Ola Foods holds QSR plans, to focus on meal kits and private brands

BENGALURU: Ola Foods, the food delivery unit of cab aggregator Ola, has shelved its plans to open offline quick service restaurants (QSR) due to the pandemic situation. It will instead expand its private brands into new categories such as biryani, pizza, health and self-help meal kits, said a top company executive.

Demand for food delivery has been recovering slowly and steadily for food delivery startups such as Swiggy and Zomato, and for cloud kitchen brands like Faasos and Freshmenu.

An estimated 70% of the pre-covid demand is back for online food delivery segment, according to analyst estimates. However, consumer behavior and mind-set have changed due to which startups such as Ola Foods, Faasos and Swiggy have been experimenting with meal-kits and ready-to-cook kits.

Pranay Jivrajka, chief executive of Ola Foods said the meal kit brand is currently in pilot stage with plans to launch the full product in the coming months.

“The idea behind the meal kit brand ties back to our core vision of making everyday meals exciting and with this we enable our customers to also enjoy the experience of cooking their favorite dish without having to worry about the ingredients or the exact proportion one needs to use them in the dish,” he said.

Faasos recently expanded into the meal kits space with like read-to-cook dishes such as marinated chicken tikka, hakka noodles recipes, exotic pastas and others. Food delivery platform Swiggy is also currently running a similar pilot in Bengaluru and Gurugram.

The demand for meal-kits and ready-to-cook kits can been seen as alternative to weekend dine-outs, which is now non-existent in many cities as consumers are still wary of visiting restaurants and pubs.

“There was a certain amount of wallet spending that was going into eating out, especially in weekends, where people usually want to try new cuisines. But post covid, restaurant dining has taken a hit,” said a venture capital investor in the foodtech space, asking not to be named.

The investor above added that the same consumer who goes out for weekend dine-outs are now a new category of customers for cloud kitchen and food delivery startups. But since many of these consumers are still skeptical about the hygiene standards of ordering-in from a restaurant or cloud kitchens, it makes sense for them to order meal-kits with specific ingredients.

For example, cooking pasta at home may require the customer buy exotic ingredients like cheddar cheese, spring onions, etc., but since its experimental, the ingredients might go to waste after the first use.

“Indians are not going to use spring onions and cheddar cheese in everyday cooking, so if you can provide consumers with portion sizes for those ingredients, then they can just put it together (the ingredients) at home, so people feel safe making this at home, and their indulgence need is also satisfied,” the investor added.

Ola Foods is also in the process of scaling its existing food brands like Khichdi Experiment and Paratha Experiment. Jivrajka said that Khichdi Experiment brand has already crossed the 1 million order mark.

“We currently cover 35-40% of the food delivery customers and we plan to expand our coverage to serve 75-80% of the urban food delivery demand. Our plans on the expansion of the offline formats are on hold now and we will revisit them once the COVID situation improves,” Jivrajka said.

Ola Foods was launched in response to growing competition in the food delivery market especially from rival UberEats. However, UberEats exited the India market and sold its food delivery business to Zomato India in January due to diminishing margins and high-cash burn.

Ola Foods does not aggregate restaurant or cafes like competitors Swiggy and Zomato, but instead operates a network of delivery-only kitchens, popularly known as “cloud kitchens” Ola Foods brand currently operates more than 50 cloud kitchens across six cities in India.

Ola Foods is a spin-off from Foodpanda India, which was shut down by Ola almost 18 months after acquiring it. On May 2019, Ola pulled the plug on Foodpanda India operations, and also laid off a large chunk of its staff in the rebranding process.