With its IoT smart vending machines, Daalchini intends to re-shape retail trends in India
Daalchini, a start-up based in Delhi-NCR, aims to popularise smart vending machines with the added benefit of no contact services to comply with the stringent parameters set by the pandemic. Furthermore, the company provides far more than just the 7Cs. You can now buy healthy, home-cooked food, including your favourite pani puri or momos via these vending machines.
Anushruti Singh June 27, 2021
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We live in asymmetrical times, with rapidly changing needs. And with the onset of the pandemic, these needs have undergone a sea change. In such circumstances, some old-school innovations are being repurposed and diversified to meet the growing demand for flexibility and to follow the no-contact norms of these unprecedented times.
One such innovation undergoing a drastic makeover is the vending machine.
These are turning out to be no-touch points for food distribution at workplaces and in public places. Furthermore, with the intervention of technology such as IoT, they are becoming smarter.
Unlike Japan or China where vending machines are ubiquitous and are a mainstay of their culture, it is a totally different story for them in India. However, this may soon change, as an Indian start-up, Daalchini, is giving a makeover to vending machines with IoT based solutions, making them advanced and phygital.
Not only that, but this Delhi based start-up also installs cutting edge vending machines to make home cooked meals available at the click of a button, requiring zero human intervention.
You can now buy maa ke haath ka khana directly from their smart vending machines.
“Daalchini is India’s first 24/7 instant snacking destination that provides affordable, healthy snacks and home-style meals through IoT-enabled ‘phygital’ vending machines and smart stores,” says Prerna Kalra, co-founder at Daalchini Technologies.
Along with this novel element, Daalchini’s phygital vending machines or kiosks offer an array of products from café-packed savouries and bakery products to ready-to-eat and premium proprietary products along with packaged food.
Banking on its technology-led model, Daalchini is able to adapt its menu based on early sales trends. With this approach, the company has already launched over 400 vending machines across Delhi-NCR, Mumbai, Chandigarh, Pune, Goa, and more.
Their food cravings made them founders
Prerna Kalra and Vidya Bhushan, both ex-Paytm executives, founded Daalchini in 2017.
The reasons behind the start-up, according to Kalra, were their personal experiences that most working professionals can identify with—cravings for home cooked food. The other reason was to assist small businesses in scaling up their operations by utilising vending machines.
“Working as a full time professional, it was a constant challenge for me to carry healthy food and snacks to work every day. Due to my busy schedule, I barely had time to cook breakfast, lunch, or even mid-day snacks. I would find myself craving for fresh home-cooked meals. Even food delivery simply got tiresome, expensive, and just did not match my schedule between meetings. You know, everyone needs an instant or quick snacking option to match up with long working schedules,” Kalra opens up.
Kalra experienced China’s massive vending machine culture during one of her official visits there, which piqued her interest in developing solutions for her food related problems back home.
“Chinese vending machines dispensed almost every kind of fresh food item—fruits, momos and more. Another thinking was that, while vending machines-based retail is so deep in China, I still see in India that mom-&-pop stores owned by people such as my father find it challenging to grow them to more locations. Inspired by this and after coming face to face with the problem, it just clicked in my mind, hence, Daalchini was born,” she says, telling us the story behind the start-up.
But with the advent of the pandemic, the company adapted the solution to not only provide fresh-food from recognised cloud-kitchens but to also act as a platform for D2C brands to launch them through their network of phygital distribution points.
No more 7Cs
Even though vending machines are not a new concept in India, they are typically found in airports or at large workplaces.
At the same time, their current offerings are limited to the 7Cs: chocolates, chips, cookies, cakes, colas, candies, and cuppa. These packaged foods and beverages are, understandably, regarded as unhealthy food options. Which Daalchini wishes to alter.
Hence, the company began as a distributor of fresh food from home chefs and tiffin services. Not only that, but Kalra sees her platform as a cloud kitchen aggregator, which has revolutionised the vending industry in India with its 6-meal-a-day concept. As a result, Daalchini has partnered with cloud-kitchens to meet consumers’ daily on-the-go snacking needs.
“Our endeavour is to enable the 6-meals-a-day offering through 100 per cent cashless, app-based and contactless smart stores and pantries, not only in office buildings but also in establishments such as hospitals, residential societies, educational institutes like colleges and in-transit as well through cabs and buses,” says Kalra.
As part of its commitment of serving 6-meals-a-day, Daalchini is now creating a sub-99 food store to enable brands in all F&B categories (like frozen, chilled, meal-kits, snacks, bakery, immunity boosters, healthy/energy drinks, yogurts etc.) to reach their targeted audience and enabling them to scale up rapidly across multiple geographies.
“We target young professionals and students looking for affordable and instant food. Since the pandemic hit our nation, we are now also available in residential societies and have also started mobility vending machines in cabs and buses in Delhi-NCR,” she informs us.
Due to the positive response from consumers, the start-up has been busy setting up vending machines at various locations since its inception. As Kalra refers to them as smart stores, they currently have 430+ smart stores in 10 cities with over 1.2 lakh monthly active users. Besides that, the brand has 190+ franchises, and consumers can choose from 100+ brands and 29+ cloud kitchens are selling on Daalchini’s platform.
Kalra says, “Our platform has provided more than 5 million meals through our smart contactless solution. 68 per cent of our customers are repeat customers. Our life-time-value or customer acquisition cost, which is an important parameter for any D2C brand is 3X of that of e-commerce. This is due to the high-repeatability and low retention cost for the brand on our platform.”
The company has an extensive list of collaborators. Its clients include industry leaders such as GE, Byju’s, Tata Consultancy Services, Paytm, Snapdeal, EY, OLX, OYO, Gaana, Cognizant, and VIVO, among others. The company has also partnered with some of the country’s leading managed office spaces, including Smartworks and 91Springboard, which house thousands of professionals.
Vending machines aka portable retail stores
The team also intends to install their smart IoT-powered vending machines in vehicles, making them portable. This will, in some ways, reshape retail trends. According to Kalra, it will be a stepping stone to establishing v-commerce in India.
According to Kalra, India has over one crore mom-and-pop stores, and the Indian retail ecosystem has grown as a result of these numerous retailers. However, the rise of e-commerce and mobile payments has created a demand for digital stores with instant physical delivery. “V-commerce or smart vending machines or automated kiosks are the perfect solution. They are the future-ready technologies for further growing the retail penetration in India. And we at Daalchini are just doing that, bringing smart retail to consumers in the form of D2C brands with home style food products,” she avers.
India currently has one retail store for every 100 people, whereas Japan has one v-commerce store for every 21 people. Daalchini’s phygital vending machines are intended to fill this gap.
It was tough in the beginning
Both Kalra and Bhushan founded this company with the goal of empowering women to become entrepreneurs. Through a network of automated kiosks, they hoped to create an unparalleled distribution channel that is both physical and digital.
However, as with any start-up, the early days were challenging for Daalchini. In fact, the company ran into difficulties when it came to procuring vending machine-worthy food products from local chefs.
Talking about the challenges, Kalra says, “Initially, after setting up the vending machines, cloud kitchens and tiffin services were not prepared for food items specific to vending machines. We then started preparing our own checklist along with food consultants and food-experts to find what it takes. This became our bible and rulebook while on-boarding cloud-kitchens and tiffin services.”
The company also faced challenges in maintaining quality, as it is the first thing that consumers think about while spending their money on food.
“We faced a challenge when it came to home-chefs in terms of ascertaining the quality of their food, as there were no set guidelines for them. For this, we prepared them and converted their kitchens into professional and certified kitchens with the help of food consultants and food-experts. We also helped them to get the necessary licenses, got their kitchens audited and fully compliant. This is a procedure we follow while on-boarding partners,” she reveals.
To strengthen their supply chain even further, the start-up employs a tech-driven, temperature-controlled supply chain that is forecast-driven rather than demand-driven, as guided by machine learning-based projection tools. “Our tech suite also uses IoT retail to keep food safe and healthy while allowing us to monitor it remotely. Particularly post pandemic, customers were concerned about hygiene and safety. We then launched a 100 per cent contactless kiosk solution which helped in its further adoption,” Kalra says.
The pandemic accelerated growth
With the pandemic norms now set in our lives, consumers prefer no-contact food delivery, particularly at work. This shift in consumer behaviour benefited Daalchini’s operations. Talking about pandemic-induced growth, Kalra claims that their vending machines provide a safe, contactless approach to office meals that are not only tasty but healthy too.
Furthermore, it has been good times for the company since last year.
“We began our operations in April 2018 after developing the product for about six months. We grew from two kiosks to 50 in FY19, and from 50 to 200 in FY20. That’s when the pandemic hit the country and we pivoted from 77 per cent into corporate offices to the much larger arena of hospitals, manufacturing, pharma companies, in-transit options like cabs/buses, and residential complexes. In Q4 of FY21, we grew from 200 to 310. And now, we are aiming for 510+ kiosks by expanding the scope of our solution and clocking 3 crores+ GMV,” she informs us.
In the last couple of months, the company has added 50+ stores per month. “In Jan 2021, we were at only 200+ stores, but by April 2021, we reached 430+ touch-points. We also added 3 cities in the last quarter and are planning to add 2-4 cities per quarter this year. With the pace at which we are growing, we should be able to achieve a 12 crores monthly turnover rate by the end of FY22,” Kalra predicts.
Simultaneously, to meet the new standards and to ensure quality, the start-up has modified its strategies with some key strategic decisions. To assist customers, essentials such as sanitisers, masks, and wet tissues have been added to the kiosks. In addition to that, the company has introduced products such as ready-to-cook meals, groceries, and milk products aimed specifically at residential areas. Which helped increase their sales.
They also encourage customers to practise social distancing and sanitisation prior to and after using Daalchini’s kiosks or vending machines. There was a pre-covid option where the customer could buy from the app and pick up the item from the kiosk. To maintain safety standards, the start-up converted that to a completely contactless option. When a customer purchases an item through the app, they scan the QR code to vend it, then use the foot-paddle stand to open the pickup pocket and collect it.
“Being an essential service and by nature being 24*7 accessible, we have seen higher consumption than normal in locations where we were operational in these tough times. This was partly due to the unmanned option (hence social distancing) and partly due to the unavailability of other F&B options at that particular location,” says Kalra.
Going ahead, the company wants to continue to build up the momentum of their growth streak.
From pani-puri to momos—all under one roof
The start-up is seeing green shoots and generated revenues at an ARR of Rs 14 crores in March 2021 thanks to its product-market-fit strategy. The plan is to exponentially expand their footprint and to continue to add to the products in their kiosks.
“Our vision is to enable the vending form-factor for every use-case from momos to pani-puri to ice-creams,” says Kalra.
To do so, the company is creating a sub-99 food store to enable D2C brands to reach their targeted audience and enabling them to scale up rapidly across multiple geographies using the community of automated kiosks. “It already has smart retail offerings for a variety of on-the-go use cases, drives daily retail across various channels and offers a variety of foods and beverages under one roof. We are creating innovative retail solutions around vending machines and v-commerce,” she avers.
The company is working on two fronts to establish the platform as a launchpad for micro-entrepreneurs in the retail-tech space. First, there will be a supply chain and logistics service for franchise partners, and then there will be a suite of smart retail that can be expanded to include more products.
Once the platform is ready, the company’s plan is to further scale up operations. Kalra tells us about it. “The plan is to cover more cities, both in terms of supply chain and technology service. This will allow us to build a strong community of micro-entrepreneurs. While Daalchini will act as a launchpad for D2C brands, that are entering physical retail beyond their existing digital footprints,” she says.
According to the company’s analytics, they have raised Rs 11 crores in the last two years from Micro-VC Artha Venture Fund and a few renowned angel-investors such as Ajay Kaul (former CEO-Dominos India), Renu Satti (VP-Paytm, former CEO-Paytm Bank), Pradyumna Agarwal (Director – Temasek), Amit Lakhotia (CEO, Park+), and others.
With their roadmap and blueprint in place, this bootstrap start-up intends to raise substantial capital to expand their operations. “We plan to raise growth capital of up to US$ 8 million (around Rs 58 crore) in the next 2-3 years to support our growth plans. We are expecting an annual turnover rate of Rs 144 crore by the end of FY22,” Kalra professes.
With this, their future plans include expanding to 2000+ smart stores in this financial year. And they also intend to add two to four cities per quarter for their kiosk locations this year.