I Did It My Way Podcast Ep 2: Offline stores a must to build trust, says Curefoods' Ankit Nagori

In episode two of the I Did It My Way, CNBC-TV18's Sonia Shenoy speaks to Curefoods Founder Ankit Nagori to learn all about the online food business and how the brands in his company have grown during the pandemic and continue to grow.

Sonia Shenoy: Hello, and welcome to I Did It My Way Podcast. My guest on the show today is Ankit Nagori, founder of Curefoods and a veteran in the startup ecosystem. He runs a house of brands in the food space and a multiple popular brands that you might have heard of, whether it's Nomad Pizza, or Juno's Pizza, Sharief Bhai, Frozen Bottle and all many popular brands today. Overall, the company runs 150-200 Cloud kitchens under Curefoods. Ankit has worked with Flipkart as well. Thanks a lot for joining in Ankit.

Ankit Nagori: Happy to be talking to you Sonia.

Sonia Shenoy: A veteran as I said, in the startup ecosystem, how's it been so far?

Ankit Nagori: So far so good. It's been a long journey now. I started about 15-16 years back, when right after college, I started my own venture, and it didn't pan out the way I expected it to. But it was great learning. And right after that, I joined Flipkart. And that was the real journey if I may say. Six-and-half-years there felt like 20 years to be honest. I did a lot of stuff, which was pathbreaking. Thanks to the wonderful team that we had, we had a very unique opportunity to do a lot of firsts. And luckily, and of course, with a lot of hard work, we all made it happen.

A lot of new things happened, we became the first retailer to sell electronics on online channel, and we were selling all kinds of stuff like TV, fridge, what not. When we first started with billion day, people thought it would reach an absurd idea... and no one can sell those many parts in a single day. Of course, we weren't very successful the first time around. But since then, big billion day has become a brand where people just shop, day in, day out. So I believe that what Flipkart did to the ecosystem... just gave a full hope to the entire ecosystem of how they can create millions and millions of money and also create a lot of impact. Post that, thanks to the play field that Flipkart created for all of us. A lot of us were able to start new businesses, I started Cult and now Curefoods.

Sonia Shenoy: The whole food tech space has picked up in a big way. Now we have 3 million orders a day across the ecosystem? Where do you see the next million customers come from?

Ankit Nagori: Yeah, so if you look at the journey of food tech in the country, Sonia, it started off with discount. A lot of people acquired customers like many online platforms, the first movers are people who deal seekers. They said... Okay, same pizza which you dine out and pay extra rupees, you're getting a 30% discount and people start ordering in. But that was just the early mover thing, then the real customers came in who are ordering in for a real use case, like not having enough time to cook or having guests at home, and they needed to cook. The real bump up came of course, during the pandemic when people were stranded, without cooks, without wherewithal and they had to find a way to feed themselves and Zomato, Swiggy, or Domino's... all of these platforms became very big. And that's where the real step jump happened. So I think if I have to talk about the three phases, of course, First was the early mover discounts... a new fad. Then came the real big use case where people figured out it's really convenient, you can order stuff that reaches you in 30-40 minutes and reaches in good quality and good shape. Otherwise, a lot of people are very circumspect about ordering food outside. The earlier example of this would be just free home delivery by the restaurants but you will not have tracking and all of that. And then pandemic took it to 2 million plus orders. I think the last three years has been more about consolidation, about getting the real consumers who really need to use food tech, I think a very fast emerging segment of people who just don't want to cook at all. And they figure out that cooking is a really, tough thing. You must have a place inside the house, which is dedicated to cooking. Of course, it's called the kitchen, then you have to set up an ecosystem of cooks or you cook yourself of course, you have to get the raw material, grocery on a daily basis. It is tough. And if you are a double income, no-kids family or you are single, living in a city like Bangalore, you wouldn't want to spend your time on that. So, I think a very fast emerging segment is a segment who just thinks that cooking is not their cup of tea, and they shouldn't be spending the time and energy on cooking and with a similar amount of time. There are subscription platforms like us or any other platforms where you used to get the same similar type of food every day with a different menu. So I think that will be a very large segment, the next million consumers I think will come from people who are looking to eat out 30-40 times a month, which means at least One meal a day, and sometimes twice a week or twice a day. And that's where I think the real paying consumers have also come in.

Also read: I Did It My Way Podcast Ep 1 | 'Trading is like dating', says Nikhil Kamath

https://www.cnbctv18.com/business/companies/i-did-it-my-way-podcast-trading-is-like-dating-nikhil-kamat-tells-sonia-shenoy-17890851.htm

Sonia Shenoy: So, you are saying that, you know, now it's become all about daily convenience rather than earlier when people used to order only on special occasions, right. So, as we move to this daily convenience model, where do you see the numbers grow to? Currently you have 3 million orders a day, a large chunk of it is from Zomato and Swiggy. But what do you see as the way forward?

Ankit Nagori: So, if I look at the total number of consumers in the food ecosystem, my sense is about three to four crore people have ordered online at least once, when you talk about food. And out of them at least one crore out there, order every quarter. So that adds up to a number where, in top six cities, one crore people are ordering on a regular basis. ordering food online is the top of the mind. But if you have to add the next million consumers a day, who order very, very frequently, you have to get at least One to 2 Million consumers who are on subscription like platforms, Right now at Eatfit about 1000 of our daily orders are subscription-based where customers are ordering, almost once a day, or 20 to 22 times a month, because sometimes they don't order on weekends because they're home or something. But if we can get to 10 to 20 lakh such customers who are ordering every day for a need of eating outside food rather than pleasure of eating outside food, then this number will grow by 20-30%. So I feel that the total universe of people eating out right now is about Three Crore who have ordered at least once; this number can grow to Three and a half to Four Crores. But the next 50 lakh to one crore people have to be the ones who are eating more frequently.

Sonia Shenoy: And is it more to do with fitness or do you think now the universe is expanding across the board? Is fitness still a big priority or not quite?

Ankit Nagori: See, it's not fitness for sure Sonia. It is more sustainable and more daily eating. So fitness food will be salads, or high-protein meals or what not. But I feel that for a very large chunk of customers is not sustainable. You can't order a salad every day unless you have a goal and it's 15 days, 18 days, 20 days, whatever. But if you really want consumers who order 250 times a year, you need to have a selection of very homely, daily food. So what is Eatfit... Eatfit is just daily thalis, like Indian food, which is dal, roti, subzi, with daily changing menu. You have rice, quinoa as options. All of those are there. But people can eat that food every day because that's what they have grown up eating, so you don't need to really invent a lot. But of course, we have salads, and we have all kinds of meals. But the highest frequency we see is in these Indian meals and of course the South Indian versions as well. We have Bisi Bele Bhath, Khichdi... so we have all of this daily comfort food. I really feel that fitness food will be a small segment, but daily food will be the largest segment. So of the Three Four Crore people that I'm talking about who may order online, I would say that half of them would be open to ordering this kind of food.

Sonia Shenoy: So, you have several brands under Curefoods right, not just Eatfit, there is Sharif bhai, there's Nomad Pizza, Frozen Bottle... and you're doing multiple things at the same time. Over the next three to four years, where is your main focus going to be?

Ankit Nagori: This is something which we figured during the pandemic, that Eatfit was a daily food brand, and we figured that people had a lot of time to cook. So, our orders on a daily food brand actually declined while we thought that, people will order a lot more because for them they had time to cook basic food. And the real bump up, for a lot of brands, customers and restaurants, was happening during weekends. And we figured that for customers who were cooped in inside their houses, celebration was indoors. So, pizzas, biryanis, cakes, were the categories which really took off. And exactly that time, we figured that we need more categories, because whenever there is a long weekend, a festival, a celebration like Christmas, New Year, Eatfit orders decline. And we have such a large infrastructure of 200+ kitchens, so many chefs in the kitchens, we need brands which can balance out the orders. And that's where we decided to get into all these categories. We could have built these categories, but we figured that it's not very easy to build brands. It is difficult. It takes a lot of years. It takes serendipity to build brands. We figured out some of these partners, like Nomad Pizza and Sharief Bhai which are now part of the Curefoods ecosystem. We saw that they were doing extremely well, but they were all single city, a few kitchen brands. We got them on board and now they're multi-city, multi-kitchen because we have that infrastructure, which they can ride on.

Sonia Shenoy: I also noticed that of course you're a veteran in the E-commerce space but now you're also getting into the offline format with casual dining Nomad Pizzas, have multiple outlets, etc. Do you think that to sustain this online business model, you need that sort of offline presence?

Ankit Nagori: Absolutely. I think for any brand to be an online-only brand, they need to be a superpower like Dominos. Well, they also are online and offline both. Or you need to have infinite marketing budgets. We are none of them right now. So, we have to build a right mix of offline and online. Offline business allows you to cater to customers who are not ordering online. Like I said, in our entire country, only three-four crore people would order online or have ordered online because others don't need to, but then how do you cater to them. But more importantly, if you build offline locations, it builds trust, people can put a place to the name... that okay, this is the place where I order from, and also for at least 30% of the weekdays or 30% occasions on the weekdays, whether it's a Friday evening or a Sunday brunch, people would step out, you can't imagine them not stepping out. And you completely miss out on those customers if you weren't an offline-also brand. So yeah.

Sonia Shenoy: So now just talking a little bit about your own journey... You're a startup veteran, you started with YouthPad about 15 years ago, then went on to become the Chief Business Officer at Flipkart. And then of course, now you are doing Curefoods, what has your biggest learning been through it all?

Ankit Nagori: I think learning one thing, which I really talk about is that everything takes a lot of time. And things can get very boring and that's when you have to endure. Because a lot of young entrepreneurs I see & speak to, as a virtue of being an angel investor, is that they're looking for a lot of action and very quick results. And maybe I was also like that earlier, maybe 10 years back, but at least in the last Eight-Nine years I figured that any outcome will take multiple decades, 10 to 20 years. So if you start off with that mindset, then you won't be in a hurry in the initial years. And being in a hurry initially is not good, because that's where the foundation is being set, the building blocks are being made. So I believe that for any success, or any outcome... be it mediocre outcome or great outcome, you have to plan for a 10 to 20 year journey in a startup. And I talk about it a lot. I talk about the fact that people who can endure boredom are the most powerful people because they are at it every single day, & if there is a game of attrition, they will win. So I really believe that it is a very long term journey. And you have to build it that way.

Sonia Shenoy: What is the biggest misconception of being a founder?

Ankit Nagori: Oh, I think the biggest misconception is that people think it's really sexy, and really hunky-dory, I think it's the toughest thing. I get a lot of questions, I get to meet a lot of young kids at Campus, when I'm talking to them. They all want to be entrepreneurs. I start off by saying... don't... because I usually tell them that you will get a good job. If you're in IIT or IIM or any other colleges, why do you want to do it? How does it match your dreams! And then of course, there is this whole misconception, Sonia that you'll make your First Million within First Five years, I think 80% founders will never make their First Million... So that's the misconception which they have, which can be cleared with data. But they still have that positive thing that okay, I can succeed, but they don't know what it takes to succeed, because start-up is extremely tough. Of course, I also motivate & push a lot of people to start-up &, I invest in a lot of young entrepreneurs. But I think most people underestimate the effort it takes because your success is dependent on the customers, the team that you build the investors that you seek, & the outcome that you want. Because outcomes again, whether it's an IPO or a sell out or a merger, it is such a complex thing. I think only One in 100 companies can get the desired outcome. So I think if I have to do some education in the eco-system, I want to talk about the fact that join an early stage start-up, there the success chances are so much higher, because you'll get your salary, you get your ESOPs and if there is a good outcome, then you will make money and then probably become an entrepreneur. But I tell a lot of young people to go join all these New Age companies like how I joined Flipkart as a very young kid. I that's the path. I recommend a lot of people to follow.

Sonia Shenoy: But that was also a step you took, which turned out to be in your favor, right? And there's a little bit of luck in that as well.

Ankit Nagori: Absolutely, very lucky.

Sonia Shenoy: So, for over the next 10 years, where do you see the big trends in the start-up world?

Ankit Nagori: I don't see a very different trend. Sonia. So, what are the fundamentals of Indian startup eco-system? 1.4 billion population, almost 100% internet literacy-internet penetration, railroads being settled now, with FinTech, logistics, internet, all of these things being taken care of. So I think a lot of new categories will get created. For example, iPhones did not exist 15-20 years back, smartphones didn't exist. So as smartphones became a category, all the people wanted to buy it online, and Flipkart, of course, was a pioneer there. Likewise, online fashion - Myntra, Flipkart did that. So a lot of new categories will come by the virtue of the innovation happening. And all the internet companies or startups who have built the railroads will benefit. Tomorrow, a new UPI comes or new UPI equivalent comes all the FinTech out there with 20-30-40 Million customers will launch that solution on Day One, right. So I think I don't see a lot of new trends, per se, I just see that, of course, AI will play its part. It's not going to be an industry, it's going to be an enabler & it'll be a great tool. But AI is not equivalent to a FinTech or AI is not an equivalent of an Ad Tech. AI is more on the lines of 4G, 5G, where it will improve the quality of business, but may not create a new business line altogether. But I feel the next 10 years will be all about consumption. India is still very under-penetrated, when it comes to brands, it comes very under-penetrated when it comes to global travel. So I think consumption is the next 10 year story for India. Absoltely. As an entrepreneur, I think the biggest learnings come from once failures, right? So what has your path been when it comes to failures & how have you dealt with it? Right, I think Three, Four incidents I can think of. The first is my own startup, when I started off, it was extremely tough. At first, I tried for Two and a half, Three years, solo founder, and very young. So I think there were a bunch of mistakes I made & a bunch of learnings. But the biggest learning there was, that a customer should not go back while thinking about a product. I built a tech solution, but didn't think about how consumers will use it, etc. So I think the whole consumer thinking was missing.

Sonia Shenoy: This was YouthPad?

Ankit Nagori: Yes this was YouthPad. And ofcourse at Flipkart, it was one hell of a journey. I think there was a time when we could do no wrong, but then the First Big Billion Days happened. And that's where I think all of us had a good learning that, the market is much bigger than we thought. The problem with the first big billion day was that we underestimated the demand. The demand, which we received was 10x of what we had planned for. And that that really opened up the eco-system. The first Big Billion Days while we had some struggles with the quality of experience that the customers got. But I think that really opened up our minds that wow, there are customers in Tier Four, Tier Five cities waiting to buy online because it's cheaper, there's a Diwali sale happening. But it was a very testing period, because we really learnt a lot of lessons. Then of course, with pandemic, when I was running Cult alongside Mukesh, those few months were very tough. Gyms were one of the most hated industries then. It was shut for almost 14-15 months & Zero revenue. Food, at least had 20-30% revenue, because people were still ordering. But gyms were shut. And infact, more than revenue we had liabilities because we had to pay rents and we had sold all these memberships, which we had to carry on whenever we reopened. So it was very, very tough, these were the bunch of learnings. And I think the last Three years, given that we started in the peak of pandemic, then there was a Second wave when Curefoods was only Eight-Nine months old, I think last Three years have been testing. And I figured that... that's the way businesses are built, there are just topsy-turvy curves that you have to deal with almost every quarter & you have to derive fun out of that.

Sonia Shenoy: And you have to be able to withstand boredom, right as you said through the course of your journey. So with Mukesh when you had cult.fit & ofcourse you went through your own upheavals with cult.fit, that entire space is also picking up in a big way. So why did you choose to deviate to Curefoods?

Ankit Nagori: I think I answered a bit of it, at the beginning. So we figured that there are so many food categories that you want to cater to. And not necessarily all of them are healthy. It's a competitive space. And also, Sonia, out of the 50,000 orders that we do today, about 60% is healthy. So about 30,000 orders are healthy food. But 20,000 orders are also categories which won't fit into the Curefit eco-system. Curefit is all about health. So we wanted to cater to all kinds of categories. It didn't really fit there. So we hived it off. We wanted this cloud kitchen business to have full potential & if it didn't have these categories, we would be 40% smaller.

Sonia Shenoy: So in this whole start-up ecosystem, there's one big funding winter that's going on... how bad is it at the moment & do you see any recovery in sight?

Ankit Nagori: See from my vantage point, I think that a lot of mid-size companies who are looking to raise funds in the last Six months have had it difficult. I think the brighter side is that a lot of companies have turned profitable or are on the verge of turning profitable. A lot of fat has been cut, a lot of experimentation money has gone out of the window. So I think it will, at least... I can't judge the future... but I think I see that at least Six to 12 months or more of consolidation will continue & post that the companies which survive, companies which are good will have a much better chance of raising funds. But the good news is that a lot of them may not need a lot of funds by then because they would have turned profitable would be cashflow positive. So I think this one cycle was needed globally, because we all contributed to that but there was a lot of froth. And I think these resets are part of life. Just that, this has been very long and very tough.

Sonia Shenoy: So you were telling us that there is a sort of froth in the start-up ecosystem funding, right? Why do you think that is?

Ankit Nagori: I think there was just easy cash available Sonia, for various reasons like policies & pandemic & this & that. So I think there was a lot more free cash available earlier. Also, there was less accountability demanded by investors from their entrepreneurs. So as a combination of all of that there was lower accountability, easy money, and a lot more metabolism in the eco-system. I think all of that is now tempered down & you will see a lot more real companies around.

Sonia Shenoy: So, with Curefoods, I do know that although your revenues have been growing, you are struggling a bit on the profitability side, as is the case with most start-ups, right? How long do you think it would take for you to achieve profitability? And what's the growth path looking like?

Ankit Nagori: Right so this year, we're hoping to end the year at about 1000 Crore annualised revenue run rate, not the full year number, but the last quarters' number extrapolated, & that would be a pretty strong number for a food company. I think in India, there are very few 1000 Crore food companies. On a profitability side, we are in the range of minus 10% EBITDA and we believe that in the next Three-Six months, we should turn EBITDA profitable, & then there's this longer journey of becoming PAT profitable and what not. But I think that'll be a big milestone for me at least, because in the previous companies I have built we have never been EBITDA profitable. It's like I said, it's new for a lot of start-up entrepreneurs. And we've focused very heavily since Day One on becoming a profitable company, but we had an option of being profitable at sub-scale, but we had said this 1000 Crore as a benchmark that profitability and 1000 Crore should happen at the same time. We could have been a profitable company at Rs 500 crore revenue, but then growing beyond that, because once you're profitable, then you want to follow some discipline, the growing beyond that will become slower.

So, there is no science to or there is no reason I chose that number where we said okay, when we are a 1000 Crore company, we want to be profitable & that was the goal set. It has been tough, profitability & food are extremely tough. Last 12 months, the food inflation was on fire, it was a crazy time to be a food entrepreneur and different commodities at different points in time. And then, of course, you know, during pandemic, which is now 18 months back, there were different reasons for inflation, because supply was not that easy.

So, I believe that as a food entrepreneur, the margins will always be wafer-thin. So you have to lead a culture of very strong frugality. And that's what you'll see in this company. If I were to talk about one core value that we all live by, it is frugality. Whatever money we can squeeze out of our system, we try to put it out on customers' food, we want the food to be the highest quality, but everything else can be one notch lower... the office space or what not. We believe that all of that can be taken care of once you're profitable. Everything will have its own time. So will this profitability be achieved through your own home brands? Or are you looking to acquire more brands from outside? No more acquisitions in line now because when we acquired we had a very systematic need for acquisition. We said, we need a Biryani brand, a Pizza brand, a weekday brand, a weekend brand, night, evening, lunch... I think all of those are sorted now. I often say that, a Week is 28 eating slots... Seven times a week, Four times a day. And not all brands can fit in everything. I feel that we cover at least 21-22 out of the 28 slots, which is very good. So I think we would not acquire anymore. We want to consolidate & most of our brands now are growing double-digit, quarter & quarter. So I think 70-80 Crores a month is sizable enough to give us enough margin to cover for our fixed costs.

Sonia Shenoy: Ankit I noticed through your career you've pivoted a lot, right? You start with YouthPad and then Flipkart which is E-commerce & now you're a full entrepreneur. Is this the need of the hour to keep reinventing yourself or did it just happen by chance?

Ankit Nagori: I think it happened by chance, & I also feel that it need not be the right mantra because I think that the benefit of doing something for a very long time is way more than trying new things. So, the way compounding works is very different. I would have preferred to be in one industry forever, but it was not to be. But I think with food now, I really hope for this to be a multi-decade thing.

Sonia Shenoy: Okay. And finally, before we let you go, I'm sure your relationship with money has also changed a lot since you started your journey. What was your relationship with money earlier and what is it today?

Ankit Nagori: Tough one... Earlier... of course, I was a seeker trying to make some money to have a comfortable life, I had certain goals and thankfully with Flipkart, most of those goals were fulfilled. I think lately, it's been more about me and my wife... we are heavily involved in our foundation. We call it 'Simply Sport' Foundation and we help a lot of budding athletes. So, I think lately, it's been more about giving. I think that's the cycle which a lot of people end up following, & I'm happy that I've started on that journey.

Sonia Shenoy: Okay, all the best Ankit. Thank you so much for joining us on CNBC-TV18.

Ankit Nagori: Thank you.

Sonia Shenoy: Thank you for watching CNBC-TV18. For all the latest news & updates do follow us on our social media platforms.