Daybreak - Can Swiggy and Zomato save train meals?

Episode Date: March 27, 2024

Beyond the nostalgia associated with meals on trains, quite often, there are also horror stories. In fact, even a recent Parliament Panel report pointed out how food quality on Indian trains is compromised. The IRCTC (The Indian Railways Catering and Tourism Corporation) has been trying to figure out how to make food a more enjoyable experience on trains and more importantly, a solid source of revenue. A decade ago, IRCTC launched its e-catering services. It now has a network of nearly 500 restaurant partners and close to 20 food aggregators. Catering makes up for more than 40% of IRCTC’s revenue every year. And its seems it will only go up because in the last few months, IRCTC has also tied up with two of the country’s food delivery giants, Zomato and Swiggy.But while IRCTC has big dreams of catering to the 20 million passengers who take the train everyday, delivering food on trains is a logistical nightmare.Tune in.Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon, Ganesh, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production.

Sita and I are still reeling from the intensity of our first studio recording. Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. For all of us who have traveled by the Indian Railways, there is so much nostalgia associated with on-train meals.

Not because the railway's food was out of this world, but because of the whole experience of eating on a moving train and watching the world part. by. My favorite was the tomato soup in a paper cup with breadsticks and amul butter on Rajdani Express. But let us not forget the horror stories of the unhygienic conditions. My dad once saw the catering staff stack all the dinner trays inside the train toilet before serving the passengers. So beyond the nostalgia, quite often there are also these sort of horror stories. In fact, even a Parliament panel report pointed out how food quality on Indian trains has been compromised. Now, the IRCTC or the Indian Railways Catering and Tourism Corporation has been trying to

figure out how to make food a more enjoyable experience on trains, and more importantly, a solid source of revenue. So a decade ago, the IRCTC launched its e-catering services, and now it has a network of nearly 500 restaurant partners in close to 20 food aggregators. Catering makes up for more than 40% of IRCT's revenue every year. And it seems that it will only go up because in the last few months,

the IRCTC has also tied up with two of the country's biggest food delivery giants, Zomato and Suu Kyi. But while the IRCTC has these big dreams of catering to the 20 million passengers who take the train every day in India, delivering food on trains is a logistical nightmare. Welcome to Daybreak, a business podcast from the Ken.

I'm your host, Nick Das Sharma, and I Don't Chase the News Cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Wednesday, the 27th of March. Every single day, the IRCTC receives up to 2 million food orders. We should take a moment to let that sink in. Still, in IRCTC's catering units and pantry cars, the quality of food, the size of the portions, and hygiene, like I said earlier, are big issues for passengers.

But things are slowly changing. After the pandemic, by March 2020, IRCTC's catering segment, which includes e-catering, began to grow really fast. In fact, it grew by three. times, so much so that it accounted for over 40% of the total $400 million of revenue in the same period. My colleague Shivani Varma spoke to the chairman and managing director of IRCTC, Sanjay Kumar Jain, and he said the same that the demand from passengers is going up. He said that this growth is mainly because of Wanda-Bharat trains and the tie-up with somato.

Shivani also spoke to multiple passengers who find train food unhealthy and boring. They prefer the consistency and quality in taste that comes with e-catering. Apart from tying up with Zomato and Swiggy for e-katering, which have all happened in the recent past, the IRCTC has also partnerships with other food aggregators like Zup and Relofi and also restaurant chains like dominoes, rebel foods and haldi rams. All the four food aggregators that the Ken spoke with said that they have seen two to three times of growth in revenue and in the number of meals compared to pre-pandemic levels. But whatever traction IRCTC's catering business has seen so far, it is largely limited to non-metro city stations. The Ken spoke to Punej Sharma, the founder of Zoop, which is a Delhi-based food aggregator associated with the IRCTC since 2016.

He told us that most trains start and terminate in metro cities, and it is only in between the journey when someone places an order. And these stops are mostly two-tier and three-tier cities. His platform Zoop receives 200 to 250 orders per day in Kanpur alone. Sharma said that the average order of value through e-catering is 350 rupees. Another travel tech startup and IRCTC partner, Raylofi delivers 60,000 orders every month. Rohan Dedia, who is the company's founder,

said that during the same time last year, the order numbers were just 25,000 per month. But here is the catch. While IRCTC's catering business seems to be picking up pace, you will be surprised to know that it is not e-catering that is driving this growth. In fact, as it turns out, e-catering makes up only for a very thin,

slice of IRCTC's catering segment. Compared to overall meal orders, e-catering makes up for about 2% of the 2 million or so meal orders that IRCTC receives every day. And why do you think that is? Well, because just try and imagine the number of things that need to fall perfectly in place for a meal to be delivered to a train. That too in India, where, as we like to joke, people and trains, follow Indian stretchable time. But before I go any further, let me just put it out there, most of the people that we spoke to who have ordered food on trains said that their experience was mostly smooth.

But again, it is not easy to pull off. So let us look at how it all actually works. Stay tuned to find out. When a passenger place is an order, the estimated arrival time of a train at the desired station has to be roughly equal to the same time that it takes to prepare, pack and deliver the food. The handover window is just five minutes. Once you enter your PNR number, the system saves your train coach details and seat number

and tracks whether your journey is currently running or a future one. An IRCTC executive explained it to us. He said if it is running, then they compute the estimated arrival. time of the train and compare all the restaurants and food aggregators in that station. The passengers will only see the places available to deliver. Then the system takes the order within the cut-off period which is 30 minutes. It will not take an order before 15 minutes of the train's arrival. The order is then held and the train running status is tracked. If the system is confident that the train is running on time, then the order is.

move to the restaurant. For example, Zootop gets orders from WhatsApp, IRCTC and its own website and app. These orders are stacked in one dashboard and sent to the restaurant before the train arrives. Usually, it is the restaurants themselves that manage the deliveries unless an aggregator also gives them a fleet. Locanaten, a train traveler we spoke to, takes the train six times every year on an average. He has almost always received his food on time, except once when the train was delayed by 45 minutes. The delivery partner had to wait at the station and the food got soggy. The e-catering executive told us how they feel handicapped if a train is delayed for too long. Also, because online food deliveries on trains are not allowed between 11 p.m. to 5 a.m.

We spoke to Kapil Raizada, the co-founder of Ray Liatry, which is a travel marketplace and also an IRCTC partner food aggregator. He said that adequate time buffers must be planned to avoid an order failure. But this increases the turnaround time of the delivery, which is becoming longer. He also said that this hampers the utilization of the delivery personnel. And then comes the train food menu, which is a whole whole. different challenge. One has to select only those items that can be easily packed, transported and more importantly, unpacked and consumed. Raleiathri's Rizada says that for this business to scale freely, there is still a need for custom technology and integration

explicitly built for India and the Indian railways. He explained how home deliveries come with three main advantages. Fixed customer locations, flexible availability and ready dining setups. These do not apply to train deliveries, which is why he says a tech platform is needed to manage them at scale. But IRCTC's chairman, Jen, is not focused on numbers right now. He says, and I'm quoting,

what I see is to create a network so that first you put the system in place and then with your strength of the network, you create the stability in the market and confidence in the customer. That is what we have to be looking for. End quote. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings.

A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps, and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. I am Snigda Sharma, your host and today's episode was edited by my colleague Rajiv Sien.