What it feels like when you start from the board?

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“Alibaba started the investments again. And the Foodpanda deal can be directly tied to that,” he says. This has now broken the duopoly. Foodpanda has had a few, if not many, loyal customers apart from discount hunters who frequently checked out the app. Now with Ola, and it’s $200 million, the company effectively breaks into the market as a third strong player.

Operating three neighborhoods

It also means that now restaurants will be able to play one against the other to get better deals and the metrics may start to distort once again. Swiggy, meanwhile, had seen this coming and has been focusing furiously on its cloud kitchen—The Bowl Company, which now operates out of three neighborhoods in Bengaluru, does over 2,000 orders a day. It will continue to expand across the city in the next six months. And if things work well, it will expand to other cities such as Mumbai and Delhi NCR. Its acqui-hire of the cloud kitchen, 48East, is another step in that direction.

“This is the trickle-down effect of that big Alibaba deal,” says the executive. He says this will also empower other investors to look at cloud kitchens as a model to grow the business.

Also playing the cloud kitchen game is Freshmenu. Though small, Freshmenu is an exciting company. Its success in Bengaluru is enviable. The company hit 1.2 million orders in the quarter ending December. The average order value rose to Rs 300. The encouraging 1.2 million orders are split 70-30 in favor of Bengaluru.

So, Mumbai and Delhi NCR (New Delhi and Gurgaon), together, draw 4,500 orders a day. Out of which Mumbai completes 3,000 orders a day, across nine kitchens. Freshmenu has been around for four years now. It has raised over $21 million from Zodius Capital and Lightspeed Ventures. And has been adding kitchens at a breakneck pace.

“We plan to add 10-15 more kitchens this year,” says Rashmi Daga, founder, and CEO, Freshmenu. The company claims it has broken even on an EBITDA (Earnings before interest, taxes, depreciation, and amortization) level in Bengaluru.

How did Freshmenu get to break even in Bengaluru?

“Just the sheer number of orders,” she says. Soon after Freshmenu launched in Bengaluru, it took off. The demand was consistently rising. And the company kept opening kitchens to fulfill it. Now, it has reached a point where the city is more or less covered. It, however, has not been able to replicate this in Mumbai or New Delhi.

The problems range from competition from Mumbai’s famous dabbawalas to restaurants and the width of the two cities being much larger than Bengaluru, which creates inefficiencies.

But the company is now on the cusp of something important. If it can turn around its Mumbai and Delhi numbers, it will start competing with the three big boys.

After these top four, there is a significant drop. Faasos and Box8 are still struggling.

Sequoia-backed Faasos has shown signs of improvement because of its new pivot but there is still a long way to go. “This is where things will change,” says the partner at an India-based venture capital firm. He asked not to be identified. “Investors will start to see value in city-based markets once again and you will see either existing players get big cheques or a new breed of founders break out.”

The attitude of several VCs have started to change as well, he says. Investors are looking at food tech companies without technology. “An example would be Paperboat and Bira,” says the executive quoted above.

There is a more granular approach to food-based companies now. The ecosystem is evolving. It may have finally grown up.

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