Making Food Delivery Profitable

Starting a restaurant in NYC is tough.  But, once you start, making your restaurant profitable is a milestone very few restaurants in NYC achieve.

As consumers choose to order online and eat at home or the office, restaurants have jumped into delivery. For some, off-premise sales represent over 30% of total revenues.

As restaurants look to accommodate this growing trend, we wanted to share some of the lessons we’ve learnt running our business for the best to-go experience.

Please share with us your insights, feedback and thoughts as peers navigating this landscape.

The Dabbawalas of Mumbai

Artists are inspired by the works of Rembrandt and Da Vinci, world leaders by Gandhi and MLK, and techies by Apple and Google. We wouldn’t be much of a food delivery service if we weren’t inspired by the precision and efficiency of the dabbawalas of Mumbai. If you’ve never heard of these folks, it’s time you did.

But let’s first start with a few statistics about Mumbai, India’s financial capital:

Population: 13 million (most populous city in India; sixth most populous in the world)

Population density: 55,794 people per square mile.

No. of people who use the services of the dabbawalas: 200,000

So who are the dabbawalas and why are they such an integral part of Mumbai’s working world?

The term “dabbawala” means “lunchbox man” or “tiffin man” (dabba= lunchbox or tiffin). The dabbawalas are a network of food delivery men who have been serving the city of Mumbai since 1880. They are not caterers. They pick up “dabbas” or prepared lunch boxes from various homes across the city and have it delivered to middle class office workers. Usually, the food is cooked and packed by the wives of the men working in these organizations. A dabbawala will pick up the lunch boxes, place them on a hand cart and use his bicycle to ride to the closest railway station. Here, he will pass on the lunch boxes to his colleagues who use the local trains to deliver the lunch boxes to the consumers. Before a lunch box reaches the consumer, it has changed hands at least 6 times. After lunch, the dabbawalas deliver the empty dabbas back to the respective houses.

Cost to customer for the service: Rs. 350 – Rs. 400 per month (approx $7)

No. of dabbawalas in Mumbai: Approximately 5000

Monthly salary of a dabbawala: Rs. 8000 (around $133.5), regardless of role and experience.

So why do these office-goers just not eat from the office canteen or pick up food from restaurants? Most cite health reasons, dietary preferences, hygiene reasons and the simple preference for a home-cooked meal.

And why don’t the office-goers take their lunch with them in the mornings instead of having it delivered? To understand that, you have to have experienced a commute on a Mumbai local train. Approximately 6.1 million people use Mumbai’s local trains every day. It takes considerable skill and perseverance to board these trains. Think the New York subway but with many more people, and with a good amount of pushing, shoving and yelling involved. Add to this mix a hot and humid climate, and you can imagine how uncomfortable the experience can get. You need both hands to board the crammed train, so carrying a lunch box is close to impossible. 

Additionally, the typical office worker leaves home before 7:00 am.  A dabbawala may come home to pick up the food an hour or two later, which gives the women of the house a bit of time to prepare the meal.

The delivery work requires great time management and precision. The only technology the dabbawalas use are the local trains. It is interesting to note that these men have little to no formal education. In fact, most of them can only identify alphabets. Yet they manage to deliver these 200,000 dabbas to 200,000 customers on time every day and bring the dabbas back to each home. According to former Forbes editor Subrata Chakravarty, the dabbawalas make only one mistake in 16 million deliveries.

Truly inspiring stuff for a food start-up! We at KS strive to achieve the same efficiency in our deliveries. May the dabbawala gods be with us!

Mumbai Dabbawalas’ Model of Service Excellence

“Using an elaborate system of color-coded boxes to convey over 170,000 meals to their destinations each day, the 5,000-strong dabbawala collective has built up an extraordinary reputation for the speed and accuracy of its deliveries…. Impressed by the dabbawalas’ “six-sigma” certified error rate—reportedly on the order of one mistake per 6 million deliveries—management gurus and bosses are queuing up to find out how they do it.” – The Economist

“There is this thing called FedEx that is similar to ours – but they don’t deliver lunch” – Dabbawala

“The dabbawala service is legendary for its reliability. Since it was founded, in 1890, it has endured famines, wars, monsoons, Hindu-Muslim riots, and a series of terrorist attacks. It has attracted worldwide attention and visits by Prince Charles, Richard Branson, and employees of Federal Express, a company renowned for its own mastery of logistics.” – Harvard Business Review