September 16, 2017 3 min read

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The surge in the shutdown of foodtech operations in India is reflecting a worrying trend for the existing players. More than 150 foodtech startups shut shop in 2016 alone, and funding in the sector slowed down drastically.

While the spotlight has always been on bigger aggregator players like Zomato and Swiggy, cloud kitchen brand FreshMenu is taking slow but steady steps to establish a pan-India presence. In a candid chat with Entrepreneur India, founder Rashmi Daga, who had a fair share of experience in the Indian startup scene before FreshMenu, opens up about the challenges in the sector and why they have not give up yet.

Where are people going wrong in the FoodTech sector in India?

Most people in food think making a set menu and living off it will be enough. But customers just move on, because today there are so many choices. Unless you innovate and constantly provide something new, it’s hard to survive in this market.

What is your opinion on the recent shutdowns and the existing bigwigs running in the red in the food sector in India?

It’s a tough environment and operationally tough space to be in. But making losses is ok for the first few years, because as a business plan it is going to be a part of your journey.

What do you think made FreshMenu click despite the sector being so cluttered?

We realized food was a good space but saw there is a gap in doing high quality food at the right price, and for delivery. There on we decided to open up cloud kitchens as opposed to a chain of restaurants.

We just chose to be on the different path as the aggregators as we wanted to focus on the quality of the food and that’s what we have been doing till now, and I believe our model is a sustainable and profitable model even with the challenges that come by.

Tell us about you expansion plans and the challenges that come with it?

We are hoping to target the top 8 cities in the next couple of years and right now we are in the phase of scaling but at the same time we are being cautious. In Food money is actually a lesser problem when it comes to expansion. The larger issue is people management and operations.

May be we will have more rounds of funding, and more money on our hand. But running a good infrastructure is the real challenge in India.

Any plans of opening up physical offline stores/restaurants?

Not really because that’s what we were against when we started, the high capital commitment model. Yes, we may have some flagship stores to let customers know how things work at Freshmenu, but not thinking of the offline model.

What’s your advice to a new player who is entering this challenging sector?

Food is such a big space. But it is a very very tough space. From outside it looks very easy, but is certainly not. It’s an extremely competitive and fickle market, because choices are too many as India lives on diverse food choices, and thus not at all a easy market to please.

If you want to be in this sector you have to be on your toes all the time and be really passionate about it.