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Rajiv Subramanian, Eatfresh’s founder, with his team of chefs. Photo credit: Eatfresh.

Bangalore-based startup Eatfresh has suspended its on-demand food delivery service and is now focusing on group and bulk orders.

“Dear customers, we no longer operate our on-demand meal delivery service, and will only cater to party or bulk orders in the future. We strived to create a differentiated offering, and hope that we leave you with some happy memories…” says a message on the Eatfresh website.

The reasons behind the rollback are unknown, as the company CEO Rajiv Subramanian was unavailable to speak.

Eatfresh was launched by Indian Institute of Management, Ahmedabad, (IIM-A) alumnus Rajiv in 2015. The startup used to offer chef-cooked Indian and international cuisines with a daily rotating menu, much like Freshmenu, in Chennai and Bangalore.

The idea behind Eatfresh was to control all stacks of a food delivery process, from order-taking to food preparation to delivery. “Managing the full-stack gives high margins of around 40 percent, but it also requires a lot of funds to manage processes from top to bottom. This could have hurt Eatfresh,” says an analyst who didn’t want to be named, because the startup hasn’t released an official statement on the rollback.

Eatfresh is the food delivery brand of Ubiquitous Foods, which also operates the eight-year-old retail bakery chain Ovenfresh. Venture capital firm Kalaari Capital had picked up a minority stake in Ubiquitous Foods in 2013.

Eatfresh claimed to have raised nearly US$4 million in total after Kalaari Capital put in additional funds in the company in December 2015.

The funds were to be used for expansion into Pune, Hyderabad, and other cities.

Screenshot of Eatfresh website, notifying users of the rollback. Photo credit: Eatfresh.

See: 25 failed startups in India this year and what you can learn from them

Series of shutdowns

The food-tech segment has been struggling with funding in the past one year, resulting in a number of shut downs. Overall, the food tech space saw an 87 percent decline in funding in 2016.

TinyOwl, for one, was one of the most talked-about failure stories in 2016. The startup raised US$16 million in February 2015, followed by a bridge round of US$7.4 million in October. But all the funding could not solve the core problems of delivery costs, negative margins, and unreliable food quality and service from restaurants. Massive layoffs followed and it eventually merged with logistics startup Roadrunnr.

Zupermeal, which wanted to connect home chefs with professionals ordering food in cities, got US$2 million in seed funding from angel investors, including celebrity chef Sanjeev Kapoor. But it closed down within eight months in May 2016.

Other food startups that had to shut down services include BiteClub, Zeppery, EatOnGo, Dazo, and Spoonjoy. iTiffin, which was backed by Bangalore cricket star Robin Uthappa also shut shop in 2016.

Others who diversified into food delivery, such as taxi app Ola, also wound up operations, while restaurant discovery site Zomato scaled back operations. Rocket Internet’s Foodpanda was acquired by Delivery Hero.

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