As part of my food thesis, I felt very strongly that there was an open space for a cloud kitchen player that catered to the Indian palate. While players like McDonald’s and Domino’s had shown that Indian consumers were ready for quick service food, the market for Indian food had not evolved. In late 2014, this market was still a generation behind and was being driven by established restaurants that only delivered food as an afterthought.
When we met Anshul Gupta and Amit Raj, the co-founders of EatClub, they were operating a chain of dine-in and delivery outlets in Mumbai city. Box8, as it was then known, served Indian meals in a box and was developing a reputation for high quality meals at very reasonable prices. When we dug in further, we realized that the founders were able to do this by turning perceived wisdom on its head and coming at the business with a technology-first approach, applying first principles instead of industry wisdom. We liked that.
When we invested in Box8, they had monthly revenues of ~$100k and operated both dine in and delivery restaurants in Mumbai. We recognized early that dine-in and delivery were in fact two different businesses, with the delivery only business being substantially better! It was simpler to operate, much cheaper to run without the need for very expensive retail dine-in spaces, and most importantly, catered to the rising trend of eating ‘restaurant food’ at home or in the office.
We jointly made the decision to jettison the dine-in business and focus solely on the delivery model. This paid off in spades and the company did not see any initial loss in revenues. In fact, in subsequent months our analysis paid off as we saw continuing growth and substantially improved unit economics.
The other trend we saw was that Indian consumers craved variety. Brands have responded by throwing away the book on brand thinking and reinventing themselves online. We have seen houses launch multiple brands catering to different audiences, or even to different moods within the same audience!
The same has held true for food. EatClub has launched several different brands for food. They expanded upon their original Indian meals in a box with separate brands for pizzas, rice bowls, wraps and desserts, and customers are eating it up. The beauty of this approach is that the company can leverage its existing central kitchens and delivery network for the additional brands. This creates operational leverage while allowing the company to target specific food categories without brand stretch.
Reflecting on this journey, Anshul and Amit, co-founders of Eatclub said: “Nikhil and Mayfield have been an important sounding board for us since the early days. With their people-centric approach, they bring more than just capital on the table and have been supportive at the right times, which is what you want from your investors.”
Delivering over 0.5 million orders per month in only 5 cities, today the company has emerged as one of the few ‘full stack’ models in this space, owning its own kitchens, outlets and delivery chain. Because of this they know exactly who their customers are and what they want, and most importantly, they are able to deliver exactly that at the right price.
We remain excited as EatClub continues its journey to build India’s largest and densest kitchen network to deliver the best experience to the new age Indian consumer.
