Inter-city logistics: Food for thought | The Financial Express

Inter-city logistics: Food for thought

As Zomato makes its debut in inter-city food delivery, players already in that space share insights and learnings

Inter-city logistics: Food for thought
Well before Zomato’s announcement, platforms such as Tastes2Plate and JustMyRoots had already set up their respective intercity food delivery businesses.

Earlier this month, online food delivery platform Zomato announced its inter-city food delivery service called ‘Intercity Legends’, which allows consumers to order and enjoy delicacies from various cities around the country. The platform will initially run this service with a pilot in the Delhi NCR region before expanding to other locations. The orders will be packed by the restaurant and then refrigerated before being transported via air or road to reach customers the next day, according to the company, though some orders might take longer than 24 hours for delivery.

The other players

Well before Zomato’s announcement, platforms such as Tastes2Plate and JustMyRoots had already set up their respective intercity food delivery businesses. 

Gyan Srivastava, CEO, Tastes2Plate, says the platform currently picks up food from locations best known for their culinary heritage, such as Lucknow, Kolkata, Kochi, Goa and Jaipur, and delivers across 12 locations. The brand, which was launched in 2019, delivers orders placed before the cut-off time of 6pm in less than 24 hours. Orders placed after 6pm are usually delivered later, though within 48 hours. “Our packaging is our USP. The cold chain mechanism ensures the food maintains a certain temperature and keeps the moisture content intact. So we are able to transport regional delicacies across the country, while ensuring quality and freshness,” says Srivastava.

Shipping and packaging costs are charged to the customer, which are around `120 and `27 per kg, respectively. Tastes2Plate picks up the food from the restaurant at a discounted rate. The customer is charged the original price, and the discounted amount becomes the platform’s margin.

A Zomato spokesperson explains that the company will pack the food with a “state-of-the-art mobile refrigeration technology without the need to freeze it or add any kind of preservatives.” However, it avoids freezing since that impacts the taste and flavours of the food. Zomato also stays away from delivering foods like pizza across cities, since these are dependent on texture.

Challenge of scale

While certain food categories like bakery and confectionery may lend themselves well to the inter-city delivery model, Karan Taurani, senior vice-president, Elara Capital, points out that it may not work for a large number of popular food categories such as burgers, pizzas and momos. Given the logistical challenges and the cost of packaging and cooling, this business may be difficult to scale up or sustain in the long run, he says. “Consumers tend to place food orders around an hour before meals, and seldom order food 24 or 48 hours in advance. Further, the consumer has other options, considering there are plenty of courier companies across the country,” he notes.

Samiran Sengupta, CEO and co-founder of JustMyRoots, which launched just under five years ago, begs to differ. He asserts that intercity food delivery presents a big, untapped opportunity, and that Zomato’s entry into this space, in fact, vindicates his business vision. “On an average, we ship around 50,000 orders a month and some months, we ship as many as 70,000 packages. The positive thing for us is the average order value, which is `1,800. Our base may be small but our organisation does business close to $2 million a month,” he adds.

JustMyRoots has 600 restaurants on its platform, and also offers services like delivery of home cooked food and international food delivery, and the core proposition is to offer consumers a taste of home. No doubt it spent close to 18 months to fine-tune its packaging and service solutions, but Sengupta is now looking at aggressively expanding JustMyRoots’ delivery footprint from 30 cities to 50 this fiscal.

Zomato, in its statement, said that with over 100 domestic airports in the country, any city with an airport is a potential market. While the company will begin intercity delivery with the top metros, it will gradually expand its operations based on customer feedback. 

Meanwhile, Tastes2Plate’s Srivastava adds his platform is expected to reach the break-even point in a couple of months, and plans to expand to more cities are very much on the cards. 

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