The Vice President and Managing Committee Member of NRAI discusses the complexities of the delivery system and why direct ordering will change the game.
Kabir Suri, co-founder and director of Azure Hospitality is also the Vice President and Managing Committee Member of NRAI. Kabir has spent three years with international award-winning restaurants ‘Zuma’ and ‘Roka’. Kabir’s initial responsibilities at Zuma and Roka were operational, but with the increasing need for growth, his core responsibilities shifted from operations to business development, spearheading global expansion and brand development.
Under Azure Hospitality he has developed, launched and is managing brands such as Mamagoto, Dhaba Estd. 1986, Sly Granny, Sly Granny Cafe and Foxtrot.
He talks to us about the growing home delivery segment and the challenges faced by restauranteurs.
TD: Home deliveries have become a mainstay for most restaurants at the moment. What sort of role is home delivery playing in shoring up restaurants and helping them cope with pandemic-induced disruptions?
KS: Home delivery, as a business, has exploded during the lockdowns. But even globally, delivery as a business has been rising. So, we have seen the birth of cloud kitchens, multiple brands from one kitchen. That phenomenon has gotten accelerated due to Covid. Is home delivery here to stay? Yes. Definitely.
TD: There have been continuing conversations about the need to order directly from restaurants. What are the conflicts that restaurateurs have dealt with delivery platforms?
KS: In the earlier days, before we had aggregators, restaurants used to deliver. People used to call directly and place an order, or they used to do takeaway. Pre-lockdown 1, restaurants were not focusing that much on delivery. They were more about providing the experience. However, post Covid with all the restrictions coming in, a large number of restaurants didn’t have a choice but to move to delivery. Now, getting into delivery has its own challenges. In most restaurants, the kitchens are structured for dining-in not for delivery. A lot of people have had to restructure their kitchens in the same given space. Second is the dependency on aggregators and marketplaces to be able to showcase the product and banking on them for the delivery fleet. As dining-in restaurants only had two-three delivery people at the max. And of course, to work with the aggregators and marketplaces, to facilitate transactions.
The issue that has arisen between restauranters and aggregators is that there is a cost to doing delivery. The cost structuring done by the aggregators doesn’t work for many restaurateurs. The structuring done by the aggregators is on a certain percentage of revenue whereas it should be on the cost of the delivery. But the aggregators charge you a percentage of the revenue which is anywhere between 17 per cent to up to 25 per cent. The defense from the aggregator is that if the average price of the transaction is low, say Rs 200, the cost matrix is very different compared to the flat math I just mentioned. So, for lower transactions, it averages out. But that doesn’t work for the restauranters. When the average price is around Rs 800-1,000 and you charge 20 per cent then that’s around Rs 200 whereas the cost of delivery is not more than Rs 50-60.
So that’s where the debate is.
We are trying to talk to various aggregators to see how that can be resolved.
TD: Why is it important for customers to order Straight from Restaurants? What does it mean for their bottomlines and survival?
It’s technically cheaper for restaurants. We save money.
TD: TravelDine has launched a #SFR campaign. Could you say a few words to our readers and social media followers on this campaign?
Straight From Restaurants is a great platform that has been created. It’s beneficial for the restaurants and for your readers. It will assist restaurants with direct ordering, and also, help us to get more people on board. It’s a good endeavour and we are happy to support it.