Zomato Instant will be launched next month in Gurugram. What are the pros and cons of this development?
First, food delivery giant Zomato introduced an on-time or free option, a la Domino’s Pizza (which offered the promise of delivery in 30 minutes or you will get a pizza free). Now, going one step further, Zomato has announced that it would be tying up with cloud kitchens to deliver food in 10 minutes.
This is in line with the hottest trend in the delivery space - speedy grocery delivery. Companies like Dunzo, Swiggy Instamart, Zepto, Bigbasket and others promise to deliver groceries and essential commodities in 10-15 minutes.
On Zomato’s blog, the post starts with a disclaimer. There is no pressure on the delivery partners to deliver food faster because of the promise of 10-minute delivery. They aren’t informed of the delivery time and they don’t get penalised either.
“The fulfilment of our quick delivery promise relies on a dense finishing stations’ network, which is located in close proximity to high-demand customer neighbourhoods. Sophisticated dish-level demand prediction algorithms, and future-ready in-station robotics are employed to ensure that your food is sterile, fresh and hot at the time it is picked by the delivery partner,” reads an excerpt from the post, which disconcertingly sounds like it has been written in 2050, not 2022.
Why 10-minute food delivery?
“In addition to that, after becoming a frequent customer of Blinkit (one of Zomato’s investments in the quick commerce space), I started feeling that the 30-minute average delivery time by Zomato is too slow, and will soon have to become obsolete. If we don’t make it obsolete, someone else will. And here we are… with our 10-minute food delivery offering – Zomato Instant,” Deepinder Goyal, founder & CEO, Zomato, wrote in the post.
How is this even going to happen?
Similar to quick delivery platforms’ ‘dark stores’, Zomato will set up finishing stations. Each of these stations will house bestselling items (20-30 dishes) from various restaurants, based on demand predictability and hyperlocal preferences.
“Due to demand predictability at a hyperlocal level, we expect that the price for the customer will get significantly reduced, while the absolute margin/income for our restaurant partners as well as our delivery partners, will remain the same. The pilot of Zomato Instant will start next month (in April), with four stations in Gurugram,” reads the post.
A bird’s-eye view from critics and supporters
Ruchira Jain, founder of Elevate Insights (ex-VP, consumer insights, Swiggy), opines that when Zomato promises such speedy delivery food, it may impact the entire restaurant industry. But she takes the time to delve a little deeper into one important part of the food and beverage (F&B) ecosystem right now – cloud kitchens.
She mentions that these kitchens are here to stay, even in a post-covid world. Cloud kitchens (or ghost kitchens) is the name given to any space that facilitates food production and delivery only, without an extended facility for dine-in customers. “This move may help cloud kitchens to find scale, in terms of demand and access to infrastructure,” says Jain.
"If there are more cloud kitchens and supply points, then it’ll enable the delivery personnel to deliver the food faster."Ruchira Jain
“If there are more cloud kitchens and supply points, then it’ll enable the delivery personnel to deliver the food faster. The pressure on the delivery guys reduces if they can deliver quality food in fixed neighbourhoods, instead of having to travel to different points of the city. This is what Domino’s (Pizza) also did. It could ensure 30-minute delivery by having a store in every neighbourhood in the city,” she explains.
Jain also adds that cloud kitchens tend to specialise in a limited set of dishes. That could enable them to streamline the preparation process to prepare and pack the food later.
She makes the comparison to 10-minute grocery delivery. There are rarely any ‘grocery emergencies’, apart from when people may want to cook something and realise that they don’t have the ingredients.
Anurag Katriar, founder and managing director of Indigo Hospitality, says that the 10-minute delivery time may not be feasible because unlike grocery, food has to be prepared fresh.
“When it comes to grocery deliveries, a 10-minute pick up is possible because the items just have to be packaged and delivered. Here, the food actually needs to be prepared. The 10-minute delivery time frame also depends on the geography of the locality and the number of dedicated drivers present in that area,” says Katriar.
"When it comes to grocery deliveries, a 10-minute pick up is possible because the items just have to be packaged and delivered."Anurag Katriar
He, however, adds that if there’s one industry that needs quick delivery of items – it is the F&B industry. “Grocery purchases can be planned for and bought. But when people are hungry and order food, a quick delivery is always welcome. Domino’s has built its empire around the 30-minute delivery promise, but the 10-minute promise still feels impractical to me. It’s not possible to make and deliver even a burger or a sandwich in 10 minutes.”
Karan Taurani, senior vice president and research analyst, Elara Capital, believes that Zomato’s interest in Grofers has always been to leverage on the big advantage of grocery delivery, which happens to be a high growth market.
"The reduction in delivery time may also limit the capability of doing multiple orders in one transit, which is a globally proven successful model for food delivery."Karan Taurani
“This will also help enable expertise of Blinkit in the quick delivery mode for Zomato which, in turn, will drive efficiency and may lead to increase in number of orders per delivery boy (average of 10-12 orders per day). The reduction in delivery time may also limit the capability of doing multiple orders in one transit, which is a globally proven successful model for food delivery, due to large order traffic,” says Taurani.
He adds that the quick delivery service can also be extended, wherein the customer may be willing to pay extra in case of opting for a quick delivery. It is similar to the service of ordering from restaurants that are far away, at an extra fee.
“India remains a very large market, with compelling demographics. A large set of consumers have varied demands. Overall, it is a good step which, if executed well, can enhance customer experience in a big way over the medium to long term,” Taurani signs off.
(Photo courtesy Caleb Oquendo from Pexels)