Meals in a box, quick & easy

Anshul Gupta and Amit Raj, the founders of Box8
When Divya, a Mumbai-based professional, craves food, she wants it fast and easy. Start-up Box8 gets her what she wants, without much effort.

"Ordering with the Box8 app is easy. I don't have to worry about getting spoons and forks and napkins - their boxes have everything," she said. "If there are leftovers, I can just 'box' it, and take it home."

Founded in 2012 by Indian Institute of Technology (IIT) alumni Anshul Gupta and Amit Raj, Box8 says it aims to provide delicious food with little hassle. Gupta and Raj are confirmed foodies, and the love - which they describe to be the most "sincere" - prompted them to venture into the segment. "The organised food market is still quite nascent in India," said Gupta, who went to IIT-Bombay.

FACT BOX
Area of business: On-demand food delivery service

Operations started: 2012

Founders: Anshul Gupta and Amit Raj, both IIT alumni

Funding: Rs 21 crore from Mayfield in May 2015

Other investors: Kaushal Aggarwal of Avendus Capital, Dheeraj Rajaram of MuSigma and Indian Angel Network

His company offers a range of food. A customer can choose among curries or biryani for a full meal, or among sandwiches and wraps for a snack. At present, the average consumer transaction is three to four times a month and the frequency is growing eight to 10 per cent.

Meals in a box

In the rush of contemporary professional lives, one often sacrifices tasty and healthy food in favour of convenience. Box8 provides tasty meals one can eat anytime, anywhere - even on the go.

What can beat good food with a great discount? "We have a core group that keeps analysing customer behaviour," said Raj, an IIT-Kharagpur alumnus. "At times, we encourage customers to order with an external push or incentive. We send reminders, with discounts and try to form a habit with our customers."

It is no surprise then that 80 per cent of their daily transaction is from repeat customers.

"We really focus on repeat customers - our focus from early days - as we believe that a chunk of the business should come from there," said Raj. "Of course, we also acquire new ones, but our core focus is on repeat customers."

He added: "Customers keep coming back to us and that has helped us grow as a business."

With about 2,000 transactions per day, Box8 has grown 10 times over the past 15 months. "In Mumbai we have 22 delivery units. We sell 100,000 units per month," Raj said. "Our gross margin is often as high as 70 per cent."

Explaining what has worked in the company's favour, Raj said: "We own the entire value chain - the front-end customer experience in placing the order, the food (prepared only once the order is placed, so that it remains fresh), the backend logistics and our delivery boys give our products to the customers."

Nikhil Khattau, the managing director (MD) of US-based venture capital firm Mayfield (which has invested in Box8), said: "Box8 is defined by taste, technology and logistics."

Tech taste & expansion

The Box8 app is available on both iOS and Android stores - 50 per cent of the business comes through mobile.

On firing the app, the customer only needs to choose the outlet, the box and whether they would like it delivered or take-away.

It is now planning to launch a new version of its mobile app in a few weeks. It will have a new-age user interface (UI) and user experience (UX), with additional features such as real-time order tracking on a map, and provide suggestions based on the customers ordering history.

One will be able to place the order in a few seconds. The Box8 team is eyeing expansion in the real world as well. "We have already started hiring and setting up the supply chain in Pune. We should be able to open a delivery unit within a month (August)," said Raj.

In Mumbai, too, expansion plans are afoot. "The number of our delivery boys will double to 500 in this quarter (July to September), and increase to 3,000 in 10 months, across all cities where we have a presence."

Box8 also aims to increase the number of per-day orders to 10,000. To order a meal for two, one has to shell out about Rs 300. "It is very popular among professionals," said Raj. Competition is not at all stiff. Though there are a number of players in the segment, their strategies are different.

Road ahead

Box8 has raised Rs 21 crore in Series-A funding from Mayfield. The money will be used to expand across different cities and grow the team.

At present, the core team has 40 members - Box8 wants to double it. The whole team would also grow from 350 to 1,000. "We are also trying to expand the tech team," said Raj.

"Execution and quality are the two major challenges," said Mayfield Managing Director Khattau.

"It is easy to start a small business and outlet. As you grow, managing consistency, as Dominos has done, is the real challenge," said Anil Joshi, managing partner, Unicorn India Ventures. "Due to a spurt in e-commerce companies, managing resource will pose as a challenge. Standardisation is important and adopting the local taste will help them (Box8). The consumer has to be the biggest priority."

EXPERT TAKE
Strong internet penetration has taken the food segment in India by storm. The segment is worth about Rs 20 lakh crore. The restaurant segment is flourishing and the delivery segment is also doing well. There is huge potential and we are just beginning to scratch the surface. Indians love eating and are open to experiments. This will help the online food market grow exponentially.

The online food ordering business is in a nascent stage. Food entrepreneurs are experimenting with a variety of new business models. Box8 is an on-demand delivery company that is solving the problem with a well-devised plan. Focusing on technology, the company emphasises on constant product innovation. It has a wide category coverage for sub-cuisines. They've ensured greater control over customer experience as they manage the product, technology and delivery themselves. However, Box8 seems very infra-heavy. The scale-up of the company is slower. Another aspect that cannot be avoided is competition. Many food tech start-ups are mushrooming in Mumbai who are also expanding to other cities. Box8 should consider scaling up to avoid being outgrown.

Overall, this is a very exciting market and a very good model. However, key to success will be how much they can scale up and capital requirements for it. In today's day and age, there are a lot of models that can be experimented with - especially the flying formation between hub-and-spoke kitchens. Standardisation, delivery time and marketing will be important parameters to consider.

Saurabh Kochhar, the co-founder and chief executive of Foodpanda India and chief business officer of their global operations

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