Welcome to our Seventh issue of Focus series at the duologue. The reading time to finish this one is around 6 mins.
The Duologue is a concerted effort by Vivek and Bheem to make sense with a unique lens. Now, on to the post!
Hey,
Looking Back
We are revisiting Cure.fit after the March piece where we focused on their strategy and their shift to online medium. It's been a few months since then and now we have a better understanding where things are headed. Back then I wrote at the start of the piece: [1]
A recent look at their financials by entrackr found that they still rake in a large share of their revenue from Health and Fitness services.
Almost 70% of operating revenues — Rs 124.5 crore — were generated by offering fitness and healthcare services while the sale of food through its cloud kitchens added another Rs 55.2 in FY19. These cloud kitchen sales grew 10.2X as compared to sales of Rs 5.4 crore in FY18.
Where Eat.fit lacks in revenue, it makes up in customer numbers.
While Cult contributes a large chunk of overall revenue for Cure.Fit by virtue of its large ticket size, it is food that really brings in the numbers(customers). Eat.Fit brings in about 80% of overall users. Several of these users overlap across different offerings — which is the main idea behind the ecosystem being created by Cure.Fit
Digital First
Picking up from where we left off last time, there were two rounds of lay-offs totalling 1600 staff. First came the trainer layoffs where about 700-800 were let go. [2] This was right in the weeds of the pandemic where Cult.fit pivoted to online training classes completely.
The next set of layoffs happened recently on the Eat.fit front. [3] Here is Mukesh Bhansal, co-founder of Cure.fit talking about their 4 months in the pandemic:
We have had a very tumultuous last 4 months, with most teams scrambling almost on a daily basis with frequent changes, shifting priorities, various cost-cutting measures, and continued uncertainty around the pandemic… I think as a team we did the best we can and the agility/hustle that was shown by many teams is absolutely incredible and is the reason that we are now able to operate like a digital-first company.
It is important we pay attention to the last words of the excerpt: Digital First company. Mr. Bhansal has acknowledged the fact they are moving towards the digital way by shedding the past. Which brings us to the latest development, Cure.fit is shutting down "Eat.fit" except in few select locations. Inc 42 reported it first with a detailed outline of why and how. [4]
Eat.fit revenue is currently at 20% of what it used to be before Covid-19 outbreak. Primarily, because of low utilisation of kitchens and shutting down of subsidies. The first month of the launch of digital sessions, Curefit claims to have generated millions of dollars in revenue and has been able to maintain that.
Ankit Nagori, the other co-founder of Cure.fit spoke to Inc42 to outline why they took such a harsh decision though the explanation given is one of positive outlook.[5]
“We are confident that the business will bounce back in a few quarters when the sentiment towards ordering-in improves across the country. Another thing that will work in the favour of cloud kitchen brands like Eat.fit is that a lot of small restaurants would have been shut down by the time Covid-19 is over. So overall the market share of cloud kitchens will go up, perhaps the ordering-in becomes a norm,” said Nagori.
We know from the previous post that 80% of customers are coming through Eat.fit where as 70% of revenue is from the fitness business. Clearly marking Eat.fit as a growth channel. Now when food delivery is having tough times, it no longer acts as a growth channel and the founders have decided to revisit it again when food delivery has the potential to be a growth channel.
This brings us back to the post where I summarised by stating the underlying strategy behind Cure.fit: [6]
This growth story and startup will always find another vertical for it to launch because like I said before, growth is not a phase but rather the story since the beginning. So, will it take the other road on the tech trajectory or just do both sides anyhow is something I will look out for in near future, both as a customer and as an observer.
As they shed the non-growing verticals that are facing headwinds, they have launched a slew of new verticals that outline the future growth they want to project to customers and investors.
Care.fit
From where will they get customers? Which service will be growth channel? Care.fit has some answers.
Online medical consultation's biggest roadblock was Doctor and Patient acceptance for the medium. Now, with the unending pandemic, this roadblock is levelled. Every health company is starting to cater to this new opportunity. Cure.fit happens to be one among them.
Growth potential remains to be ascertained as the pandemic unfolds but with the general care moving online and people avoiding visiting hospitals for check-ups or consultations. An opportunity for future customers is brewing.
Recent app updates clearly outline their entire offering stack. As we stay and exercise indoor due to pandemic, more and more health services are required that are not centred around fitness. Cure.fit wants to expand further, they are selling a slew of services around overall care of an Individual. Right from testing to doctor consultation.
Still, the core of Cure.fit remains to be fitness even as they move online. Both Mr. Mukesh and Mr. Nagori are careful in framing their sentences, they are only being digital first not digital only. Because, in their culture, strategy and execution it is always growth first. And you never know where they might have to go next to find their newer growth channel.
Lost Opportunity
Cure.fit has been busy building Care.fit where the end service is offered by other providers. [7] Cure.fit acts as the default lead generation mechanism. I wrote back in March: [8]
So far the tech that they have built is a boilerplate commerce platform that sells multiple things in a single vertical (health) with a strong brand affinity. And that is nothing less than a miracle in itself. But in order to transform itself into a tech company, they need the other parts as well. The actual tech that helps individual lives become better by being customised to their individualist needs.
None of what is mentioned in the excerpt changes with recent launches. They added a live technology stack to power live.fit, which is commendable. [9] The change is limited to Cure.fit being commerce platform which is branching to a be lead generation tool for other health Service providers and doctors.
Fitness : Core
All the moves and shifts so far are made in line with the strategy Cure.fit always follows: Growth First. In following this strategy they lost out on an opportunity to go digital native and build a vertically integrated offering in Fitness and health. Peloton comes to mind.
Cult.fit had the moat and muscle of Cult centres i comparison to competition that was relying on partners to build their centres. This was their lead generation and revenue channel predominantly.
With the move to digital, cult.fit is in competition with not just other competitors but Fitubers as well.[10] How does it differentiate itself? Even if it can offer all sorts of fitness formats under sun but the experience cannot be replicated of a Centre. This to me is the biggest worry as things move forward.
Group workouts simulate the in person experience but the physical surroundings is still your home. Customers will accept this for the current times but not as the default medium of workouts.
Eat Healthy: On your own
Another opportunity that was abandoned, Eat.fit. They could have gone all-in on “Food” when people are getting tired of cooking at home. I salute you if you are not tired of cooking. With work from home, isolation and no house help, cooking daily on top of that is full-time work.
Most of us might be looking for healthy options from trusted places to eat as the fatigue of the pandemic creeps. Eat.fit could have been positioning itself to execute this pain point. These opportunities are hard to sell and even harder to execute with no new growth narratives to pitch.
Closing Update
In the end, all of this leaves me as a customer confused when everything is being offered to me but then again are of no real value from other offerings outside the Cure.fit health circle.
So, I will close by stating that by the time I revisit Cure.fit in a few months, more growth channels will spring up. One such could be the around Heath Stack API where Mr.Mukesh Bhansal is invested in a personal capacity as a contributor.[11] Until then, I will wait and watch more as an observer than a customer.
Regards,
Vivek
References:
A focus series is a stitched narrative from multiple sources. A list of all the links is listed below. For this one, i am specially thankful for the coverage done by Inc42.
[1]: .fit
[2]: Curefit’s Layoffs Get Messy As Virtual Classes Take Centre Stage
[3]: Curefit Undergoes Downsizing Again, 600 Employees Laid Off, Furloughed
[4]: In A Move To Bring Focus On Core Business, Cure.fit Scales Down Eat.fit In 12 Cities
[5]: In A Move To Bring Focus On Core Business, Cure.fit Scales Down Eat.fit In 12 Cities
[6]: .fit
[7]: Healthians Website
[8]: .fit
[9]: Behind the scenes of Cult.live
[10]: Fituber Youtube Channel
[11]: The elite VC-founder club riding Aarogya Setu to telemed domination
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Nice piece vivek. A question not directly related to your article. how curefilt able to get their first 500, 1000 customer? any insight on the channel they used and users they Targetted
?