The reason why

small medium
business fails PSDA
1
SUBMITTED BY :- PRATEEK MUNDHRA
(A10102121016)

Submitted to :- Dr Anjani Kumar Singh

[COMPANY NAME] :- SETIA TRANSPORT
I have chosen the Company Yumist. A Gurugram based company launched in 2014,
founded by Mr. Alok Jain and Abhimanyu Maheshwari. The foodtech startup aimed to make
it big in the foodtech industry, combining the goodness of homemade food with the ease of
having it delivered to one's doorstep. Their vision of steady expansion and serving the
working sector seemed pretty achievable initially but ended up choking them to the very
core. Their main point of differentiation was that instead of focusing on restaurant delivery
only, they wanted to venture into delivering comforting, simple, and home-cooked meals.
But, with the home-cooked meal aspect, they didn’t want to source it from a restaurant.
Yumist wanted to prepare it.

What led to Yumist's failure?

 If we talk about failure of Yumist’s considering the target sector, funding and budget
before taking decisions for a company. The important factor behind Yumist's downfall
was poor timing and an eventual cash crunch. The foodtech startup misjudged certain
aspects and couldn't fortify its position in the industry eventually leading to the
shutdown of the company.

 Yumist was not only trying to expand to other cities but was also making efforts to
ramp up capacity and space in its existing ones, which made it a high cash-burn
model. The already present cities had a lot of scope for improvement. And adding new
kitchen increased strain on the company.
 Another reason was that 2016 was an ominous year for the food tech industry as a
whole. A lot of similar companies came up which led to a clog because of the
competition – there were 150 food tech start-ups that came up. This confused
investors, consumers, and thereby slowed the growth.

 Many companies like I Tiffin, EazyMeals, and Zupermeal shut down. Even giants like
Swiggy which was showing tremendous year-on-year growth, went into losses instead
of the predicted profits in 2016.
 Thus, raising money became tough for every food tech start up and only a few
survived. The high cash burn and low cash inflow made sure that Yumist did not make
the cut, no matter how competent the company was.
 Yumist was one of the first companies in India to showcase the advent of the cloud
kitchen. And the founders are still sticking to their guns and saying that even though
the model hasn’t caught on yet, that is where the future lies.

 “Cloud Kitchens are here to stay. It’s probably the case that the first one through the
door gets shot. The problem we were trying to solve is a big one and we are certain
someone will pick up from where we left. Our wishes and support are with them.” So
far, Yummist is not showing signs of a resurgence nor it is moving ahead with the idea
of a cloud kitchen with afresh company. Its failure was a result of its circumstance, as
much as it was of mismanagement. Many companies didn’t survive the 2016 start-up
bust, and this company just happened to join the list.