Founded by Alok Jain and Abhimanyu Maheswari in November 2014, Yumist served home-style meals, which it prepared in its own kitchens.

Delhi-based cloud kitchen startup Yumist shuts down operations as it fails to raise capitalImage source: Facebook
Atom Startups Saturday, September 30, 2017 - 11:25

At a time when the FoodTech space seems to be gaining traction after a lull over the past two years, Delhi-based cloud kitchen player Yumist has shut down operations.

In a blog post on Friday, the company announced that it is shutting shop as it failed to raise the kind of capital that the business required.

“From the very beginning, we knew that our biggest challenge will be finding a business model that’s profitably scalable. We tried multiple iterations across our supply chain to achieve this. There was a time in early 2015 when our bikers had hot meals with them basis a demand prediction algorithm and orders were delivered within 15 mins,” the post said.

Founded by Alok Jain and Abhimanyu Maheswari in November 2014, Yumist serves home-style meals, which it prepares in its own kitchens. The start-up had a 12,000 square feet kitchen in Delhi-NCR.

Yumist was backed by Ronnie Screwvala’s fund Unilazer Ventures and Orios Venture Partners. It raised $2 million in a round led by Unilazer Ventures in December 2015. Orios Venture Partners also participated in the round and invested $1 million in February 2015.

The startup was making Rs 65 in margins per order at an average order value of Rs 190 as of March 2017.

It claims that its delivery outlets were breaking even at just 70 orders a day and it was acquiring new customers at Rs 180 and recovering back this money within 45 days.

As per the blog post, from March until September, Yumist tripled our revenues and gross margins. With these trends, Yumist would have become a profitable company by June 2018.

In October last year, it decided to foray into the food truck business. However, it is unclear if these plans fructified.

It had operations in Bengaluru and Delhi NCR. But Yumist announced in May that it would be shutting down its operations in Bengaluru, where it was operating out of a rental kitchen.

One of first reasons it states for this is a premature launch in a second city and committing to a high growth, high burn model because of what investors wanted to see in 2015.

It continued to expand in Delhi-NCR.

Yumist says that several different factors have led to the startup shutting shop on Friday.

“…taking a tad bit too long to find the right business model, we made our mistakes. We learnt from these mistakes and recovered fast, but maybe not too fast,” the post says.

Owing to the lull in investor appetite in 2016, Yumist failed to raise funds. Investors wanted to wait it out.

The startup, in fact, raises some valid questions on how it could have built its business. Questions like, would the outcome have been different had Yumist been built in a different time, would that have helped them raise more capital? Would that have helped them build the business profitable across the country?

The FoodTech industry has been seeing some investor appetite come back after the market saw players reduce burn rate and focusing on their business models. The competition, however, continues to be stiff with startups like Zomato and Swiggy investing in this business aggressively thanks to their deep-pocketed investors.

The cloud kitchen space in particular too, has seen a number of players such a Fresh Menu in Bengaluru and Mumbai and Innerchef, which has a presence across the country.

Despite shutting down, Yumist acknowledges the opportunity in this market.

“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,” the founders said in the post.

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