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Trends to Cope up with Unpredictable Sales in 2022 - Part 2

In the previous article, we spoke about the recent trends observed in the food and beverage industry in order to cope up with unpredictable sales. Competition is at an all time high and with businesses looking to turn profitable in the long term, newer trends are emerging in the industry. Let’s have a look at the adaptation of the industry in order to remain relevant in the current times and bounce back to its former glory.

1. Outsourcing Manufacturing

One of the major costs that a food-based business has to bear is the cost of manufacturing. This would include costs associated with acquiring raw materials, producing the final product and finally transporting the finished product to its store. This conventional method of manufacturing meant that companies could not expand at a higher rate to meet demands of the market.

The onset of the pandemic saw companies switch to outsourcing manufacturing. MTR Foods, a Bangalore based food processing company took the third party manufacturing approach. The contracted manufacturing factory in Mathura was responsible for the production of vermicelli. The additional 150 tonnes produced by the third party manufacturer made MTR Foods’ expansion into the northern and eastern part of the country a reality.

Outsourcing manufacturing has helped MTR foods has helped them source wheat faster and reduce freight costs by upto 6 to 7%.

Large scale outsourced food manufacturing.

2. Hello Frozen, Goodbye Fresh

This has been one of the most successful strategies in the food and beverage industry in the post-pandemic world. From just 5 - 8% during the pre-pandemic time, ready-to-cook (RTC) foods now account for a whopping 40 - 50% of the offerings at some of the country’s most prominent fast food and cloud kitchen chains. In order to address scalability and standardisation, cloud kitchens have become heavily reliant on RTC products to prepare their fare.

For Barbeque Nation, a Mumbai based restaurant chain, which primarily saw its business through its dine-in restaurants saw a major crash during the pandemic. It was during this time that their delivery brand UBQ, became a lifeline for their survival. The transition to the delivery-first business model was more arduous as Barbeque Nation had to replicate the dining experience they were known for. The element of speed in the food delivery space played an important role. After a few false starts, UBQ eventually adapted by switching to frozen foods. This allowed them to standardise their offerings and shrink delivery times. The need for skilled labour to prepare food was also a thing of the past as the restaurant staff simply needed to thaw and pack the food.

Karamat Foods, a ready-to-cook food manufacturer has seen a change in the attitudes towards RTC foods since the pandemic began. Prior to Covid, cloud kitchens were averse to the idea of using RTC foods. But the same changed after the pandemic struck as most of the restaurants and other food companies switched almost entirely to RTC food. It is due to this trend that Karamat Foods earned a revenue of ₹ 50 crore and has been witnessing a yearly growth of 10 -15%.

Significant shift to frozen food.

3. Adopting the Store-within-a-Store Model

Businesses have figured out a way to have a better and expanded market reach. Conventionally, a brand would sell their products in their standalone store. This brought several limitations such as space for expansion and convenience to the customers who lived far away. In order to tackle this issue, businesses came up with a store-within-a-store model.

A store-within-a-store model is when the retailer acts as a host, allowing one or more other brands to operate independently within the store. The partnership between brand and retailer is a mutually beneficial one that helps both parties increase revenue and grow their market. Such a model gives brands the power to manage their own inventory. Moreover, this model also helps brands save money by removing much of the overhead costs to run an independent store. If the host retailer generates a lot of foot traffic throughout the day, brands within their store wind up selling more products than solely operating out of a standalone store.

Several companies in India have adopted this strategy too in order to cater to a larger market. Bono, an ice-cream company based in Mumbai, sells their products through The Food Matters chain of restaurants such as The Table and Mag Street Cafe. Bina’s Homemade Ice Cream has tied up with turf field companies to store their products on their premises. Sweetish House Mafia, a cookie store, sells its products through a restaurant named The Roll Company.

Adapting to the store-within-a-store model

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