Rise of online-only restaurants

Rise of online-only restaurants

With rents and running costs becoming unviable, many eateries are closing down their brick-and-mortar operations and going completely online.

Cafe Thulp in Koramangala had a physical presence for about 10 years before it moved to an online-only model.

It is ironical that in a city like Bengaluru, with its ever-increasing population and penchant for eating out, many restaurants are shutting down.

The intensifying competition and rising rents make the F&B industry difficult, and insiders in the restaurant and fine-dine business say it is not as lucrative as it looks from the outside.

Some restaurateurs have found a way to address their rental concerns by moving to online-only models.

Many restaurants now have no seating for customers. They rely on the takeaway and delivery model, and it’s working.

Night owls place: 6 pm to 6 am

Ashish Tiwari, owner of restaurant Raat ki Rani, says the lack of options for late-night diners made him go completely online.

Raat ki Rani is a delivery-only place operational from 6 pm to 6 am. It serves fast food and North Indian cuisine and is known for its paratha, ghee rice, veg burger and white sauce pasta.

“After I quit my job, I started taking orders from people late at night. The response was tremendous and it made me think of making this a proper, full-fledged business. But since physical restaurants can’t stay open beyond a certain time, I made it an online-only model,” he says.

People are desperate for food at odd hours, and Ashish says he gets orders all through the night and till 6 am.

“This was something we had never expected. We would have lost that business if we had been a physical establishment,” he says.

Costs Lower when you go online

Each restaurant has its own challenges, but a common challenge is getting footfalls, says Padma Kumar, co-partner of Thulp, Asia In A Box and Smoke Co.

“The moment your footfalls become fewer, it is a problem. You end up paying rentals and paying the online partners, so it makes sense to plan your model accordingly,” says Padma Kumar.

Thulp, which serves king-size burgers, pasta and more, recently went from a chain of physical joints to an online-only model.

No high rentals, and lower investment

No expensive rentals, fancy interiors, electricity bills, salaries for waiters and so on. A delivery-only place can be run from a cheaper address and with minimal staff.

“You just have to invest in setting up a kitchen away from residential areas and hiring a place for your staff to stay. Then come equipment, licences and bikes for delivery staff,” says Tiwari.

Since last month, Tiwari has done away with exclusive delivery boys. “We have tied up with aggregators like Zomato, Swiggy and UberEats and get their executives to deliver our food,” he says.

They offer a variety of cuisines

‘Oki Poki’ is a delivery-only model that has tied up with Mamagoto, a chain restaurant serving a pan-Asian menu.

So contrary to popular belief of virtual restaurants serving only comfort or home food, Oki Poki has a selection of baos, sushi, salads and dumplings in their delivery menu.

“Apart from getting orders from regular customers of Mamagoto, we have newer enquiries too,” says Ashik, restaurant manager. “We are concentrating on serving a wide variety to our online customers.” 

Why not brick-and-mortar?

Profit margins are slim and the middle-class and upper-middle class young consumer is not exactly loyal; so footfalls are inconsistent for upmarket restaurants.

Physical places need a larger investment and investor-entrepreneur alliances are often uneasy. A supply that far outstrips demand is another constraint.

For professionals

No one really has time to go sit at a proper restaurant during weekdays, and many professionals reserve their weekends for bars and pubs. For the young professional who missed lunch or breakfast or is too lazy to cook dinner, a quick takeaway or delivery service makes sense.

Numbers to go up in future

“Bengaluru is one of the fastest growing cities in India and a key focus market for us. Online ordering and food delivery services have not only helped restaurants reach out to more customers but has also proved to be a stable revenue channel, irrespective if they are a dine-in restaurant or a cloud kitchen.” We expect more and more restaurants to join the online ordering ecosystem as it connects more and more users with their favourite food items.”

— Zomato spokesperson

Why not physical biz?

Profit margins are slim and the middle-class and upper-middle-class young consumer is not exactly loyal; so footfalls are inconsistent for upmarket restaurants. Physical places need a larger investment and investor-entrepreneur alliances are often uneasy. A supply that far outstrips demand is another constraint.