A recent post shared by Grapevine founder Saumil Tripathi about a salad startup founder’s challenging journey is doing the rounds. The food founder shared on Grapevine, “I’m writing this from our Bangalore central kitchen at 3 AM, looking at next month’s projections, and for the first time in 6 years I’m scared.”
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The salad startup founder's story
The food startup grew from a small basement kitchen to 78 cloud kitchens and 5 million orders in six years, only to face challenges from rapid expansion and surging costs.
“I went from selling 12 salads per day to 14K salads per day,” the founder remarked. “Don’t start a cloud kitchen business,” he further warned.
In 2018, the said person quit his high-paying tech job and used his Rs 8 lakh savings to set up a small kitchen in Gurgaon. He found that enough fresh, filling and affordable salads were not available in restaurants. So, he wanted to prepare salads that were delicious and healthy for his customers.
“The menu had eight salads priced at Rs 250 each. But there were problems” the founder shared.
He listed the charges he had to bear and the initial loss he was making.
“Food cost per salad: Rs 85
Packaging cost: Rs 45 (eco-friendly materials were expensive)
Delivery platform fee: Rs 75
Staff cost per order: Rs 28
Each salad lost Rs13, even before accounting for rent and marketing.”
However, his customers loved the fresh ingredients and balanced flavours. As a result of word-of-mouth publicity, the orders grew from 12 to 200 a day within six months.
By 2019, the techie-turned-food startup owner started making profits.
Bulk orders for ingredients and packaging of the orders lowered costs. The cloud kitchen’s menu expanded to include smoothie bowls and protein boxes.
“Profits improved, with each order bringing Rs38,” shared the food entrepreneur.
At this point, COVID-19 hit, and demand for healthy, home-delivered meals got raised. The salad startup founder opened another kitchen in Cybercity and started catering to corporate bulk orders by then. As a result, the daily orders shot up to 600.
Now, the company scaled quickly opening 78 kitchens across India and hit 5 million orders.
“But scaling up came with challenges,” the founder shared explaining how rapid expansion, funded by loans, soon turned out to be a problem.
The delivery platforms were charging high commissions (up to 30%), which was eating away profits. Operating 78 kitchens added huge fixed costs. Also, marketing expenses had to be increased to bring in new customers.
The startup founder concluded by saying, “Scaling too fast on borrowed money and depending on platforms can turn your dream into a nightmare.”
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