With a global pandemic changing life as we know it, people all over the world are being driven into self-isolation. Under such circumstances, where social distancing and quarantine is the norm, it is inevitable that the world economy will take a hit.  Amidst all the gloom, the online food sector may just offer a sliver of hope that turns things around.

SUPPLY VERSUS DEMAND

The Novel Coronavirus outbreak has taken its toll on the food industry and the initial outlook is pretty grim. There has been a  60%  drop in orders on Zomato and Swiggy, across India.  As major brands such as Socials, Truffles,  Smoke House Deli, Fatty Bao, etc, shut shop, these numbers do not come as a complete surprise.

The future, however,  is predicted to be somewhat  brighter. Reports from Foodnavigator indicate that the situation could very well boost revenue and users,  to  even more than what they were  before the pandemic. A surge in the numbers is expected once the short term effects of the lock down wears off. With the  government constraints lifted,  operations returning back to normal and the availability of supplies and manpower resuming to its full capacity, the bottlenecks that the online food sector is currently grappling with, will be removed.  

With time, as the demand increases in the online food delivery segment, so will supply. With the government mandates and social restrictions, more and more hospitality players who exclusively served offline, will be encouraged to tap into the online delivery sector. They are likely to come  on board food aggregators and delivery platforms. Combined with the current trend of working from home and avoiding unnecessary travel, this means increased business for the home food delivery industry.

GOLIATH’S SAFE, WHAT ABOUT DAVID ?

The question that automatically arises at this point is if all industry segments are affected equally—what does the prognosis entail for the smaller restaurants and independent players ? While larger enterprises and food chains have the financial resources to ride out the shock of a global health crisis, most of the SMBs are being forced to fold.

In a quote to Business Today, the NRAI ( National Restaurant Association of India) said:

"We are looking at 50 percent restaurants to shut down if this lasts till May. There are only 5-6 chains that have cash reserves to sustain more than a month. That's because restaurants work on about 15 per cent EBITDA (earnings before interest, taxes, depreciation, and amortization) margins"

This means layoffs—for a sector that employed around 7.3 million people, NRAI has estimated initial job losses of approximately 1.5 million.

WINNER WINNER, CHICKEN DINNER

As independent restaurants brace for the unknown, there emerges a clear and  dramatic shift in paradigm, one that is likely to persist long after the corona panic subsides—the need to be online. Even prior to the outbreak of COVID-19, brick and mortar restaurants were seeing a decline in footfall while online deliveries had seen a steady upward trend.

While millennials had always shown an inclination towards having food delivered at their doorstep, the epidemic is likely to have a lasting impact on the way the rest of the demographic consumes their food. It is also likely to affect how the restaurant industry prioritizes their operations. Although there has been considerable shrinkage of business in the food delivery industry as most of the restaurants have temporarily pulled down their shutters, it is mostly business as usual for the ghost kitchens or  cloud kitchens like Box8, Innerchef, Rebelfoods, Foodstreet.  Zomato and Swiggy continue to deliver delicious food in an otherwise grim situation, from these ghost kitchens.

As the  transition from eating out to eating-in is likely to be on the rise  even in the aftermath of COVID-19, the surge in online delivery could very well mean expectations of augmented “experiences” in delivered food. This entails a heightened demand for personalization, specific ‘made-to-order’ meals and knowing exactly when it will arrive.   It is here that the unique phenomenon of the Ghost kitchen dazzles with the  promise of cordon bleu food served at the comfort of homes — a trend more than likely to gain pace once  the Coronavirus  pandemic subsides.

A LIGHT AT THE END OF THE TUNNEL

“It’s a bird !….it's a plane!”...It’s your Zomato  delivery guy! Amidst the struggle of the lock-down, takeaways and deliveries have resumed slowly but steadily. Cape-less superheroes from  Swiggy, Zomato, Dunzo and all such online delivery platforms are zigzagging across towns in response to the rejuvenated eagerness of customers to order online again.   Hygiene and the highest standards of food safety top the priority list for all stakeholders—Zomato and Swiggy have taken steps to ensure that the safety of the customers is not compromised. Swiggy has introduced “best safety standard batch”. In a statement to the  Economic Times , two brands tagged under this batch claim to  have seen an increase in order volume.

The COVID-19 pandemic is undoubtedly the greatest tragedy of our times and the reason behind the untimely death of social dining, among other things. (Too soon ?) In uncertain and turbulent times such as these, there lies comfort in the certainty of familiar things like food. The online food industry may be the ray of hope  in the tumultuous economy that we are bracing for, in the days to come — hope, which is a reminder of resilience in the face of adversity and a promise that this too, shall pass!