Startup Mantra: F&B startups keep the orders coming
In the post-Covid unlocking phase, the hotel, restaurant, café (HoReCa) industry in the city, which had been impacted adversely, is back with a bang, and showing tremendous innovation
PUNE The common refrain is: “Pune Tithe Kay Une” (There is nothing that cannot be found in Pune).
This city has witnessed several brands of tea, biryani and other food items becoming “famous” within a short span of time.
With a large student population, the “experimenting customer base” is always there.
As the Covid-19 pandemic and subsequent lockdowns hit the city, social media was flooded with several “Puneri recipes”, with everyone becoming a chef and health conscious. This wave slowed down as the unlocking phase began, but till then, the hotel, restaurant, café (HoReCa) industry had been impacted adversely.
Several outlets closed down while some turned to the online solutions, like Nikhil Dahake, owner of Just Bytes Café.
He says, “A behavioural change is evident and seen in customers post lockdown. The overall spending capacity has also come down, but now a gradual recovery is happening. We have completely shifted to online ordering since the lockdown.”
As customers were wary about hygienic practices at the reopened outlets, business owners looked for some innovative and technological solutions. These innovations and tech-based solutions are in demand in all segments, like food products, packaging and safety, storage and supply chain solutions, food distribution and food processing equipment and technologies.
Pune has seen the birth of a “rebel”, another unicorn in the making, along with several other healthy food startups.
City-based entrepreneurs are overcoming the challenges and riding the long-awaited wave of disruption in food industry.
What the founders say
“In the last one year we are seeing lot of action in the food-tech startup space, because of people becoming more conscious about their health and immunity. Covid-19 has pushed people towards adopting a healthier lifestyle and experimenting with healthy food. Customer acquisition that would have taken two or three years, has happened in just four or five months. We are aware that this is a temporary situation and there will be some dropouts, but we have got a lot of boost.
“Even though the interest in the food-tech space has increased in the recent past, investors are not so keen in this domain, because margins or returns are less relative to other tech products. The packaged food revolution has not taken place in India yet. We still consume conventional food and no company has been able to change this habit. This will be disrupted soon and we will see this wave in near future.
“Strategically, Pune has many advantages and an ecosystem is already developed. Pune has one or two food parks, but if we want new companies then we need to have more food parks. Also, there are SMEs existing in and around Pune which are into machinery production for food processing units. There are at least 20 to 25 new packaging food brands in my knowledge that are coming up. A few companies from Pune will grow big in the next two-to-three years, which will help build the ecosystem.
“The other factors in favour of Pune are that Maharashtra is among the three states with a large number of food-tech courses offered in colleges. So, human resources and talent is not a problem for us. There is no issue regarding raw material supply. One advantage is that huge capital not required to start in the food industry, as compared to, say the auto industry. Hence, many entrepreneurs have started their businesses in Pune. Since margins are low and it’s a struggle to make it in food industry, it will take time to pick up. The young generation is helping the older generation in their businesses which is also changing the dynamics and building the ecosystem. The government should support and ensure that all permissions are given quickly.”
Sreejith Moolayil, co-founder, True Elements
“I was running an IT company and cloud kitchen in 2014 at Nigdi Pradhikaran. Managing these two simultaneously, I was facing challenges in the restaurant industry on the operations, inventory, staff, and expense-tracking front. I thought it was not my domain. I started looking for a software and approached some companies. The software was priced at about a lakh of rupees and hence, we could not afford it. Despite being an IT guy, I thought we can manage the operations manually, but then we failed miserably. Since then, I decided that we will help others to setup their cloud kitchen and run their restaurant smoothly. So, we diverted all our attention to the food and beverages industry with a special focus on technology. We designed our operating system for restaurant industry. We aimed to manage all tasks through our software in a smooth way and help the restaurant industry.
“The restaurant industry was badly impacted during the pandemic. Hence, we decided to bail it out by offering a contactless platform for online and offline ordering. Since, customers were not stepping out and were sceptical about handling menu cards physically, we designed the QR code-based contactless ordering platform. We have on-boarded 4,000 restaurants since the lockdown, including 1,200 restaurants in the Pune region. Now with second wave of Covid-19 cases and restrictions in place again, enquiries have increased. We are also in talks with some investors for a first round of $1 million funding for scaling.
Rahil Shaikh, co-founder, TMBill and TechMainstay
Food & beverage, and food-tech startups in Pune
True Elements (HW Wellness Solutions), Hinjewadi
•Founded in 2014 by Sreejith Moolayil and Puru Gupta
•A whole-food plant-based and clean-label brand that provides a range of healthy breakfast (nashta) and snack food items using Indian local produce like millets, grains, and seeds.
•Secured ₹10 crore funding from Maharashtra State Social Venture Fund (MSSVF) managed by SIDBI VC in January 2021. Raised ₹5 crore in pre-Series A funding round led by RP-Sanjiv Goenka Group.
Aker Foods (Aker Foods Agrotech), Kondhwa
•Founded in 2019 by Suraj Saste, Nihal Surve and Adarsh Kedari
•An artificial intelligence (AI)/machine learning (ML)-driven B2B supply chain platform for restaurants and delivery kitchens. The platform integrates farmers and small and big manufacturing companies, and also provides eco-friendly packaging solutions.
•Received undisclosed amount in funding from Mumbai Angels Network in April 2020
Rebel Foods, Vimannagar
•Founded in 2011 by Jaydeep Barman and Kallol Banerjee
•Rebel Foods, formerly known as Faasos, is a chain of online restaurants. This “Soonicorn” has established a multi-brand, cloud kitchen model in India and operates 15 brands, such as Behrouz Biryani. The platform is now a network of 3,000 restaurants across 350+ kitchens spread through 40+ cities across four countries - India, UAE, Indonesia, and the UK.
•In July 2020, raised Series E round of $26.7 million from Coatue Management.
Engineered Food Concepts, Erandwane
•Founded in 2015 by Rahul Nanal
•Offers 100 per cent cooked, ready to eat frozen food in bulk for restaurants, cafes, hotels. Simple reheating in a basic microwave makes the food ready to serve in six to eight minutes.
Hungry Hippos (Asish Nihal Foods), Charholi
•Founded in 2019 by Asish Nayak and Nihal Rath
•Hungry Hippos is a brand for the unbranded restaurants and fastfoods across India. Hungry Hippos aims at organising the micro, small, medium level restaurants and fastfoods and leveraging them with sales and business operations.
Rolls Mania (Golden Oak Food and Beverages), Shivajinagar
•Founded in 2009 by Puneet Kansal
•Started as a small kiosk in 2009 in Pune, Rolls Mania now has 150 stores across India. Franchise model was rolled out in 2015. A self-funded company, now planning to go international.
La Kheer Deli (Sooduku Foods), New Sangvi
•Founded in 2017 by Shivika Sood and Shivang Sood
•LKD has transformed the humble Indian Kheer into a pre-packaged gourmet kheer. Just like ice-cream parlours, LKD plans to scale the kheer speciality retail stores across India.
India – 6,450 (DPIIT-recognised – 1,855)
Maharashtra – 1,266 (370)
Pune – 297 (92)
•Department for promotion of industry and internal trade
Bits and bytes
Build fund to develop startup ecosystem, say investors
Pune: Angel and institutional investors claim that a rub-off effect is not happening in Pune city and companies are not spinning off any new firms.
“City-based corporates should keep aside a ₹10 crore to ₹50 crore venture capital funds to develop the start-up ecosystem,” investors stated during a virtual meeting organised by the Incubation and StartUps Committee of the Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA).
Sanjay Mehta, founder and partner at 100x.vc said, “There is a lack of hunger in Pune startup founders. They should be mentored in terms of attitude, scaling rapidly and raising capital rapidly. For the Pune startup ecosystem to grow, the corporate venture capital should come up from treasury side. AIF of about ₹10 crore to ₹50 crore should be kept aside. Unfortunately, the rub-off effect is not happening and same company is not spinning off many companies.”
Gireendra Kasmalkar, managing partner at Pentathlon Ventures said, “The information technology (IT) industry took a while to get started in Pune and a similar thing is happening with the startup ecosystem.”
Kanchi Daiya, regional head, Indian Angel Network said, “Pune is special chapter for us. There is diversity within Pune city and recent trends are from cyber security and manufacturing domain.”
Krishna Iyer, angel investor based in Pune said, “There are public market stories from Pune, but there are not enough local funds available for city-based start-ups.”