Pranay Singh Mehta

Aryan Chaudhary
1.2) Outline of the business idea
The basic idea is that since small cafés and kitchens already run on relatively
smaller profit margins than bigger companies, it becomes very costly for
them when food is wasted after a day’s operation ends, i.e., during the late
night hours. Furthermore, precious food is wasted which could have been
used to feed other people. This is where our service comes in to bridge the
gap, where we buy the food that will go to waste in the morning, and then
collect such products from across restaurants to be collected in one
warehouse facility with refrigeration. An on-ground survey was conducted by
us to check if businesses were willing to sell such food about to go waste,
where 7 of 10 businesses were open to the idea of selling to at least recover
their cost of producing that food, and the survey also reported that 60% of
the businesses closed at around 9:00-10:00pm, 30% businesses closed at
around 10:00-11:00pm, and 10% of the businesses closed its operations
around 8:00-9:00pm. It is evident from the data collected that all the
businesses surveyed closed after 11pm, which sets our operations to start at
around 10pm to start off with basic setting up of the warehouse and
refrigeration, and starting the collection of the food. This warehouse will then
be used by drivers to deliver food to customers that require it. The prices to
be mapped out will be cheaper than original food prices. The obvious
question here remains why restaurants sell at lower prices. The simple
answer to that question lies in the original plan of operations itself, i.e. the
time of our operations is when most businesses are closed, and this is where
the customer persona comes into play, where we target specific needs of
specific customers. A questionnaire was also created by us to check the need
of the customer, where the general customer in the market reported that
around 73.8% of the 164 respondents ordered their meal for a dinner. Out of
those 73.8% respondents, we can see that around 94.6% respondents were
around the age of 18, i.e., potential bachelors (one of the types of customers
we seek to target). Coming onto the financials of the operations, as reflected
on the financial model section, the fixed one-time costs would include the
price for refrigeration equipment, the potential liabilities while maintaining
the operations would include costs like salaries of drivers and warehouse
workers, rent of the warehouse, and packaging of the food. The key thing to
note is the advantage of the odd hours of the operations that work in favour
when negotiating rent. The small number of hours for our operations, which
will start from 10pm and go on till 2:30am, i.e., 4 1/2 hours, also works in
favour when negotiating worker salaries. Another menial detail that is
actually really important is that these hours have less to no traffic on the
roads, making the operations faster. Now that we’ve discussed the aspects of
the delivery side of the operations, let us go ahead and discuss the
procurement of food from restaurants. The estimate of food wasted in
restaurants in the survey averages about 15kg per day, which is more or less
what we might expect from relatively small scaled restaurants. The cheapest
of the options of food would be dal and rice, which sells around 150 INR for
a meal weighing around 300g
(https://www.swiggy.com/search?q=Dal+Chawal). This means that we get
450INR per kg for a staple meal in a decent restaurant. Considering that we
procure the food and cut down on the restaurant's production cost, which by
a thumb rule, comes to around 30% of the food cost in the F & B sector,
comes at around 150 INR for procurement. Even after we add in logistics
and sell the 1kg which initially costed 450 INR at 250 INR, we reach a
running margin after procurement at around 100 INR. Now, let us consider
that we buy all 15kg from a single restaurant at the fixed price of 150INR
per kg, which makes it 2250 INR for procurement, and then we have
3750INR worth of product to sell, giving us a running cost of 1500 INR from
a single restaurant. Let us make a reasonable assumption of starting off
partnering up with 10 restaurants, which gives us a running margin of
15,000INR per night. One months’ running margin comes to around
4,50,000INR. Now, cutting up on rent and salaries of potential 3 drivers to
partner up with 10 restaurants comes to 60000 INR (20,000INR each
considering only 4 1/2h of working hours), we get 3.9 lakh INR left. The rent
for the warehouse can be taken as 65,000INR for a godown of 1,690 square
feet (https://www.99acres.com/ware-house-for-rent-in-india-ffid). It still
leaves us with 3.25INR per month, which is 39 lakh INR a year. Three 300
litre fridges would cost around an estimated 90,000INR, which leaves us
with an estimated 38.1 lakhs in the first year
(https://www.google.com/search?q=300+litre+fridge+cost&oq=300+litre+f
ridge+cost&aqs=chrome..69i57j0i22i30j0i10i22i30i457j0i390.199047j0j7&s
ourceid=chrome&ie=UTF-8). Let us keep in mind that we have taken the
most staple food, and thus, the selling margin only goes up, and while this
small model serves the purpose of giving a glimpse into the business model,
the comprehensive financial model including all the logistics is present in the
financial model.

Q2) Customer Persona

What existing market gap will your product/service fulfil?

Include empirical evidence to rationalise your hypothesis.

Food Wastage is something that we can safely say is a big problem, not just
in our communities, but in most communities around the world, and we
don’t require data analysis, only observation to understand that food is
wasted in front of our eyes every day, and to realise that this “waste food”
can go a long way in dealing with hunger. To even think of filling in a market
gap, we need to understand where the gap is. Close to 70 million tonnes of
food everywhere is wasted every year in India alone, while at the opposite
spectrum, while 7000 people die due to hunger in India every day. This line
of food being good and getting wasted happens in a matter of hours, and we
seek to incentivise businesses to sell food about to go waste, while giving
this food to customers for a lower price, for them to consume quickly. Our
service will give the customer the opportunity to eat good food at cheaper
prices. The only drawback here is that the time for our services would be
among the late hours of the day. To analyse the effect of this drawback, we
conducted a survey where 73.8% of the 164 respondents answered that
they ordered food for dinner, which clearly shows that there is a lot of
viability to our service.
Q4) Marketing Strategy (B2C)
Our marketing Strategy is the B2C model, which is Business-to-Customer
Marketing. To start off, we are directly providing delivery services to our
customers, considering that our targeted audience already seeks to pay less
for their food, adding in the expense of having them take food physically,
can defeat the whole purpose of buying cheap food. Considering that we
seek to work for a cause that we consider noble, i.e., reducing, and
preferably eliminating the food wastage problem from restaurants, such
marketing can lead to potential investors in the future sympathetic for the
cause to help fund the expansion of the project. It helps our case that we
are meeting our customers’ (as we create a targeted audience) specific
needs, this helps in building one of the firm goals of the B2C model, i.e.,
generating loyalty amongst our customers. A big role of how our potential
customers think has to be achieved by surveying, which has been done by
us beforehand, surveying 160+ regular customers, and stakeholders.

Q5) Competitor Analysis (100 words)

Our potential competitors would be food delivery apps like Zomato and
Swiggy. Both Zomato and Swiggy are restricted to the restaurant service
timings, which in most cases close around 10pm. Furthermore, the food
prices offered on Swiggy and Zomato are set by the restaurants, whereas,
considering that our service seeks to procure food at lower prices from
restaurants, whose willingness depends on the simple fact that they would
make money by selling to us, rather than letting the food go to waste. These
advantages allow us to target a specific type of consumer whose needs our
competitors don’t fulfil.
Q6) Financial Model (Forecast Model)

When looking at the financial prediction for 2 years, we need to keep in mind
a lot of factors -
1) The Food Procurement standard has been set by analysing dal chawal
meal on swiggy which is set at Rs. 150 per meal (300g), which is at Rs. 450
per kg normally, and since our main selling point is cheaper meals, we offer
to sell that Rs. 450 worth of dal chawal at Rs. 250, which we procure at the
F&B sector standard for production, which is set at 30% of the entire selling
cost, i.e., Rs. 150. Here, we discovered from a survey conducted that around
15kg was the average food waste per night, and we are taking into
consideration that we only are able to procure 10kgs, by procuring food at
10 restaurants to start off, which is increased to 15 restaurants in the
second year of operations.
2) Considering that under our capital cost, we are purchasing TVS XL 100
model of the bike that runs at a mileage of around 60kmpl, we can safely
say that for 3 bikes, one nights operation cost for gas would come around
3
liters (price taken as conservative 2014 highest petrol prices), our gas cost
per night comes as Rs. 315 per night.
3) We shall be taking our employee salaries as most conservative in this
model, paying Rs. 25,000 per month to 3 delivery persons, and Rs. 15,000
to restaurant workers that will help in packaging etc. These salaries come up
to Rs. 1,05,000 per month, which per night comes as Rs. 3,387 per night.
Even rent has been taken as the most conservative renting outlets at Rs.
65,000 for a 1,096 square feet outlet, which comes at around Rs. 2,097 per
night.
4) The packaging cost was also taken at the most conservative price of Rs.
6 per packaging material (500g), which for around 100 kg was Rs. 1,200
per night, and adjusting in the second year for expanded operations and a
2% inflation rate. It came to Rs. 1,836 per night.
5) Considering we sell only 70% of the food we procure as reflected in the
“Total Profit after procurement” sections, we still achieve a positive balance
of Rs.1 per night in the first year, and Rs. 2,959 per night in the second year
of operations, after subtracting our Opex costs Rs. 6,999 per night (1st
year), and Rs. 7,751 (2nd year), adjusting for 2% inflation and expansion of
operations.
6) Seeing our profit in the second year of operations yearly, coming to Rs.
8,97,699, we can safely say that we cover the capital costs, i.eThe price of
Samsung 253 L'3 Star Fridge (3 300 liter fridges), and 3 TVS XL 100 bikes,
which comes to Rs. 2,03,49. We can safely say that we can aim for a ROI of
less than 1 ½ year.
7) All values adjusted for inflation and expansion of operations, keeping in
mind that all components of this model, the most conservative values have
been taken, i.e., all profit margins are to only go up from here, not down.
Thus, this shows the viability of the business even after conservative
predictions.