ETtech Exclusive: Zomato CEO Deepinder Goyal writes to restaurants addressing concerns over 10-minute food delivery

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The concerns raised by the restaurant industry grouping, the National Restaurant Association of India (NRAI), over standalone 10-minute apps launched by food and quick commerce platforms have prompted Zomato founder and CEO Deepinder Goyal to write a letter to the eateries with which the firm works.In the letter, a copy of which has been seen by ET, Goyal has broached the issues of bringing down food delivery timelines, Zomato’s attempts at solving this problem, concerns on the company competing with restaurants through Bistro – a 10-minute food delivery app launched by its quick commerce unit Blinkit – and whether Bistro is an “existential threat” to the restaurant industry.

Also Read: Restaurants body eyes legal challenge against 10-minute delivery apps

Bringing down food delivery timelines

“Our data shows a 3x higher repeat rate from customers when delivery time is under 15 minutes, compared to more than 30 minutes. This means that reduction in delivery times will significantly expand the market,” Goyal wrote. “Most of this comes down to making sure our kitchen networks are more dense (more outlets per city) to cut down distance, and cut down kitchen preparation time while still serving hot and fresh food that customers require. And doing this in a way where restaurants can make money is not an easy problem to solve,” he added.

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Also Read: ETtech Explainer: Behind restaurants body’s big tussle with Zomato, Swiggy

Zomato’s attempt at reducing delivery time

Goyal has underscored how the Gurgaon-based company took a shot at 10-minute food delivery in 2022 but couldn’t find the “right economic model for restaurants”. The project, which started as an experiment, was short lived and Zomato remodelled it to everyday – its home style.

“A few weeks ago, we enabled restaurants to offer ‘15 minute delivery’ in select locations, by curating their menu items and providing dedicated delivery fleets. Available only in a handful of locations, the service will be scaled as and when it gets to the desired outcomes. We’re also discussing reduced commissions for short-distance orders to encourage more outlet expansion to improve the delivery speed,” he wrote.

Bistro – a key point of contention

“Bistro is not a ‘private label’ or ‘Zomato kitchen.’ In the past, I have expressed that Zomato as a restaurant-aggregator will never compete with its own restaurant partners, unlike players such as Amazon who sell their own private labels on Amazon. Zomato has fully backed this commitment by never opening a physical restaurant and will not use Zomato as a distribution channel for kitchens that we do,” Goyal noted in the letter.

He also pointed out that Bistro will only continue to be a small part of the market.

“Even at 1,000 outlets, Bistro would barely be 0.5% of the market. Also, scaling Bistro isn’t the goal of this experiment – it is to find a workable business model that the restaurant industry can replicate,” he wrote.

“Also, I don’t think everything will move to 10 minute delivery. Gourmet restaurant food has its own space, and customers don’t need a gourmet pizza in 10 minutes and neither is that possible as far as we know,” Goyal added.

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