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FoodService India January-February 2016

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Is the high noon of fund raising in Food tech a thing of the past? While it may be premature to pass any hasty judgement, the feeding frenzy has slowed down considerably in recent months. Companies like Food Panda, TinyOwl, Zomato and many more, which at one time were riding the crest of a powerful business wave, are now witnessing sobering times. For instance, discovery and food ordering app Zomato has shut down its online ordering service in Lucknow, Kochi, Indore and Coimbatore, where it had ventured a few months ago.

What is interesting about this retreat is that cities like Coimbatore and Kochi are no pushovers in technology adoption. Kochi in Kerala boasts of some of the largest IT parks in the country, and Coimbatore in Tamil Nadu sits on the high table of world’s top global outsourcing cities. So, why did the business cookie crumble for India’s top food tech brand in these putatively technology-friendly cities?.

Perhaps, start-ups should rethink their go-to-market strategy. A business model that works well in bigger metros can come a cropper outside tier 1 cities. Most food tech start-ups have existed purely as an order delivery chain in the metros. Even though they have been delivering food to customers at a higher cost in the hope that they will form a habit of ordering food, the volumes have been attractive enough to make business sense for the companies in the long run.

In most tier-2 cities – even with visible tech permeability – most people still prefer to walk into an outlet fi rst before buying online. It is therefore wiser for food tech companies to fi rst test the waters in these places before taking the full plunge. There are examples replete where companies have had to wait out patiently and get involved in building the market before they could start counting the pennies. But then, such forbearance calls for staying power and deep pockets, which our new-age companies are mostly bereft of.

The moot thing is not to lose heart in the business potential of our smaller towns. Technology is a great enabler and a few years down the line, it will be these places that will become the magnets and hotbeds for the food tech companies. All that is needed is to keep the faith and not stop probing the waters.

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