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Challenges Faced By Food Tech Startups

Challenges Faced By Food Tech Startups
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The food industry has seen numerous food tech startups launching with full planning and excitement. Some are trying to get a hold here while others are on the verge of shutting down because of numerous challenges. Challenges could be the tough competition from big players or no stable growth in it.

While running a food tech startup, it is very important to tackle some of the major challenges that can directly or indirectly affect the whole business mechanism. The challenges that every food-tech start-up faces on a daily basis are-

1. Restaurant Selection 

First and the foremost challenge for a food tech startup is to select the right restaurant. This requires an in-depth research since some restaurants are famous for their food, some for their drinks, and others for their ambiance. So, it becomes essential to select the restaurant carefully as the business will be generated from restaurants who offer good food and provide good ambience. These days people love to dine out to spend some quality time with loved ones. They desire to have good food with a good ambiance beside good hospitality, but sometimes get disappointment, so selecting the right restaurant becomes a major challenge.

2. Food Quality

The food quality is the backbone of any food related startup. To maintain the food quality, one should keep in mind the taste, the proportion of ingredients, etc. Hot foods should be served on plate, the dishes should be fresh and hygienic, if customers have ordered food, then the food has to be warm until it reaches to a customer’s home. The company must invest time, money and efforts to keep their customers happy and motivated so that the operation can run smoothly. 

3.  Peak Delivery Hours/Manpower

Deliveries must be done with proper planning, considering unforeseen risks in mind. Food delivery within time is a difficult task especially during peak hours like for instance 1pm to 3pm and 9pm to 11pm (lunch and dinner timings). The food delivery company, regardless of its team size needs some additional manpower as well to provide proper backup in the peak hours. The manpower crunch during the festival season is another major challenge.  It is important to cope-up with external factors and still provide the best services possible. Therefore, manpower remains a big challenge for a food tech start-up.

4. Wavering Profit Margins

Even after setting up a company and associating it with some good restaurants does not offer any profits. Hence, a constant business development is required to see the face of good margins. Due to high competition in the food industry, many companies have a propensity to work on low margins and compromise with quality to earn more profits. So competing with pricing and still maintaining the quality is a big challenge. 

5. Technology

It’s a tech world, everything is based on technology. But still a major part of the population, especially the middle-age segment either clueless about technological trends or don’t have internet connection in their smartphones. It’s worth mentioning that, some of them don’t know how to order food online and use traditional mediums of ordering food or dependent on other family members. Hence, educating people and integrating with mobile apps/websites is another majorchallenge.

6. Discounts And Offers

This is not a challenge exactly, but this thing plays a crucial role. An entrepreneur wants to avoid it, but they have to bow down to the demand. Discounts are and will always get a quick attention from customers, but they are not a profitable scene for startups. As long as you offer discounts, people order, but the moment you will stop giving discounts, they will leave you and move towards your competitor. Hence, working on low profit margins and still offering discounts is tough.

These are some of the challenges that every start-up face or go through, especially in the initial years. Those who can manage and tackle these aforementioned challenges, can sustain in this ever-changing tech industry.  

 
Edition: June 2017

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