Case Under Analysis:

Stay Hungry Stay Foolish- New Era of Food Delivery at your

doorstep.

Introduction-
One evening, the CEO of the leading Cab provider XYZ Ltd in India was mulling over the future of the
company. Jack was sitting in his plush apartment and thinking about the ups and downs his company has
faced in the last 2 years largely plagued by the ongoing pandemic which had disrupted the businesses across
the globe.

• The mobility sector had recovered 69% of Pre Covid volume but the second wave of Covid-19
spoilt the party.
• From 113 Mn rides in January 2020, mobility companies in India had reached 78 Mn rides in March
2021
• The recovery would have continued if not for the second wave of the Covid-19 pandemic which
hit India last month leading to more lockdowns
• The sector witnessed a 30-40% fall in volume due to the spike in Covid infections in the second
wave
It has become necessary for XYZ Ltd to diversify into some other industry which can mitigate the risk of
business suddenly going down due to external factors.

Problem Statement
Jack could not think of a better or a worse time to make a foray into a new industry. Food delivery business
kept playing in his mind. Barring a few weeks of complete lockdown, the food delivery business had done
well in India during the pandemic. The corporate India which had been initially locked in their respective
homes -had majorly ordered food from these apps sitting in the convenience of their homes. The high
growth of the food delivery business is driven by the increasing work pressure for the people having
corporate jobs and the fear of infection always looming in the background for people living in small towns
with increasing internet access. But there were a lot of factors to be considered:

The competition is at an all-time high and the restaurants supplying food are marred by the increasing food
prices.
The fuel cost was already affecting the cab business and, at the same time, entering an industry which has
a dependency on fuel prices should not prove to be the last nail in the coffin.
Restaurants commission is a major source of revenue for food delivery platforms.
Also, Driver’s compensation may soon gets some government regulations which can further increase the
cost.
This is a business which is cost intensive and low margin and is driven by scale. The industry has seen
exponential growth after the pandemic but the delivery platforms have largely been unprofitable.
While XYZ ltd has its own strengths in terms of tech enabled fleet of drivers, and adequate experience on
similar platforms, the food delivery business will be a different ball game altogether.

Research
Food Services is a $65 billion market opportunity in India, as per Redseer, growing at 9 per cent per annum
and likely to reach $110 billion by 2025. Within the food services market of $65 billion, online delivery
forms only a small subset with a market size of $4.2 billion (6-7 per cent). Hence, there is also an
opportunity for online delivery to gain share within the growing food services pie. Only 9 per cent of
Internet users in India are currently ordering food online, according to estimates, versus 36 per cent in the
US and 50 per cent in China.

Food Services in India is highly under-penetrated vis-à-vis other countries. This is evident in the fact that
while food consumption expenditure in India stands at $670 billion per annum, only around 10 per cent of
it is spent on restaurant food, while the rest is driven by home-cooked food. In contrast, 54 per cent of food
consumption spends in the US and 58 per cent in China comes from restaurant food.

Decision Making
• Analyze the Market Demand
• Analyze the Strengths and Weaknesses
• Analyze the Opportunities and Threats
• Analyze the various factors operating in the market and Industry
• Devise a Business Plan
• Arrange Funding

Business Impact & Result

After the launch, within a few months XYZ Ltd carved a market share of 12.7%. The India
Business was valued at USD 206 Million. The bigger market players started approaching XYZ
with Merger/Acquisition Proposals.
Road Ahead and Challenges
• Keeping the same momentum of growth may be difficult
• Need to carve out and maintain a Niche in the market
• Innovative Marketing to enhance the Brand Recall value

Questions for Discussion (ACON/Bridge)

1. Validate if all the 7S as per Mckinsey 7S framework are aligned with each other.
2. Do a Porter’s 5 forces model analysis for XYZ Ltd. and make a recommendation to enter or not to
enter the Food delivery Business (Explanatory)
3. Do a SWOT Analysis to evaluate the current strength, weakness, opportunities and threats of XYZ
Ltd
4. Is there any other industry where they can plan to enter to fuel their growth? (Exploratory)