SUMMARY
Since April, high-end hotels such as ITC, Hilton, Marriott and the Taj Group have entered home delivery for their unutilised restaurants
Restaurant SaaS provider POSist noted that among its high-end restaurants, the business from deliveries has increased by 3X as compared to the pre-Covid time
While generating revenues through delivery, high-end hotels and restaurants have decided to focus largely on home delivery while cutting down rental costs
In today’s hypercompetitive world, brand perception can make or break the market and this is especially true in the food industry. When it comes to startups, the likes of Zomato, Swiggy, Rebel Foods, Freshmenu, Pizza Hut or Dominos are fighting for the competitive edge by changing how customers perceive these brands.While Swiggy has positioned itself as a platform to deliver food from anywhere in the city, Zomato has looked to build loyalty through the Zomato Pro and other initiatives. Domino’s has remained a force through its promise of 30-minute delivery, while Rebel Foods has an array of brands with affordable price-points to bank on.
Brand differentiation has been key for the food delivery market, but in the post-pandemic world, one where we are adjusting and living with the coronavirus, even high-end restaurants have had to change their positioning from classy to massy — in a manner of speaking.
High-end, premium hotels which had sworn off food delivery in the past had no option but to jump on the bandwagon. With hotels closed for most visitors except the few who were stranded, food delivery had suddenly become the main business for high-end restaurants in five-stars and other luxury hotels. From ITC Hotels to Marriott to Oberoi to the Taj group — nearly all the big hotel chains in India decided to enter food delivery to utilise their resources and make some money amid the pandemic.
Since April, five-star hotels have slowly and steadily opened up their operations for home delivery. Before Covid-19, the average order value in India was reportedly around INR 300. However now, with the entry of top restaurants into the delivery business, the attention is on the premium segment to fulfil the demand of the more affluent consumers.
The leading food delivery platforms Swiggy and Zomato have been looking to bolster their premium play. Zomato had tied up with hotel chains like Hilton, Marriott and Hyatt. Swiggy, meanwhile, has tied-up with ITC Hotels, Marriott, Hyatt, Mumbai-headquartered KA Hospitality, which operates the high-end Hakkasan and Yauatcha restaurants, and others. Luxury hospitality chain Roseate House not only tied up with Zomato for delivery, but also began live-streaming the feed from its kitchens to reassure consumers.
ITC hotels partnered with Swiggy towards the end of May to launch ‘responsible dining’, by offering ‘fresh and seasonal’ selection of food. This would include curated menus with local offerings from the region across all major cities in India. It also opened a special take-out counter at each ITC Hotel with hand sanitizers and thermometers to corroborate the health parameters of local food delivery partners. The emphasis was on premium dining experiences at home.
Covid-19 accelerated the delivery business’ shift to a more premium space, which enabled these five-star hotels to bring in the “experience”. From a five-course or seven-course meal in the high-end hotel with the ambience, the hotels have now packed these meals in boxes brought to a customer’s home as its ambience.
Taj Hotels, Oberoi, Ritz Carlton, Roseate House were among the others that had also started food delivery during the lockdown. Taj Hotels went a step ahead and is launching its own food delivery platform Qmin in July-end, to offer food from eight restaurants in Mumbai including Golden Dragon and Souk from the Taj Mahal Palace; Thai Pavilion and Trattoria from the Taj President; and Ming Yang from Taj Lands’ End.
Initially, these hotels were testing the waters by offering coffee shop menus or limited menus in the pre-Covid era through delivery platforms. But with the dining-out and restaurant industry not earning any money during the lockdown, the hotels are said to be looking at deliveries as a long-term business and plans to augment the dining-in experience to be at par with what restaurant dining used to be.
POSist, which offers a SaaS platform for restaurants, said that during the peak of lockdown from March to April, there was a steep decline of 95% in daily billings across its universe of customers. “Many of our customers are fine-dine restaurants in prime locations across the country. On the positive side, we saw deliveries increasing by 3X as compared to the pre-Covid time. The order value of deliveries also increased by 1.5X-2X from Pre-Covid levels as the order size was higher since most of the family members are at home,” cofounder and CEO Ashish Tulsian told us.
“As of today, our customers are already pivoting their operations to the takeaway-and-delivery model. we are working with most of them to bring them to the online delivery model with our product stack for online ordering and cloud kitchens,” Tulsian added about typical dine-in restaurants moving to home delivery.
Further, dining-out booking and SaaS platform Dineout told Inc42 that Indian diners are now ranking safety assurance and premier hygiene as top factors when they choose a restaurant to dine in.
Dineout CEO Ankit Mehrotra said, “Typically high-end restaurants and hotels have not adopted delivery in the past but now with the situation that we have at hand, we are seeing more and more high-end hotels opting for takeaways and deliveries.”
He noted that in a survey of Dineout customers, the hygiene ratings for restaurants came up as a major deciding factor. He also noted that the restaurants with higher “Cost for Two” prices might see higher traction owing to the fact that diners might perceive them to be more hygienic.
Dine-in customers account for 75% of the organized restaurant industry revenue, with online delivery and takeaways making up for the rest, said a May 2020 report by Crisil Research. Even those that are open could see a 40-50% fall in revenue this fiscal, Crisil said.
Surviving The Pandemic: Shutting Units, Focus On Delivery
With an eye on financial viability, only a few restaurants have decided to open for business with new regulations in place by the government — while most decided to stay on deliveries and takeaways.
Further, these restaurants have also started new delivery-only formats or do-it-yourself (DIY) meal kits as well as online cooking classes to engage with users. For instance, speciality restaurants, which own brands such as Oh! Calcutta and Mainland China, will launch cloud kitchens under the Speciality Kitchens brands. Others like CAARA, a catering firm that runs upscale restaurants with lifestyle stores Nicobar and Ogaan, have expanded to offer gourmet groceries. Chef Ritu Dalmia’s Riga Foods too is selling DIY kits for gourmet Italian dishes.
Lite Bite Foods and Zorawar Kalra’s Massive Restaurants are planning new cloud kitchen brands.
Further, the pandemic has also directed several restaurants to shut down some of their brand stores. For instance, restaurateur Riyaaz Amlani, chief executive and managing director of Impresario Handmade Restaurants said the company had to shut the Smoke House Deli outlet in Delhi’s tony Khan Market.
The decision, Amlani reportedly said, was made because of hefty rental costs and uncertainty over long-term viability. Anurag Katriar, president of the National Restaurant Association of India (NRAI), had earlier said that huge amounts of fixed and operational costs are making restaurants bleed at a time when business is at its lowest.
The Federation of Hotel and Restaurants Association of India (FHRAI), which represents 10,000 hotels and restaurants across the country, said that 20% of its member restaurants and hotels had reopened, and 20%-30% of those are closing again. The industry says it is unviable to keep restaurants open with low customer footfall and high electricity costs, rents, and staff wages.
Further, Hyatt Regency in Gurugram is at least counting on food delivery to keep its momentum going. General manager Vishal Singh reportedly said that the hotel started home delivery in April with cakes and priced it 25% lower than the hotel’s regular in-house dining rates.
Singh noted that though the hotel has resumed all operations (except pool, gym and spa) since June 8, the number of deliveries are still higher than footfall.
So even as restaurants open up and five-stars welcome some diners, the emphasis going forward might just be on home delivery, at least to make up for the lost revenue.
