What Is Happening To The World of Food Delivery Startups?

We’ve talked about it over and over again, but that’s only because it seems to be the number one problem in the country. The food delivery startups make a big splash and lots of noise and then suddenly they fall apart and they exist no longer. It’s happening all over the country, but there are specific parts that are being affected more than others.

Bengaluru, as the Silicon Valley of India, is obviously spitting out tons of these food delivery start ups that are both gaining traction and falling apart at the seams. Some of them expand and go further into more cities across the country, while others don’t even make it out past the front door. Another city that is struggling with this Gurugram, formerly known as Gurgaon, is dealing with the same trouble that Bengaluru is. We can write articles and read articles about why this keeps happening, but there really aren’t too many answers for why this is a persistent problem. The only thing one can do is learn from the mistakes of these startups, if there are any.

According to a report by Inc42, four food delivery startups from Gurugram – Cyberchef, Mealhopper, Bite Club and Foodpost – have all shut shop. In fact, Foodpost didn’t even last six months since the launch. What all four had in common was that they networked with home chefs to prepare meals to be delivered to customers ordering via the web or the app.

In the same report, the reasons were listed as to why each food delivery startup faced their end. Started in 2015, Cyberchef was a great place to get traditional meals, but apparently the problem that the home chefs were facing was that they weren’t being paid on time. This is always an issue in a startup environment, when the company is trying to meet profits and still pay all their vendors at the same time. We reported about Bite Club shutting shop earlier in July when they failed to raise a fresh round of funding. Started in 2014, they had an app that connected customers to local home chefs. Some say that the company went bankrupt.

Instances like this aren’t making investors put a lot of faith in food tech. There are so many ways to make these things work and so many things to not to to keep audiences interested, but it is always hard to find that balance. While the food tech industry has its problems, investors and venture capitalists believe that a revision of the strategy would definitely help the companies stay afloat longer and build a customer and vendor base that is trustworthy and reliable and vice versa. Often what happens is that once the company is launched and they receive their first round of funding, the money is spent on expansion and trying to one up the other. While that is obviously the only way to handle this kind of market, it’s also what is causing the problem. Instead of building the company from within, they are trying to get further out there and get more attention.

And even restaurants are starting to get smarter about these things, when they started to pull out of partnerships with Swiggy and Shadowfax due to increase in commission. In 2016 alone, there have been new food tech startups popping up everywhere, but collapsing at the same speed.