Bistro is not an existential threat to the restaurant industry as it would not account for 0.5% of the total “market” even with 1,000 outlets, said Goyal
CEO Goyal also said that Bistro would operate as a separate app, and would have no access to “data that would create an unfair playing field”
This comes after NRAI and the FHRAI were said to be mulling a legal action against Zomato and Swiggy over the foodtech giants’ quick food delivery offering
Amid the ongoing sabre-rattling between restaurateurs and Zomato and Swiggy on “10-minute” food delivery service, Zomato cofounder and CEO Deepinder Goyal has now reached out to the foodtech giant’s restaurant partners to assuage their concerns.
In a letter, Goyal said that Zomato will never compete with its own restaurant partners, adding that Bistro is neither a “private label” nor a “Zomato Kitchen”.
“Bistro is not a “private label” or “Zomato kitchen”. In the past, I have expressed that Zomato as a restaurant-aggregator will never compete with its own restaurant partners, unlike players such as Amazon who sell their own private labels on Amazon. Zomato has fully backed this commitment by never opening a physical restaurant and will NOT use Zomato as a distribution channel for kitchens that we do,” read the letter.
Earlier in the day, Inc42 reported that the National Restaurant Association of India (NRAI)) is mulling taking legal action against Zomato and Swiggy over their quick food delivery offerings.
Sources said that both companies had transgressed into restaurant territory with their affordable meal delivery services Zomato Everyday and Swiggy Daily, both of which are cooked at company-owned private kitchens.
Meanwhile, in his letter, the Zomato CEO told the restaurateurs that its 10-minute food delivery service, Bistro, is not an existential threat to the restaurant industry. Citing his rationale, he said that even with 1,000 outlets, Bistro would account for a mere 0.5% of the total “market”.
“Even at 1,000 outlets, Bistro would barely be 0.5% of the market. Also, scaling Bistro isn’t the goal of this experiment – it is to find a workable business model that the restaurant industry can replicate. India’s out-of-home food consumption has room to expand, and new service models like Bistro will help acquire new customers, benefiting the wider restaurant ecosystem,” read the letter.
Noting that restaurateurs are the “best people” to do the job of running an eatery, Goyal said he believes that not everything will move to the 10-minute delivery segment. He also informed the industry stakeholders that Bistro would operate as a separate app, and would have no access to “data that would create an unfair playing field”.
The letter also shed light on the reasoning within Zomato for launching the quick food delivery offerings. Goyal believes that bringing down delivery times increases demand for restaurant food.
While underscoring the need for further bringing down delivery times, Goyal said that the listed foodtech company’s internal data shows a 3X higher repeat rate from customers when delivery time is under 15 minutes versus when it is more than 30 minutes.
“This means that reduction in delivery times will significantly expand the market. Most of this comes down to making sure our kitchen networks are more dense (more outlets per city) to cut down distance, and cut down kitchen preparation time (KPT) while still serving hot and fresh food that customers require. And doing this in a way where restaurants can make money is not an easy problem to solve,” added Goyal.
The cofounder and CEO of Zomato also noted that Bistro is part of the company’s latest attempt to reduce delivery times. He reiterated that Bistro will target the demand of in-office workforce for quick access to snacks, meals, and beverages within 10 minutes. He added that the Bistro team is working with food researchers, producers, chefs, and restaurants to provide a proof of concept.
“While we’re unsure about finding product-market fit and profitability, our hope is that this platform could be replicated by different restaurants and cuisine types where demand exists,” added Goyal.
Talking about the roll out of Zomato’s 15-minute delivery experiment, Goyal said that the company has partnered with restaurants by curating their menu items and providing a dedicated delivery fleet to scale the offering. He added that the company is mulling reducing commissions for restaurants for short-distance orders to “encourage more outlet expansion”.
While noting that the service is currently available only in select locations, Goyal added that the quick food delivery offering will be scaled “as and when it gets to the desired outcomes”.
Notably, he also said that the listed foodtech giant’s previous tryst with 10-minute food delivery via Zomato Instant in 2022 was cut short as it failed to find the right economic model for restaurants. Goyal, however, added that the offering then was “moderately successful” at reducing kitchen preparation time.
The development comes close on the heels of reports stating that restaurant bodies NRAI and FHRAI are likely to approach the Competition Commission of India (CCI) over alleged anti-competitive practices by Zomato and Swiggy and their respective 10-minute food delivery services Blinkit Bistro and SNACC.
Earlier this month, NRAI representatives also met the managements of Zomato and Swiggy to address the issue, but the meeting is said to have ended in an impasse.
