Travel tech platform Ixigo announced its entry into the train food delivery business by acquiring a majority stake in Zoop, a leading train food delivery service and an authorised IRCTC e-catering partner, the company said on October 24.
"The board of directors of the company approved.... entering into definitive agreements to acquire a 51 percent stake in Zoop Web Services Private Limited (“Zoop”) for a total consideration of Rs 12.54 crore including noncompete fee, subject to the completion of certain conditions precedent, through a combination of secondary and primary share purchases," the company said.
It added, "Additionally, the Company have the option to purchase the remaining stake in the future subject to fulfillment of certain conditions."
Zoop is currently operating at 192 stations across India and partnered with around 400 select restaurants.
"E-catering on trains has become a fast-growing part of the market for IRCTC and its food aggregator partners, and as per management estimates, food on trains has a TAM (total addressable market) potential of nearly $1 billion. This strategic partnership also gives us an opportunity to deepen our partnership with IRCTC on another front of e-catering groups, with synergy creation for everyone involved in this process," said Aloke Bajpai, Group CEO & Rajnish Kumar, Group Co-CEO, Ixigo.
He added that the food delivery company which was founded in 2016 by Puneet Sharma and Manoj Kumar, generated Rs.7.65 crore in revenue in FY24 and is profitable. Zoop had reported a revenue of Rs 4.1 crore in FY23.
"What we also liked is the frugality of the business. Zoop was built with less than Rs 2.7 crore of capital raised, and reached over Rs 7 crore of revenue in FY24, along with profitability. The overall size of the food delivery opportunity to rail passengers exceeds $1 Billion based on Zoop management estimates. So, the overall train food order market has a scope to expand 10-15 times from where it is now, and can help us monetize the train audience better during their trips," said Saurabh Devendra Singh, Group CFO, ixigo.
On the back of Zoop's acquisition, ixigo has launched a new 'Food on Train' feature, enabling travellers to pre-order a wide selection of quality meals at 192 railway stations across India.
Through this feature, users can browse and order high-quality meal options, get direct delivery to their seats, track orders in real time, and can also free cancellation before the cut-off time.
"This acquisition will enable ixigo to enhance its services for train travelers by combining Zoop’s food delivery expertise with ixigo’s distribution reach & live train information to provide a seamless onboard dining experience to millions of train passengers across the country," the company said.
Ixigo management pointed out that ixigo currently has Rs 292.6 crores of total liquidity available across cash, cash equivalents and short-term investments after the Zoop acquisition.
"The Zoop acquisition involves an upfront investment of Rs 11.54 crore only, so even post consummation of this deal, we would be left with approximately Rs 281.1 crore total liquidity," the management said.
"It’s a natural progression aligned with our vision of providing the best customer experience to our users. For us, that has always been more than just selling tickets. Food during trips forms an integral part of the traveler’s overall experience, specially on train journeys where many trains do not have pantry cars and many stations have limited choice of food vendors," noted Rajnish Kumar is Director and Group Co-CEO.
He added, "Zoop has been operating since 2016 and is an IRCTC authorized food delivery aggregator. It is the 4th largest 3rd party food delivery aggregator delivering food inside trains. They have been delivering food at 192 stations in India with around 400 select restaurants partnered with them. They have also built their own onground delivery network at a few of these stations and are expanding that. This combined with our large distribution funnel of train travelers will expand our offering to include food on trains."
Bajpai added that they were impressed with Puneet and Manoj’s resilience and operational excellence in building their business.
"We believe there is a lot of complementarity in their ability to run the operations and manage the onground, in-station experience and our ability to tap into a large share of the reserved train travel market and leverage our user-base and data to grow the food ordering business. The synergies we see with them are in leveraging our distribution funnel of train searchers and bookers to help them make food orders in the funnel for delivering a warm meal directly to their seat," he said.
He added, "The tight integration of the delivery logistics with our crowdsourced train running status shall also ensure lower chances of missed deliveries and better expectation management for both the delivery boys and the users. This partnership also gives us an opportunity to deepen our partnership with IRCTC on another front of e-catering growth, with synergy creation for everyone involved."
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