Is nostalgia enough to drive Zomato Intercity Legends success?

Restaurant aggregation platform Zomato plans to expand its Intercity Legends service across top cities in the next few months while adding more iconic restaurants on its platform to scale its food delivery service. Zomato’s Intercity Legends was launched as a pilot in Delhi in late August to offer 24-hour food delivery from premium restaurant brands in different parts of the country, including Sandesh and Rosogollas from Kolkata, Biryani from Hyderabad and Chole Bhature from Delhi. The service is currently only available to users in Delhi-NCR and Bengaluru. 

Zomato, an online food aggregator stated in a press release that its inter-city food delivery will start to make profits at "a slight scale" amid concerns of the service being a logistical nightmare and a high cash-burn model.

However, as soon as the reviews started flowing down the internet world, there was not much joy among the customers. A Gurugram-based businessman was dissatisfied when only salan was delivered to him via Zomato's intercity meal delivery service.

Sharing his disappointing experience on Twitter, he wrote, “Ordered chicken biryani from Hotel Shadab using Zomato interstate legend service and all I got was a small box of salan. Deepinder Goyal, this seemed like a great idea but my dinner plans are up in the air now. Now, you owe me a Biryani in Gurgaon!"

In another tweet, he wrote, “It’s a double loss for me. As a customer and as a shareholder, Deepinder Goyal must figure out where is the failure in the process. At least, this won’t happen again."

While orders faced delivery delays and few complaints about stale food being delivered. But many enjoyed their favourite food from far away states too.  Under the initiative, the company has listed a number of restaurants in different cities from where a customer can order their food like any other regular Zomato order.

All food are packed by the restaurant and then refrigerated before being shipped via air or road to reach customers the next day, the company said. However, some orders may take longer than one day to reach customers. Unfortunately, the services are not available for all users yet. But before the question of accessibility to all users, the major concern is logistics and will the company will be able to sustain this initiative. 

Commenting on the initiative, Teja Chekuri, managing partner at Ironhill India stated, “When Zomato started it was launched as a discovery app a restaurant aggregator, with restaurant menus and offerings shown in its app and website. This was aimed at helping the user with choosing a restaurant based on specifics such as distance, cost, ambience etc. This came at a time when the young generation of Indians was getting involved in the digital revolution sweeping the country. Hence, they were able to create a large database with intricate data regarding the behaviour patterns, demographics, psychographics of their users.”

Soon the demand for discovering restaurants converted into the propensity of the young generation to order food from these restaurants. This demand and supply were converted into an opportunity by Zomato and the online food delivery ecosystem in India has since then flourished.

In many ways, Zomato was also innovative as the provided variety, cost-effectiveness and offers, as well as restaurant discovery at the click of a button through a single app. With more and more customers migrating to their app, they have also enhanced the interface and experience such that the customer database expanded exponentially, and it is pegged to be growing at 25 percent CAGR.

“With a huge population of India currently underserved and quite a chunk of it not even having embraced digitization, I believe Zomato is only bound to grow, as can be seen by its recent spate of acquisitions,” Chekuri further added.

Zomato has tied up with commercial airlines and logistics partners such as Shadowfax to enable deliveries. The cost of the food item listed on the menu on Zomato includes packaging and other logistics charges. The platform charges a ₹80 delivery fee over and above the listed price. Unlike Zomato’s other home delivery options, the service is not necessarily hinged on discounts.

“Zomato’s intercity legends are a very welcome initiative. The world has become more inter-connected than ever and the one area where it was so far missing was food. People were tied down to their city for the food they could eat. However, Zomato intercity changes that and eliminates this limitation,” feels Jayesh Sinha, founder and CEO of Burger Rush.

However, given that Zomato has tried several of these experiments and abandoned them, most recently with Zomato Wings and earlier with grocery delivery and nutraceuticals, the question we must ask is whether or not this business is still feasible for Zomato.

Zomato’s intercity meal deliveries don’t exactly make it clear to whom the company is catering. However, it remains to be seen whether the nostalgia factor would be strong enough to persuade customers to place intercity orders when a metropolis like Delhi, Mumbai, or Bengaluru has an abundance of options.

“Zomato would need customers to place several high-value purchases for it to recoup the cost, even taking into consideration the heightened sense of nostalgia that some metro dwellers may experience for their hometown meals,” a Delhi-based food consultant commented. 

“Many customers would find it more expensive to transfer food from an airport to their homes, necessitating the necessity for Zomato to establish distribution hubs or terminate stations for these shipments in busy areas,” he further said.

Furthermore, food packaging is said to be a critical factor in the success of intercity deliveries. Aside from the logistical issue, Zomato should ensure that meal packing is not hampered. The founder of an intercity food delivery website based in Kolkata stated that orders must use the same subpar packaging that restaurants frequently use locally.

The founder, who requested anonymity, claimed that because his company offers 12-hour delivery, it keeps equipment parked at airports throughout the day in the cities where it operates.

Zomato has conducted a number of experiments over the past few months, and its teasers masquerading as new services show that Deepinder Goyal and Zomato aren’t short on ideas. Will it Zomato’s Half-Baked Experiment?