Frshly’s dispensing machine has food from the most popular restaurants of the city at affordable prices and in proportionate quantities.

This Chennai-based startup has an answer to Swiggy Instant food on the go
Atom Startups Tuesday, August 08, 2017 - 19:39

It’s lunchtime at SP Infocity in Chennai and like any business park it houses a large number of corporate offices. The food court is buzzing, with over 10 restaurants offering all types of cuisines. 

But in a small bustling corner a tall automatic dispensing machine is seen handing out food from some of the most popular restaurants in Chennai.

People come punch in their choice and pay, and a robotic arm moves towards the selected food, picks it up, heats the food and dispenses it, all in a few seconds. The food dispensing machine called Frshly is the brainchild of Satish Chamy Velumani. 

How Frshly works

Started in 2013, Frshly partners with some of the most popular restaurants in a given city. For example, in Chennai it has partnered with restaurants like Anjappar, Saravana Bhavan and Sangeetha.

Based on what consumers have been ordering, Frshly tells the restaurants to prepare a set of dishes 12 hours in advance. The food is prepared right before peak time and is brought to the outlet and fed into the machine. 

Frshly’s proprietary technology automatically reads the food labels and displays the food item with the price on the machine. Customers can pick what they want and order. On ordering, Frshly’s robotics technology picks up the food, reheats it and dispenses it to the customer.

To ensure the food offered is fresh, once the food is more than approximately six hours old, it automatically disappears from the menu. Frshly has a built an algorithm that enables this.

Satish says that this is a good business proposition for restaurants as well and they end up earning good profits on the business they get from Frshly, which charges the restaurants a commission on meals. 

With the amount of orders the restaurant receives from Frshly, Satish says that they make good profits on the business they do with the startup

The food is kept simple keeping in mind that it is treated as everyday food by employees. And the prices too are kept low. Frshly does not charge more than about Rs 120-150 per meal.

Food on the go

Since the model of Frshly is getting food on the go, the target areas for the dispensing machines are airports and railway stations, business parks and food courts.

Frshly has so far installed 20 dispensing machines across Chennai, Bengaluru, Hyderabad and Pune and dispenses an average of 200-250 meals per machine.

Satish says that the advantage with Frshly is that is can be installed anywhere you want. The machine occupies only 40 square feet area and is fully automated and doesn’t necessarily require someone to be employed at the machine.

 

Business model

The idea of building a fully automated machine integrated with robotics and built-in algorithms may sound capital intensive. But Satish says that the machine Frshly currently uses is 50% the cost of the original one. “The advantage is that the cost of technology always goes down. We are now working on a new machine which will be 30% of the cost of the original one,” he adds.

 With the convenience that Frshly brings to employees, it doesn’t pay rent for the space it sets up in, except in food courts.

In fact, Satish is now adopting a new business model. Frshly will charge the client a subscription fee just to have its outlet present in an office or building. It already has one large US-based client on this model. It will be adding another 8-10 locations for this client.

Additionally, the older customers too, Satish says are switching to the subscription model.

“The advantage here is that we bring an unprecedented convenience for employees. Most food courts don’t have a huge variety and in most places you will usually find caterers, whose quality declines over time. If employees start walking out of office premises looking for food, it is a direct loss for companies as the time the employee dedicates to work goes down. Why do you think Google gives its employees free food?” says Satish.

Frshly currently runs at about 85% capacity. It gives restaurants a guarantee of 90% consumption, so 10% of wastage is covered by the restaurants itself. If there is anything above that, Frshly covers that.

Transit areas are however a different business. In this case, Frshly enters into a revenue sharing business model with the Food and Beverage (F&B) operator like Travel Food Services (TFS), which manages that particular airport or railway station.

In airports, the product is sold at slightly higher prices and the F&B operator gives Frshly a cut on every product that is sold.

Frshly is currently in talks with Bengaluru, Mumbai and Delhi airports to set up its dispensing machine there.

The startup is also looking to integrate beverage dispensing, which it will add over the next few weeks. This will be an extension of the machine which will add another 20 square feet to the area it occupies.

Frshly is also looking to install its machine at stand-alone corporate offices, hospitals and cinemas. The food that the machine dispenses will vary based on where the machine is placed.

Frshly is aiming to open 50 outlets by the end of this year and taking that to 400 by next year.

Competitive landscape

Since there is currently no food dispensing company in India, or elsewhere, Frshly sees no competition for it, neither from restaurants.

“Does Amazon compete with sellers? No, it enables them. Similarly, I’m an enabler,” Satish says.

One could argue that it competes against the likes of Swiggy or FoodPanda. But Satish says that he’d rather collaborate than compete with anyone.

With Swiggy, the order size is usually larger because a restaurants portions aren’t always designed for a single person’s consumption. There is always a wait time of at least 30-45 minutes.

Frshly is also trying to collaborate with food delivery startups to become a micro delivery partner for them. It will act as a hub from where delivery boys can deliver, instead of having to travel to each restaurant.

Additionally, Frshly also has plans to expand internationally to Singapore and Malaysia. It is currently chalking out plans while researching the food market there.

It is also working on launching an app, which will let users reserve their food. Once they come closer to the dispensing machine, it will automatically detect the user and gets the food ready.

The only challenge for Frshly, Satish says, is to reduce the cost of technology while simultaneously enhancing it.

Having raised a seed and pre-series A round of funding previously, it is now looking to raise series A to fund all of its grand expansion plans.

It has currently reached an operational break even in Chennai and is on the verge of breaking even in a month in Bengaluru and Pune. 

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