market for restaurants like yours in the small towns?
The aspirations of people in small towns have caught up with those in the metros due to social media exposure. In recent months, we have seen our cafés in small towns recover faster than in metros, and we believe the growth going ahead will come from these places. Hence, we will focus on small towns to expand our brands Social — which contributes about 70% of our revenue — and Smoke House Deli, which contributes 15%.
We recently launched seven cloud kitchen brands through which we will be tapping small towns too. However, we are conscious that while the market has opportunity, we cannot open too many outlets. Hence, we will create a statement outlet by borrowing design inspiration from the state’s culture. In our upcoming café in Indore, for instance, we have incorporated tribe art and bamboo craftwork.
The restaurant business has taken a severe hit due to the pandemic. What are your projections for FY21?
We were hoping to achieve a topline of Rs 500 crore in FY21, but now everything is out of order. The most important thing for us at the moment is that our outlets survive the storm. Hence, we have restructured our rentals with most of our landlords, and walked out where we could not reach an understanding. We are also driving activation through initiatives like Work-from-Social, and using this opportunity to make design changes. For the initial three-four months, we stood at 10-15% of our like-for-like sales last year, but it has now improved to 60%. Backed by these initiatives and as life normalises, we are hoping to reach our target of Rs 500 crore by FY22.
Read Also: How luxury brands can cast their nets wider