Late-Night Food Deliveries Bring Profits For Eateries But At A Cost

In the wee hours of a Wednesday in Mumbai’s Dadar, a cloud kitchen owned by Nino Foods is bustling with activity. They run two brands — Nino Burgers and Francesco’s Pizzeria — from the same kitchen. Four staff members are busy preparing one order after the other. Three delivery executives from Zomato and Swiggy, India’s leading food delivery platforms, are waiting right outside for their respective orders to be handed over to them. The road out front is mostly deserted with only a few vehicles passing by occasionally. Many of the approaching vehicles are also delivery partners on two-wheelers delivering orders. 

“We started late-night deliveries six to eight months after we started businesses because we saw it as an important opportunity to increase visibility since there’s less competition later in the night. Now, our late-night sales are 15% of our total orders, almost as much as our lunchtime sales,” Nishant Jhaveri, founder of Nino Foods told The Core. 

Late-night food orders, between 12 am and 4 am, have surged in Indian metro cities with the pandemic serving as a boost to this segment. Many quick service restaurants (QSRs) like McDonald's, Domino’s Pizza, Wow! Momos, Subway as well as cloud kitchens like Nino Foods and Rebel Foods are now delivering as late as 4 am. The restaurants are raking in considerable extra revenue. However, they haven’t hired extra staff to man the extra hours. Now fewer people work on each shift, albeit making it much more difficult and hectic.

Increasing Demand

A growing demographic in India’s cities who work late nights or live on their own means there is also a growth in demand for late-night food orders. 

“Swiggy has observed an 82.4% surge in late-night orders over the last two years, with cities like Mumbai leading, closely followed by Hyderabad and Bengaluru in placing the highest number of orders. To meet this growing demand, Swiggy has enhanced serviceability across restaurants, resulting in a 50% increase in the number of active restaurants during the nighttime,” a Swiggy spokesperson told The Core. 

In cities like Bengaluru and Hyderabad, many people work at MNCs according to international timings, which means that they leave from offices after midnight when the food options are limited.

“Instead of eating on the roads, these young executives working in Business Process Outsourcing companies and Global Capability Centres want to order pizzas, burgers, dal and roti at home,” Asha Rao, a QSR consultant told The Core. 

The younger generation is also another big customer base for late-night food orders. Many stay up late for work, to study or meet with friends and watch sporting events, etc.

“We see a considerable surge in late-night orders especially around events. For example, in the two days of Lollapalooza in Mumbai, we got many orders after 12 am after people returned home hungry. Especially during international gaming events, like football and basketball matches, the timings are many times late at night for Indians, so late night orders increase during those days also,” Jhaveri of Nino Foods said.  

Big Orders, Smaller Costs

The Core visited various QSRs and cloud kitchens of which a majority received 20-25% of their total orders later in the night. The manager at a pizza kitchen said that they receive 80-90 orders on average during weekends, of which 30-35 come between 12 am and 4 am. The pizzeria started late-night deliveries only after the pandemic. 

“Our data shows a high demand for items like pizza, wraps, burgers, and desserts in late-night orders, and in response, we provide exciting exclusive deals and collections on these popular nighttime choices. This strategic approach has not only been welcomed but has also shown significant growth in orders, reinforcing our belief in the potential of this market segment,” Ajay Jain, chief operating officer at Rebel Foods, a multi-brand cloud kitchen told The Core. Rebel Foods is a chain of internet restaurants, including brands like Faasos, Behrouz Biryani, Mandarin Oak and Oven Story Pizza.   

At a Tibbs Frankie outlet, only one person worked the night shift. He told The Core that they receive the highest orders on Friday and Saturday nights when more people stay awake later than usual. The company decided to keep delivering till late only in 2020, but has seen a  great response since, the staff member at the outlet said. Of the 120 orders that the outlet got on the day, 15 orders were already clocked in between 12 am and 1 am. 

Another staff member at a Wow! Momo outlet in Mumbai said that the company started delivering till 4 am post-pandemic and received 20-25% of their total order in the late night time frame. By staying open later in the night, these eateries have been able to increase their revenues, all while incurring only a few extra costs. 

“Restaurants have more than 70% fixed costs of operation. If the assets are utilised for longer hours, the profitability improves significantly. All early morning or late night deliveries with skeletal staff can increase profitability and also create customer affinity,” Kumar Rajagopalan, chief executive officer of the Retailers Association of India told The Core.    

 

 Very few eateries that The Core visited had hired extra personnel for the night shift. Rather, they had moved around the shift timings and redistributed their existing staff to stay operational later in the night. A Wow! Momo outlet continues to employ eight people only but instead of two shifts with four people each, the staff now works in three shifts with three, three and two people in the morning, middle and night shifts respectively. 

QSRs that have many closely situated outlets do not keep all of them open at night. The food delivery platforms usually increase the service radius of outlets at night. 

“It is not in our hands. Swiggy and Zomato assign our delivery radius and since the roads are emptier, they extend the delivery radius in the night,” Jhaveri said.  

Staff at another pizzeria said that while they serve a 4 km radius in the day, it extends to 6 km in the night.  

The Kitchen Staff 

Like many industries, working later in the night comes with challenges for the kitchen staff. Some choose these hours because they want to earn extra and have day jobs, or they are students who attend college during the day and work at night. Others have to work the night shifts as a part of their company’s rotational shift policy. 

“Some people do it out of choice, some out of habit because they have always worked late at night, but some have no other option. They do it out of need,” a manager at a pizzeria in Worli told The Core. 

Transportation comes up as an additional problem for some. A staff member of a cloud kitchen in Prabhadevi, Dadar told The Core, “I live about 3 kms away from here. When I get done with my shift, sometimes I get lucky and find an early morning bus, otherwise I have to take a taxi which costs me Rs 70.” This extra cost is borne by him. 

The lack of public transportation at night means that some workers have to wait for the early morning bus or train. “I take the 4:15 am train from the station. But I wind up my shift by 3 am. I spend the rest of the time waiting for the train at the station,” another worker told The Core. 

The late-night shifts are typically understaffed making them hectic. “I once got eight orders simultaneously and am the only one who works in the night shift. It was difficult for me to manage that,” said a staff member at a Tibbs Frankie outlet.  

However, staff members pointed out that one of the upsides of working late at night is that they don’t need to do any preparation work. “The earlier shift does the chopping of vegetables, makes the sauces and does the rest of the prep. We only need to make the food and pack it. For us, the time doesn’t make much of a difference. Everything inside the kitchen remains the same,” a staff member at Nino Foods’ cloud kitchen said.  

Working in the night shift doesn’t come with a pay raise for most. One of the workers had to extend his working hours from 7 hours to 9 hours for which he got a 20% raise which he said was hardly Rs 3,000. 

Delivery Executives Are Also Stretching Their Hours

A crucial part of this ecosystem is the food delivery executives who have started stretching their working hours considering the availability of enough order deliveries late at night. Zomato also increases its payments to delivery partners after 12 am. 

Ram Pujan, a delivery executive with Swiggy said that he prefers to deliver at night because it isn’t as hot and the roads are relatively emptier too. However, he added that this also means that people drive more rashly and he needs to be much more careful at night. 

Delivering food late at night comes with its challenges too. Mohammad Umar told The Core that there have been instances where people have snatched away the parcels.

While the food delivery app usually compensates them for the order in the case of snatching, the rider still has to go back and pick up the order again, creating additional work.

Umar said that it is difficult to find addresses at night and security guards are wary of letting them into the buildings. “Some customers don’t answer the phone and others complain to us because they have to come downstairs to pick up the orders,” he said.