The present study is an attempt to understand the innovative strategies used by online food service companies to drive business. Indian food service industry has evolved magnificently in the recent times. The scenario has changed immensely from previous times when we had to actually go to the restaurant and select the restaurant and have the experience. Today, choosing the best place is just a click away. Best offerings at the best prices are available on your mobile phone. Zomato is one such service provider which provides restaurant search and discovery service.
It assists in deciding the best places to dine and also provides delivery services. Zomato Gold is a highly differentiated offering of the service with the aim to attract and serve more customers. We try to determine how successful Zomato Gold has been along with other factors in driving footfall to the partner restaurants.
Extensive literature review has been done to know about the food service industry and its evolution.
Primary research along with factor analysis of the data collected has been utilized and the results obtained have been documented and interpreted.
Literature review unearthed plethora of information and the latest innovation and role if technology in the food service industry. The research done provided us the deterministic factors that are responsible for the customer choosing a service over the other.
The study was confined to a limited number of customers and their perceptions and expectations. The sample size was of 140 respondents and hence may not be 100% accurate.
More research with larger sample sizes need to be done for better accuracy.
The factors which are decisive in getting footfall pertain to factors like the location of the restaurant or how close/ convenient it is to the customer. Other factors like customer reviews, ratings and quality of food also play a major role in footfall generation.
Today, Indian economy has a significant mark on the world economic platform. By 2050 we are expected to be in the top 3 global economies. Food services is a very key driver of the Indian economy. Estimated industry worth: Rs. 3,37,500 cr.,2017 with projected growth of CAGR 10% over 5 years targeting reach of 5,52,000 cr. by 2022.
10 years back eating out was not a very imminent feature in an Indians life, but over the years due to evolving consumption pattern, eating out has gained momentum. Increased organized presence of ethnic and exotic cuisine restaurants, different tech models being introduced, advent of technology to improve consumer experience and continued leveraging of social media for customer engagement are some key trends that will shape the future of Indian food service sector.
Due to these factors, this sector is attracting interest from local and global private equity and venture capital funds. Renowned names like Goldman Sachs, Everstone Capital have been active in this space in the country. Favorable macroeconomic factors, ease of doing business and an evolving customer mindset have made the sector a major attraction for investors.
33% population younger than 15 years
50% population younger than 24 years
Advent of Technology in Food Service Industry
Technology has disrupted Food Services industry in the following 3 key segments:
Previously, food lovers waited for annual guides and restaurant directories. These publications had reviews by experts, opinions and other important information to dine out. Now, these are made available by restaurant search or food discovery players within a click, a feat achieved by such tech-based companies. Zomato is one such restaurant search and discover service provider which was launched in 2008, with a revenue of INR 318 Crore2 (FY 2016 17).
Lately, it is common for fine dine restaurants to offer reservations to customers. In fact, this service has become significant to a restaurants operation, because of its multifold benefits. This service allows outlets to estimate demand accurately and improving the sourcing, staffing and management of costs more efficiently. It is of major benefit to a customer as reservation guarantees ones table at desired time and place based on his/her planning and likelihood of receiving better service at the outlet increases as details like arrival time, no of people etc. will be shared with the outlet in advance. 25% reservations currently happen through portals and are projected to reach 62 65% by 2022. Dineout is one such service which operates as an online restaurant booking site, launched in 2012, with sales number of around 4,00,000 diners per month3
Technology has made the process of having restaurant food very convenient for the customers. Today customers utilize their smartphones to order food from desired restaurant of choice and get delivery within minimal time. No time wastage, no traffic hassles, no quality compromise consumers can save time and enjoy restaurant food together. Platforms like Foodpanda were the pioneers in this food ordering industry in 2012, with the provision of an end to end food ordering and delivery solution to urban consumers from the nearby restaurants, which has a revenue of INR 37 crore (FY 2015-16) and reaching over 15 million users per month. Later , in 2014, Swiggy entered which now has revenues up-to INR 24 crore. A company is categorized a food-tech if they use explicit technology to reach out to customers for food review, food delivery or providing food ingredients etc.
With the increasing proliferation and penetration of smartphones and internet, food tech companies are gaining high amounts of traction. These are customer backed, who resort to convenience-based meals to their homes and offices with the tap of a button. The popularity of these tech companies has risen tremendously over the past few years and garnered a great deal of interest from the VC/ private equity funds. Below is an overview of various such companies across wide categories:
It is an Indian restaurant search and discovery service which was founded in 2008. It operates in 24 countries and provides information of restaurants, their reviews, including images of menus, and online delivery services in some countries.
Zomato Gold is an exclusive dine out and social drinking membership program extending special perks which include a complimentary dish (think BOGO!), and up to 2 complimentary drinks (think happy hours all the time), every time you dine at, or hit the bar at any Zomato gold partnered restaurants in India.
It was launched in November 2017. 26000 subscribers signed up to Zomato Gold on launch day. The product garnered 200,000 subscribers by April 20 in five metro cities in India. Revenue contribution by April 2018 was 12% of total. The company states that 40 % of its total sales were referral driven and 3X increase in Zomato traffic on Gold vis-a-vis non-Gold restaurants observed.
The objective of the paper is to determine the impact of Zomato Gold and determine other factors which drive footfall in Zomato gold partnered restaurants.
The major deliverable include the variables which are decisive to get the customer to a restaurant and whether Zomato Gold partnership should be leveraged by restaurants to increase their business.