Online food ordering startup Yumist has closed down its operations as the company was unable to raise further capital. “(From) 2016 onwards, food tech (in the manner the term is loosely used) had amassed a notoriety with investors and media and became almost a dirty word. We failed in all our attempts to fundraise since then, as investors wanted to wait it out,” Yumist’s founders Abhimanyu Maheshwari and Alok Jain said in a blog post.
Yumist had raised pre-Series A funding worth $2 million led by Unilazer Ventures, with participation from existing investor Orios Venture Partners and Steven Lurie, a Silicon Valley based investor back in 2015. The company had raised seed funding worth $1 million from Orios Venture Partners in 2014.
The company served lunch, snacks and dinner items made in its kitchens and starting at Rs 65, with a delivery time of 30 minutes. Yumist acknowledged that this was one of the internal factors which affected the company’s profitability.
“There was a time in early 2015 when our bikers had hot meals with them basis a demand prediction algorithm and orders were delivered within 15 mins. We delivered one such order in 2 mins and the customer’s expression was priceless, but our P&L had a different sort of expression,” the blog said.
Number of orders
Yumist said that it was seeing 70 orders a day and it had an average order value of Rs 190 and they were making a margin of Rs 65 in March 2017. The company’s cost of acquiring new customers was Rs 180 but it said that it was able to recover the money within 45 days. It added that 70% of its 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.”
App only model
Perhaps an another internal factor which hurt the company’s profitability was their decision to go app-only for their service. During 2015, a host of other startups had started to go app-only after Flipkart decided to shut down their websites and drive users towards the mobile app.
In October 2015, Yumist started taking orders from its website as well, after an initial app-only approach, stating that allowing web orders enabled it to reach a wider audience as its customers were mostly from offices. According to the company allowing web orders enables it to reach a wider audience as its customers mostly come from offices, where users are always in front of a computer or a laptop.
Consolidation in the food tech space
– The consolidation began with TinyOwl in 2015, which subsequently led to a co-founder being taken hostage.
– Food ordering startup Dazo shut operations in October 2015.
– Eatlo halted operations in December 2015.