Founded by ex-CMO of Zomato, Alok Jain,
What Was Yumist?
Yumist was a company that was venturing into food delivery in 2014. Their initial brand offering was:
“We make delicious, homely meals available in under 30 minutes through the use of technology and a sophisticated logistics infrastructure.”
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.
What They Envisioned
There was a lack of proper ordering system, kitchens system, customer servicing, logistics, and tracking service in one package in the Indian ecosystem. Each company that dealt with delivery would only fulfill maybe one or two of these requirements and not all. Thus, there was a scope for rapid growth.
The two founders of
They had plans for expansion on the cards and soon, opened another headquarter in Bengaluru. By the March 2016, they had plans to scale up to 5 cities including Mumbai, Pune, and Hyderabad and by 2017, they would expand to Chennai and Kolkata too.
For a company that had plans for the next few years in the pipeline, what did not cooperate was their funding rounds. They had only 2 of them. Their first Seed round took place in January 2015, which raked in USD 1 million.
The second round took place in December of the same year, which brought in double the amount raised in the first round, i.e, USD 2 million. The lead investor for this round was Unilazer Ventures.
By March 2017, the company was hitting profit margins at Rs.65 per order and had an average delivery time of 20 minutes. It was faring better than most.
So, for an idea that came at the right time to people with the right experience and with enough funds, why did Yumist not take off?
In October 2017,
“We failed to raise the kind of capital that this business required while staying true to the customer problem. In hindsight, there’s a bunch of internal and external factors that led us to this dead end.”
And they were right. Many would say that the primary reason for
Now, one of the main reasons was the expansions to other cities.
“From launching in a second city prematurely, or committing to a high growth, high burn model just because prospective investors wanted to see that back in 2015, or taking a tad bit too long to find the right business model, we made our mistakes.”
They wanted to expand to woo investors, but then their margins dipped which then drove away investors.
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 startups that came up. This confused investors, consumers, and thereby slowed the growth.
Many companies like iTiffin,
Thus raising money became tough for every food tech startup 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.
“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.”
Its failure was a result of its circumstance, as much as it was of mismanagement. Many companies didn’t survive the 2016 startup bust, and this company just happened to join the list.