Available a team of highly-trained and experienced professionals, a readymade market of thousands and a proven business model in which profits are guaranteed on every transaction.
What sounds like an investor’s wild fantasy exists right under our nose. Sadly it is a business that’s been hit hard by the pandemic, and is in urgent need of a benevolent backer.
For years, the 5,000-people strong network of Mumbai’s dabbawalas has been using bicycles and trains to deliver hot meals from homes to nearly 200,000 eager eaters in offices throughout Mumbai. Each of the empty tiffin boxes is then returned to the homes by the afternoon to complete the complex web that is often cited as the lifeline for the city’s office workers who can’t afford to eat out every day. It is a healthy, sustainable and environmentally-friendly model that’s been feted and written about extensively.
The logistics are daunting, entailing nearly 400,000 transactions six times a week throughout the year. These transactions have to be timed to a perfection since the food must be picked up from homes, delivered to the offices and the empty lunch boxes collected and returned, all within a space of six to seven hours. While no one has kept tabs, it is safe to say that over the 130 years of the service, the on-time delivery rate is around 99 percent. Which is why the network does have a Six Sigma Certification even if all this has been achieved without any software or a centralised monitoring system.
The dabbawalas journey in a typical day is a masterpiece of complex logistics broken down into simple, easily-executable parts. Thus, one person picks up a number of such tiffin boxes from the homes of customers in a neighbourhood, delivers it to the nearest train station where they are sorted and assigned to colour coded crates and marked for a specific destination station on the Mumbai suburban rail network. Here it is collected by another set of dabbawalas, who then deliver them according to their assigned zones. Later the entire process is reversed to ensure the empty tiffin box is back at the customer’s home.
Downtime is rare. Two days after the devastating floods that ravaged Mumbai in July 2005, the dabbawalas were back at work doing what they do best, making sure office-goers got their homemade meals.
Prices range from Rs 600 to Rs 1,200 per month, enough to yield annual revenues of Rs 40-45 crore. The number looks puny when compared to Zomato’s revenue of Rs 2,486 crore as of March 31, 2020. But here’s the big difference. The dabbawala’s model is entirely self-sustaining and intrinsically profitable. There is no scope for losses. By contrast, Zomato’s losses ballooned to Rs 2,451 crore in 2020. Effectively, Zomato with over $2 billion in funding and after nearly 13 years in the business, loses nearly as much as it makes. The condition of the other competitor, Swiggy, owned by Bundl Technologies is even worse. The company reported revenues of Rs 2,776 crore for the financial year 2019-20, and a net loss of Rs 3,768 crore during the same fiscal.
Sure, the two startups are going for growth and hence profits are being sacrificed in that quest. But the dabbawalas model is profitable and has scope for growth too since it can be replicated across major Indian cities particularly because after the onset of the pandemic, most people will prefer to eat food from home than from outside. There are similar suppliers in other cities but none which are on par with the dabbawalas. Their knowledge of the business, the best practices they have built over the years and their promise of reliable deliveries, just need an impact investor who can see the massive social ramifications of their work.
For such investors, this may be the right opportunity since, of late, there has been a growing realisation that impact investing need not be limited to areas such as education or healthcare or affordable housing, where the benefits to society are immediate and direct. That slight tweak in priorities is showing up in the numbers. According to The International Finance Corporation (IFC) assets under management as part of impact investing reached $2.1 trillion in 2020. This explosive growth is being driven by millennials who want their investments to do more than just make money.
Already, efforts are under way to create new partnerships with the dabbawalas. As the second local lockdown in Mumbai dawned, Impresario Handmade Restaurants which runs a series of restaurants across several cities started a programme in which it roped in the dabbawalas, to deliver orders from its restaurants to homes across the city.
A smart impact investor can use the data from this one experience to put together a win-win business. Mumbai’s dabbawalas deserve no less.
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