The Bite Club :Lost in translation !

Tired of eating out,Same old menus of the restaurant and same old greasy unhygienic stuff? Nostalgic about home food? Need a change? Ánd will you pay a premium price for it? How about trying out what each home chef has to offer, the belief that there are signature dishes and recipes which you just can’t get anywhere , The authentic taste, the real deal are part of the household for many and some would want to serve it to other people. Bite Club for many and some would want to serve it to other people. Bite Club had everyone drooling over their home chef’s rotating menu. Be it the understated elegance of Chef Gul’s Biryani or Simple Roti Daal and Bhindi from Mrs. Garg   , The Delightful mini Idlis or was it the exquisite Iranian  Cuisine or the Korean Platter dished out for you. In the circles it became a norm to check out every day to see “Aaj bite club main kya hai “  with favorites being sold out within minutes , Imagine lunch menu  from top chefs being sold out at 10 AM? Everyone regardless of the age group who tried BiteClub enjoyed it and there was instant stickiness to the whole thing  , people would reorder ,referrals and word of mouth being their most important assets.

The Juicy Burger : Photo Credit Divya Saluja

So what’s wrong you may Ask? Why are they struggling Now? How have they changed over last 2 years?

Now consider the challenges facing them ,since there is a difference between home and commercial area and its location logistics is a challenge so Bite club sorted it out with single Pickup from the house , stored it and delivered orders in slots ( 12PM -1PM Slot), they never claimed to be an on-demand food delivery people.  Building supply of the food is a challenge as you have to go hunting for these chefs in forums, word of mouth and they should be willing to take up the task. Bite Club would equip them with Branded Packaging Material. So you order and your food gets delivered in the time slot you wanted it to be. So Sorted Right ? Wrong? This lead to new Challenges.

The flaws are the same which I discussed as key success factors in my last blog.

(1)    Food is a live product with a half-life to be served at the right time, right temperature and right physical form. Since this was home food half life isn’t 2 hours but maybe 3-4 hours. But NOBODY LIKES TO PAY A PREMIUM PRICE AND WANTS TO RECEIVE A LUKEWARM FOOD PACK Period. And Biteclub never tried to solve it, It’s not rocket science, you supply your vendors with microwavable packing or use heat packs to store them. They should understand that it’s not groceries , but people tolerated and brand got stretched as the home food was what they offered.

(2)    Now since they stored it god knows under what condition, they were stuck with unsold inventory and would do flash sales at night. So imagine a food pack picked up in morning which didn’t sell in lunch remained there till 9PM. I know this as I used to track dishes. So one was to pick up batch orders and drop in batches.

(3)    Now you have wastage each day so you have to factor it in your cost so they couldn’t make it affordable lunch packs hovering around 200-350, with few exceptions in 150-200 range.

(4)    They couldn’t maintain consistency of service and scale.

(5)    They quietly added restaurants and started selling their food under a white label or even mention the chef’s name with no credit given to restaurants bcos the loyal followers would eventually find out and on the supply side Biteclub lost their superstar chef’s . What remains on their platform today are those who have their own catering business or occasional chefs or restaurants.

So I Shot an email to them inquiring about the change and the why have they added places with a dubious reputation and lousy regard to hygiene, the reply from CEO was we had trouble scaling up and we ensure all our partners maintain quality standards. So the next email was to list down their SOP for quality checks and their FSSAI license, and of course, the email went unanswered.

The rumors abound about their surviving 2016, BTW they did manage to raise some money in 2015 and not making unit economics. I would say KARMA. As I am writing this I still ordered from Bite Club today a simple daal bhindi roti meal from one of the few trusted chef’s that remain on the platform.

Bite Club you were cool once! But you succumbed to your investor’s pressure and news of peers raising millions. In the process, you betrayed  your brand promise.

Food Tech- The Problem Remains Unsolved

2015-2016 has been particularly harsh on the food tech business. Before I start to express my views, I would like to state the context of the underlying industry, it's state of affairs and consumer behavior

In simple terms, the characteristics of the food industry are that of a very volatile business with a yearly churn rate of approx 15%-20% yearly. Well, that simply means those many restaurants shutting shops each year. I am still sticking to those that are dominantly food oriented rather than pubs or bars.

If we try and understand the cost structure, it's composed of about 25%-30% raw materials and the fixed costs going as much as 25%-30%. So they thrive on keeping fixed cost component low and increasing kitchen and asset utilization. It's a cyclical business, throughout the day with lunch and dinners are when they do 90% of the business that essentially is 6 hours of the day or about 25% of the total available time.

Some places essentially maintain same pricing structure for Dine IN and Delivery but I feel considering the economics of a kitchen (which could be a base kitchen with extremely low fixed cost) these should be different. The three things that essentially define a place are Food, Delivery/ Service capability, and raw material prices.

Food for thought. Image Credit : Kumar Anurag 

                                      

Let us take food as a product and most of the things are sort of peripheral, It is alive product and its half-life is let’s just say 30-45 min which means, it has a taste, it has a certain look and feel, it needs to be served fresh, at the right temperature and needs to be served quickly as the quality starts deteriorating with time. One thing or one line which would describe the consumer behavior associated with food would be, that he is hungry and a hungry customer is an angry customer, you got to take care of him be it fast service or quick and efficient the consumer preferences keep changing so you have to keep pace with it and of course the price has to be right. Essentially these factors restrict the catchment of the outlet to its immediate 3 Km and an extended catchment of 5 Kms

Now if you call yourself a tech company trying to solve the food industry problem and not concentrating on the basics you won’t cut it. So the opportunities do exist and they would be, considering the churn the outlets are ever hungry for publicity and to reach a wider audience there is always an opportunity for good marketing platform, they want control over raw material costs and need to standardize it using Technology and automating the manufacturing . Since its just 6 hours they do 90% of the business( well don’t take me for my word , look up to any restaurant on Google local business and the smart folks which are tracking your cell phone will tell you with a graph for example the ever famous Natural’s ice cream in Connaught Place CP  does 70% of its business between 9PM to 11.30PM and I don’t need to look at their books to figure that out) , the asset utilization isn’t smooth and lot of potential to improve this.

Credit : Natural's Icecream-CP,New Delhi-Popular Times : Credit Google.com

 Efficient delivery of a live product is another area. They end up dealing with multiple partners with multiple payment terms and payment cycles (raw material, delivery, ordering) there is a potential to solve this as a problem. Since the customer is s volatile when hungry J there is an opportunity for a tech to solve it and make the experience more uniform and smooth. There are problems in plenty when it comes to restaurant staff one of the major being attrition and as you make things tech-oriented considering that involves training . So the problems are in plenty lets see how things how can we solve them.

Different companies have positioned themselves to solve one or the other problem.

In the next blog post, I would take up Zomato which I admire the most & see how it has been able to ace at all fronts and continue to do so with shrewd business sense and strong execution capabilities.Will follow it with Bite Club of  which i "was" a fan.