The restaurant industry, which has seen near decimation by Covid-19, is staying afloat with online delivery as dine-in suffers again, said multiple executives. They expect the spike in online demand to be temporary and it to normalise once the restrictions end.
Aseem Grover, operator and owner of The Big Chill in the national capital region, said online volumes have doubled on a regular weekday since the authorities imposed a night curfew in Delhi.
“Online deliveries, of course, have gone up but it’s not a match on what normal business would be like. With night curfews kicking in at 10:00 pm, our entire dinner business is getting killed which in hospitality accounts for 60% of the volumes. It is affecting us badly and some of the restrictions don’t make sense,” Grover said.
The Big Chill has 12 outlets in the NCR.
Augustine Kurian, partner of speciality restaurant Kappa Chakka Kandhari in Bengaluru and Chennai, said his online food business on
and Swiggy has doubled in the last two weeks. Kurian said the company has plans to aggressively advertise on aggregators and direct ordering channels and revamp its online presence.
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“We thought that after the second wave, once the restaurant opened up, things were going to be pretty smooth. But I think we have to rely more on our online delivery. And we have to actually re-strategise our entire online delivery platform,” Kurian said.
Direct ordering platforms are also benefiting from the spike in online volumes. Kurian said it is looking at Dunzo and Thrive as it prepares to launch an online presence in a big way. Direct ordering platform DotPe has seen a 100% spike in order volumes in the first week of January compared to the same period last month.
Management consultancy Redseer predicts that while there might be a short-term impact in food delivery volumes, owing to fear around the spread of Covid-19’s Omicron variant, the overall industry will continue its quarterly growth.
“Between the first and second quarter of 2021, we saw overall volume and value of food delivery grow 15-20%. With a much larger base of online users now, we may not see the same growth levels, however quarterly volumes will continue to grow,” said Abhijit Routray, engagement manager at Redseer. “The pace of growth for cloud kitchens is outpacing the overall growth of the food delivery industry as players are much prepared now and have identified the right micro-markets to be present in.”
Cloud kitchens make hay
New-age, cloud-kitchen operators such as Curefoods, Ghost Kitchens and Box8 are clocking a 10-15% rise in orders already, with weekend curfews in play.
“Over the last 10-15 days, we have seen a 15-18% spike in overall delivery volumes compared to the first week of December and expect this to grow up to 25% in January. There has been some confusion on the ground with the lack of clarity on lockdowns, but that is a short-term botheration,” said Karan Tanna, founder and CEO of Ghost Kitchens Pvt. Ltd, which runs a plug-and-play model for food brands helping them set up cloud kitchens.
QSR chain Wow! Momo—which fulfils 80% of its orders through Swiggy and Zomato—told ET that online order volumes had peaked at 70% higher than December levels before the curfews. Cofounder Sagar Daryani said they plan to scale the number of cloud kitchens from the existing 19 to 65, by the end of the year.
“We are clubbing all our brands together in our cloud kitchens and it is giving us better throughput sales. The silver lining here is the cloud kitchen business or the delivery business is booming. Because if people are not able to come out, they’re wanting to at least get their favourite food delivered to their doorstep,” said Daryani.
Hybridisation (a mix of online and offline) models will become a norm in the industry as large format restaurant owners are also exploring plans to set up and operate out of cloud kitchens.
“The demand for cloud kitchens would increase. Even though margins can be less for restaurants compared to running their own outlet, there is a lot of uncertainty for dine-in right now. They are creating a cloud kitchen setup just to de-risk themselves and opting for a hybrid model,” said Mukesh Yadav, director of cloud kitchen operator Smart Kitchen, which works with brands like Chai Point and Fatlulu’s in the National Capital Region. Yadav said the number of queries from mid-size and premium restaurants asking for a cloud kitchen space had increased in the last week.
A stronger ecosystem for online ordering and cloud kitchen infrastructure providers are benefitting restaurants that now have a playbook to deal with these sudden unexpected waves. That said, restaurant operators said if the restrictions extend beyond the expected 4-6 week window, the impact on the industry could be catastrophic.
“It’s going to be crucial how long the variant lasts. This wave is also as unexpected and as sudden as the first and second waves were. But what happened is that people who have been in business for a long time had savings and backups in the first wave. It considerably diminished in the second and is completely non-existent in the third. So, it is becoming that much more difficult to survive and see this through,” said Grover of BigChill.
While the spread of Covid-19 might be one of the short-term deterrents towards online food delivery, dynamic lockdowns are also raising concerns amongst the industry.
In response to ET’s queries, foodtech company Swiggy said while there hasn’t been volatility in food order volumes yet, it does expect some disruptions owing to the dynamic lockdowns across various states.
“We are not seeing any unusual volatility in order volumes… While we can expect some degree of disruption to happen to the extent of curfews in the specific cities and during those hours, we do not expect it to be significant. This is the third such lockdown and food delivery is understood to be an essential service in most cities,” said a spokesperson.
On Monday evening, the Delhi Disaster Management Authority decided to shut all bars and restaurants to curb the growing number of Covid-19 cases in the national capital, and allow only takeaways.
These new guidelines, which prohibit dining completely and allow only deliveries, are “completely unsustainable”, Kabir Suri, president of the National Restaurant Association of India, said in a statement. “It is like an excruciating and painful slow death for an erstwhile vibrant industry.”