Though the website has already been launched, Petoo draws a lion's share of about 100 orders it receives daily from Foodpanda, JustEat, TinyOwl and Swiggy
Bengaluru: Barely a couple of months after Rocket Internet-backed Foodpanda announced the acquisition of rival JustEat’s India business, Ritesh Dwivedy, chief executive of JustEat India, is back in the fray with an online quick-service restaurant Petoo.
Dwivedy started the venture in March with funds pooled in from his personal resources and the two other co-founders, former head of operations at JustEat India Abhishek Mandal and digital marketer Kumar Setu.
Operational in six locations in Bengaluru, Dwivedy is looking to raise $5-10 million in the next two months to ramp up the business. To begin with, Petoo will expand to 11 more locations by June and cover the entire city by the end of the year before expanding to other places.
“A lot depends on the synergies between us and the investors," said Dwivedy. “Expansion to other cities will happen entirely based on scale. If team bandwidth is available, then it will be possible to replicate the same model elsewhere."
Though the website has already been launched, Petoo draws a lion’s share of about 100 orders it receives daily from restaurant aggregators such as Foodpanda, JustEat, TinyOwl and Swiggy. A mobile app will be launched in the two months, even as the team will be doubled from 35 members to 100. The company operates from one central kitchen in Bengaluru at present.
“We want to cover all the key localities in the city first before embarking on an expansive marketing drive. That is when the traffic on our site and app will increase," Dwivedy said.
To ensure high standards for food quality, Petoo will refrain from cluttering its menu with a large number of items, besides keeping a constant menu unlike its cross-town rival SpoonJoy.
Domestic food technology start-ups have received tremendous investor interest in the last three years. According to information from Tracxn, a start-up tracker, about $195 million has been raised by the food technology start-ups since 2013, and the lion’s share, $168 million, being accounted for by online restaurant search provider Zomato alone. The company had recently entered the food delivery segment to keep pace with competition from Foodpanda and Sequoia Capital and Nexus Venture Partner-backed TinyOwl, which has so far raised $20 million.
Despite this, no clear winner has emerged and neither is there a proven business model. The unit economics, or the ability of the food tech companies to make money per order, is unclear.
While the biggest pie has been grabbed by listing and food delivery companies, online kitchens or Internet-first restaurants have also seen significant traction. Businesses such as HelloCurry, Frsh, SpoonJoy and Yumist have together raised $4 million in the last two years.
Internet-first restaurants operate at a better margin, about 30-40%, against food listing and delivery businesses, which typically charge a restaurant around 10-20% for every order, industry experts say.
“Internet-first restaurants are a newer way of entering the segment and the opportunity is huge as the bigger trend is, people are cooking less," said Abhishek Goyal, founder of Tracxn. “They are just like the offline food chains and their margins are even better as buying raw material in bulk and operating from a central kitchen drives more efficiency."