Mumbai: Mumbai-based food ordering company TinyOwl Technology Pvt. Ltd has laid off over 100 employees as the company undergoes a restructuring exercise, according to two persons close to the development.

Tanuj Khandelwal, co-founder and the human resources head of the company, confirmed that layoffs had been made, but refused to specify the number.

“The layoff is part of the restructuring strategy. We are a growing company and, as the business grows, there are some areas where we need to curtail operational inefficiencies, hence it is important," Khandelwal said in a phone interview.

TinyOwl is at an advanced stage of raising $50 million, according to one of the two persons cited above who is directly involved in the fund-raising process.

The company, founded in 2014 by Harshvardhan Mandad, Gaurav Choudhary, Saurabh Goyal, Shikhar Paliwal and Tanuj Khandelwal, had some 350-400 people in 2015.

Khandelwal said the company is also in the process of hiring 100-150 people in technology, design, customer experience and home-cooked food division over the next two months.

The home-cooked food space is a focus area for the company. It launched this service in Mumbai and Bengaluru in February, and operates it under a separate mobile app called TinyOwl Homemade.

Under this segment, the company works with 40-50 chefs who are registered to be licensed food providers. The company helps curate menus and pricing for these chefs where food is priced anywhere between 80 and 250. The service has been launched only in Mumbai and Bengaluru.

“TinyOwl Homemade is a part of that vision. Our focus is to work towards both the sections simultaneously and expand it further as the combination of the two models caters to every food requirement of the consumer," Mandand said in an email response to Mint queries.

The online food ordering business in India is estimated to be worth around 5,000-6,000 crore and growing at 20-30% month-on-month, according to a report by India Brand Equity Foundation.

The share of online food ordering would be in single digits of the overall food ordering business. Other service providers in the space have been getting a lot of investor attention this year.

On Wednesday, the chairman emeritus of Tata Sons Ltd, Ratan Tata, made a personal investment in Holachef, backed by Kalaari Capital. Yumist has raised $1 million from Orios Ventures; Biteclub has raised a seed round of $500,00 from Powai Lake Ventures. Other start-ups in this sector include Fresh Menu, iTiffin, Eatlo and InnerChef.

“To run a food ordering business and a marketplace for home cooked food are two separate businesses. They require two different teams and separate set of operations and resources. This can be very difficult for a start-up," says Saurabh Saxena, co-founder at Holachef.

The margins in a food ordering business are as low as 2-4%, he said. “It makes sense for food ordering companies to either pivot or add the category for additional revenue streams. The margins in our business are 20-25%," added Saxena.

TinyOwl expects daily orders to grow to 100,000 by next March. According to company estimates, the entire food ordering aggregating category is not more that more than 5% of the total quick-service restaurant (QSR) and home food delivery market.

“Transactions is what matters... most classified companies that begin with listings eventually move to a model that is led by transactions. Zomato and Practo are examples of this shift. For a food delivery company to expand to an aggregation model (that controls menu and pricing) not only gives access to transactions, but a working capital advantage," says Anil Joshi, managing partner with Unicorn Venture Partners.

Start-ups in the food delivery business have pivoted their business models; sometimes fund-raising depends on this. Faasos, which started out as a fast food chain, shifted to a delivery-only model.

“We were working on the technology looking to be a complete food tech company since November last year," said Jaydeep Barman, co-founder with the company.

The company raised $20 million in February. Another example of a change in model is that of Box8 that started off as Mexican food chain, shifted to an Indian food outlet and now is a food-delivery company (it prepares its own food and delivers). It raised 21 crore in May this year, after it said it will be only a delivery company.

Joshi added that in the short run, food ordering and food aggregation models have to be set up separately; funding will play an important role in the pace of scaling up.

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