Page 49 - Forbes India (December 2015)

streamlining has its shortcomings, fully integrated supply chain. data to find the least repeat ordered
particularly when it comes to the Whether or not it will be able to items on its menu. “It doesn’t matter
number of food items on offer. The strike a balance between quality how much we love the products,
problem is, and its founders admit and scale remains to be seen. we slash the bottom 10 percent off
that it has always been, variety. While variety is a concern that the menu regularly,” says Barman.
“Ultimately, it is about the food. applies specifically to Faasos, there are The results seem impressive.
While an integrated platform can also larger concerns about the startup “A DC breaks even in six months,”
bring reliability, taste, quality, value, ecosystem and food-related ventures says Barman. He also claims that
etc, it may struggle to bring variety,” in particular. The recent news of large they have managed to increase
says Anand Lunia, founding partner lay-offs in companies like Zomato and their revenues by 400 percent over
at India Quotient. His venture TinyOwl has given way to speculation the past year. “Next year will be
capital firm has invested in, among a about the viability of some of their our $100 million (revenues) year,”
number of other ventures, Hola Chef, business models. But Barman insists he says. Although Faasos did not
a food delivery startup that offers that Faasos’s strength lies in the fact share its present revenue numbers,
new menus daily from local chefs in that it works on a sustainable model, a back-of-the-envelope calculation
Mumbai and Pune. Customer fatigue an integrated one which allows it to suggests that even with their lower
can be a consequence of a limited have margins upwards of 50 percent, claim of 15,000 daily orders, with
menu, he says. However, he insists he says. In fact, he claims that the an average order value of Rs 250,
that such things can be solved by company is already on the verge of Faasos’s annual revenues may be in
data analytics and personalisation, breaking even, and will do so by 2016. the region of Rs 130 crore already.
and says, “If anyone can do it, Faasos There exist several companies
will probably be one of the first.” within the food space that have come
In order to address the variety up with different delivery models.
crunch, and to improve scalability, FAASOS SERVICES From larger players like Foodpanda
earlier this year, Faasos added curated 15,000 TO 18,000 and the embattled TinyOwl, to
items to its menu. It allows its food ORDERS DAILY. IT’S smaller ones like startup Swiggy, they
curators to commission kitchens to all focus on different aspects of food
provide food through its platform. ADDING ABOUT delivery. But, “only very small chains
“We have a team of curators in every 15 DELIVERY with about five restaurants have the
area that goes around looking for kind of fully-integrated infrastructure
good food,” says Barman. Instead of CENTRES EVERY that Faasos has,” believes Prashant
charging a commission, they price MONTH Mehta, partner at Lightbox Ventures.
the product after factoring in the “None of them has been able to
margins for the kitchens and the achieve this kind of scale,” he says.
incremental cost of actually cooking The investment led by Lightbox
the food, explains Banerjee. rEplAcing thE rEfrigErAtor Ventures and Sequioa in February this
This simple process now lies at the Finally, and perhaps most year and the subsequent growth have
heart of its expansion spree. Curation importantly, the one aspect of ensured that Barman and Banerjee
enables it to set up the supply chain Faasos’s model that has enabled continue work on their stated aim of
and bring the best of local food to its consistently rapid growth is its replacing the refrigerator of the young
customers. The shift to becoming increasingly inexpensive DC. It now Indian professional with Faasos. It
a food on-demand platform means costs the company about Rs 15 lakh still sounds like an odd name, and
that in the cities that it has opened to open a DC compared to Rs 40 there’s little doubt that they will
recently, Faasos doesn’t even serve lakh earlier. Since they don’t serve have to repeat their Burkina Faso
its signature rolls. This ensures that as QSR outlets any longer, the DCs story a few more times. Especially
it can quickly replicate its model do not need to be located in very following their recent marketing
in a new city without having to visible areas, which helps save on spree, which included two television
replicate the supply chain for its rental costs. They don’t even have commercials that project Faasos as
original products. “Eventually, we to look like outlets. “In fact the last the answer to the universal question:
want about half of our revenue to 50-60 outlets that we have opened ‘Aaj khaane mein kya hai?’ (What’s
come from curation,” says Banerjee. cannot even be found because they there to eat today?). As long as
However, with curation, it have no Faasos signage on them,” they remain agile and flexible with
would seem that Faasos might says Banerjee. The optimisation their model, they should have the
cede some control on its otherwise doesn’t stop there. Faasos uses its answer more often than not.

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