Last year, the Foodtech sector had witnessed a number of shutdowns and it continued. Gurgaon based Foodtech startup Yumist has closed its operation as it failed to raise fresh capital to battle against the biggies.
In a blog post, Yumist said, “we are shutting shop today. We failed to raise the kind of capital that this business required while staying true to the customer problem. In hindsight, there’s a bunch of internal and external factors that led us to this dead end. From launching in a second city prematurely, or committing to a high growth, high burn model just because prospective investors wanted to see that back in 2015, or taking a tad bit too long to find the right business model, we made our mistakes. We learnt from these mistakes and recovered fast, but maybe not too fast.”
The on-demand food business is tough, especially if you’re trying to handle all elements of the experience, like sourcing the food, cooking the food and delivering it. It’s a lot. However, the startup claims that it was able to get Rs 65 in margins per order for an average order value of Rs 190. The cost of new customer acquisition was about Rs 180 which was recovered back within 45 days.
“Owing to our product quality and customer experience, we enjoyed good word of mouth (with 50% of our new customers coming through referrals), 70% of our monthly orders were from repeat customers and from March until September we tripled our revenues and gross margins. With these trends, Yumist would have become a profitable company by June 2018,” the blog post said.
Yumist that cooked and delivered its own food, was founded in October 2014 by former CMO of Zomato Alok Jain and Abhimanyu Maheshwari, a seasoned F&B entrepreneur to provide easy access to tasty and homely daily meals. Within a year of launch, the company expanded its footprint to Bangalore but things didn’t go as planned. The Bangalore unit started showing troubles very soon and the startup had to pull out from the city.
The company had raised a total funding of $3 million in two rounds from the investors such as Orios Venture Partners, Ronnie Screwvala’s fund Unilazer Venture, among others.
Yumist isn’t the one to shut the operation. Over 150 foodtech startups had shut down shops in 2016. Some of the foodtech players such as TinyOwl, Spoonjoy, Dazo, among others shuttered operations in the past year or so.