BackFaasos plans to sell daily meals in advance
The move comes at a time when investor apathy has prompted a few food technology start-ups to shut shop
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Bengaluru: Faasos Food Services Pvt. Ltd, which started as a fast-food restaurant before building a strong online presence, is planning to start selling daily meals ordered in advance from January.
The move, which comes at a time when investor apathy has prompted a few food technology start-ups to shut shop, is aimed at luring customers to Faasos with breakfast, lunch, snacks and dinner at cheap prices.
Faasos caters to the on-demand food ordering segment, with about 60 items on menu. The new initiative called Faasos Daily, which is being piloted with 300 customers in Gurgaon, will have smaller portions and will be priced at least 30% cheaper than the usual fare.
The company will launch the service in at least three cities, including Gurgaon. It will take a pick among Bengaluru, Pune and Mumbai for the other two locations.
A greater focus on daily meals will help the company coax its existing customers, who transact at least five times a month on Faasos, double their engagement and would translate into a 25% increase in revenue, according to Jaydeep Barman, co-founder and chief executive. “With Faasos Daily, the prices will be lower, hence we will make less money out of these orders. But, they will be delivered in a processed manner as compared with on-demand delivery and we can dispatch four to five meals at one go, which brings the delivery cost down. It is a trade-off between gross margins and cost per delivery," Barman said.
The Sequoia Capital-backed company, which specializes in Indian cuisine, is looking to launch global dishes, such as lasagna and Thai curry, apart from ready-to-cook food.
Founded in 2011 by Barman, a former McKinsey & Co. Inc. executive, and Kallol Banerjee, a former Bosch Ltd employee, Faasos has raised about $28 million from Sequoia Capital Operations LLC and Lightbox Ventures.
The company started out as a quick-service restaurant in 2011 and metamorphosed into an online food business through a network of about 160 distribution centres in 15 cities. An online-focused model, Barman said, has helped the company improve unit economics as it saved money on rent and establishment costs for a consumer facing outlet.
“We still have the customer-facing outlets, but whatever we added in the last few quarters were these dark stores, and this will be the way forward. Out of the 160 distribution centres, about 45 will have the Faasos name," said Barman.
Faasos’s ambitious plans come at a time when investors are clawing back on investments. The food technology sector took a hit with Dazo shutting down and Internet-first kitchen Spoonjoy (Emvito Technologies Pvt. Ltd) being acquired by hyperlocal delivery start-up Grofers (Locodel Solutions Pvt. Ltd). Start-ups such as Tinyowl Technologies Pvt. Ltd and Zomato Media Pvt. Ltd cut jobs.
In the daily meals segment, Faasos will lock horns with Yumist, Biteclub and Eatlo.
Food tech companies have mopped up at least $150 million in 2015, a lion’s share being grabbed by Zomato, Swiggy (Bundl technologies Pvt. Ltd) and Tinyowl, according to Tracxn, a start-up tracker.
Although there are individual businesses catering to a particular meal segment—Brekkie and Eatongo for breakfast, Yumist, Biteclub and Eatlo for lunch and dinner, Bhukkad for snacks and Freshmenu for fine dining—Faasos is the first to target all segments.
Food ordered in advance may work better for corporate tie-ups than the individual consumers, since most of the orders from consumers are impromptu or on-demand.
However, the move may pay rich dividends for a company which has infrastructure, financial muscle and a steady consumer base, an expert said.
“They have the advantage of having the infrastructure. Usually, if you have a huge infrastructure, you have to make sure that you utilize it in the maximum possible ways. If you end up being a specialty player, your kitchen is not fully utilized unless it is a heavily specialized kitchen like Dominos," said Rutvik Doshi, director at Inventus Capital Partners, a venture capital firm. “Faasos have the capital and the reach, so why not cater to different needs?"
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