Food delivery apps face margin pressure

Lite Bite Foods' FooGo delivers food at departure gates in Mumbai and Delhi airports

Many companies in the food ordering apps space seem to be losing the momentum. A primary reason, experts say, is that the cost of logistics does not leave room for any margin. Others argue that setting up information technology infrastructure in each of the listed restaurants is costly, while competition and customer acquisition forces offers of deep discounts.

However, what if you had near-monopoly of the market in every way — you owned the restaurants and the logistics, and it was almost impossible for competition to enter?

Lite Bite Foods is staring at such a possibility. The company recently launched a food deliver app, FooGo, which delivers food at the departure gates in Mumbai and Delhi airports. It is primarily targeted at the business traveller who will not have the time to stand in a queue or usually arrives just in time to catch a flight.

“We run 60 per cent of the restaurants at Mumbai airport and 40 per cent of those at Delhi airport. We list all that can be carried on board on the menu and travellers can place an order 40 minutes before boarding,” said Amit Burman, chairman.

Meals with specifications, such as gluten-free or lactose-free, must be ordered 12 hours ahead.

“Flash your boarding card and pick up your paid-for meal,” he added.

The idea is unique to the two airports. He wants to get to other airports and railway stations. “And, if it is successful in India, maybe we will take it international as well,” he said. Burman wants the app to be restaurant-neutral. “It is easy to have one long list of dishes but I want the others to list on it as well. So, each restaurant will be allowed to have its own menu.”

He will be initially offering discounts to encourage participation and has set modest annual targets. “Currently, my food business brings me Rs 70 crore a year. If I can bring 10 per cent of that through the app in my first year, I will be satisfied,” he said.

The company will not attract competition as food-tech companies such as Zomato and Tiny Owl are aggregators, and some run delivery services.

These companies will not be allowed to only have delivery personnel standing around, ready to ferry orders.

LBF has partnerships with global brands such as KFC, Pizza Hut, Burger King, Subway and Krispy Kreme. The app is on Play Store and the iOS version will be launched next week.