Prior to co-founding Kolkata Chai Co with my brother, my relationship with food had been largely transactional. I could appreciate the nuances of a good meal when I found myself at one, but the demands of my schedule forced me to see food as a purely practical. I ate so I could physically sustain myself until my next meeting. It was only after being around a food business did I realize the carnal, biological and euphoric effects that food has on people. No material possession, no Ferrari or Birkin bag, can illicit the same level of satisfaction as consuming the perfect meal. It gives people more than sustenance — its a sense of identity, community and comfort. Yet, as the behaviors and preferences of consumer culture has evolved, the food industry has found itself struggling to keep up.
The coronavirus crisis has put the plight of restaurants in full view for everyone. As an industry that operates on razor thin margins, precarious cash flow and seasonal unpredictability, the constraints around social distancing have brought a majority of restaurants to their knees. But why are the establishments that contribute so much joy, culture and flavor to a neighborhood also the most economically vulnerable? Why is that that despite the massive financial and operational risks that restauranteurs take, they are often victims to some of the most predatory business practices of our modern convenience oriented economy?
Over the past few years, human beings have collectively decided to trade money for convenience. Our jobs are more demanding, our schedules are busier and as a result we’ve concluded that “buying” time is an acceptable way for us cope. These factors have come together to create our modern “convenience culture.” As a result, various companies have emerged to fill different needs in the market and reached astronomical valuations in the process. Amazon, Uber, Lyft, PostMates, FlipKart, AliBaba, DoorDash, OYO, are some of the winners who have successfully facilitated, manipulated and benefitted from this new trend.
However, in all things capitalism, there must be losers in this equation as well. One group is the new labor industry, or more euphemistically known as “gig workers”. Another loser is the food industry. Food has become one of convenience culture’s favorite on-demand item. The idea of getting a 20 piece McNugget or 12 pieces of sashimi delivered to your door with a few clicks is simply irresistible. However, in rush to save a few minutes, what we don’t account for is the devastating effects that convenience culture has on the industry it claims to support. The economics of the third party food delivery platforms is predatory at best. Third party delivery fees average anywhere between 15–30% of every order, cutting into restaurant margins that are razor thin to begin with. “Oh, but it drives volume and every restaurant needs volume,” is the common response to which I say, not always:
Naturally, this is a one-off example but it illustrates how the economics of the on-demand world don’t translate to economies of scale in a traditional 1:1 manner. At any given time, there are a number of fees, offers, discounts, etc that can affect restaurants negatively.
Now, here’s the rub: It’s my belief that this is largely the restaurant industry’s fault. As the worlds of technology, social media, digital content matured over the years, the restaurant business stubbornly resisted any advancements. There was minimal investment in the digital infrastructure it takes to compete in our new mobile-first, digitally driven world.
The reasons for this resistance is understandable but they can’t be excused. Most restaurant businesses are small independent operations, many of them immigrant owned, and their focus understandably falls on the food rather than the marketing. However, if you don’t innovate and adapt in our modern economy, you are at the risk of perishing. Instead of strategizing, investing and prioritizing a strong digital presence, restaurants reluctantly accepted their fate every time a new salesperson for UberEats or DoorDash walked through their doors. Now, with pressure applied to the system, it’s strikingly clear that this was never a sustainable business move to begin with. Since delivery orders are the only source of revenue for most restaurants during quarantine, those profits lost on margin are most crucial that ever. And guess what? Delivery companies don’t care.
However, we can’t put the entire blame on restaurants. As consumers, it’s time to stand up to convenience culture and share the onus of creating an economically sustainable future for our favorite spots. That means going direct through a restaurant website when you can, calling your order in (I know, I know) and spending an extra 5 minutes to save someone a whole 30%. These little things add up to create more stable economics for independent operations. You’ll also be saving yourself from a huge markup due to increased menu prices and service fees which many of us don’t even catch:
As local economies and communities attempt to build after Covid-19, every dollar is going to be important and it’s time to put it in the hands of the people who’ve been enriching our lives with their labor and food.
Since the day we launched Kolkata Chai Co at a small, private tasting in 2018, we focused on building a digital-first food company. From our website, social channels, content strategy to our playlists, every piece was intentional. It led to viral moments, glowing press reviews and a legendary opening night. However, the most important thing it did was allow us to seamlessly pivot as we had to shut down in response to Covid-19. Through a combination of our internal delivery system and e-commerce, we have financially weathered two months of the crisis and managed to grow our cash balance through the process.
This week, we’re relaunching deliveries at Kolkata Chai Co.* However, if you want to experience our acclaimed chai and snacks, you have to order directly through us. We’ve decided to forgo working with any third party service. We’ll use the extra profits to hire more drivers and stabilize our business in the face of this crisis. In full transparency, our internal system won’t be perfect. There might be headaches for both our staff and customers, but we’re going to take those on in stride and get better with time. There may even be a limit to how many deliveries we can do in a day which would put a ceiling on potential revenue, but I’m willing to face these limitations early on and scale with time. If we start by owning a 100% of the pie, we control how things evolve from there.
Admittedly, I am the last person that should be writing this piece. As an entrepreneur and business owner, my life is a microcosm of convenience culture for the past few years. Prior to the coronavirus forcing me to be home, I hadn’t cooked a meal in over four years. However, this period has opened my eyes to the reality of this predatory system and I’ll be playing my part to honor the people who take the risks to put food on our plates. Feel free to join me.
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*Order delivery at www.kolkatachai.co/delivery