It was a chaotic time for Gaurav Choudhary. The 24-year-old founder of food tech start-up TinyOwl was held hostage by sacked employees at his Pune office for over 30 hours last week.

"They didn't think the company would be able to pay them their dues and were insisting on getting their money in cash," says a source familiar with the developments at TinyOwl.

The lack of faith in the company is not surprising. The start-up was going through a round of layoffs and shutting down offices across the country, despite having raised around Rs 200 crore since December 2014. "Instead of using the money to consolidate, they tried to expand too fast and too far," the source states.

This year was meant to be the year for food tech start-ups: companies that deal in food with technology. Many such outfits have come up in recent times - restaurant aggregators such as Zomato (which lists eateries, their menus and post reviews), restaurant services such as DineOut (which help you book tables at restaurants) and cook-and-deliver companies (which provide clients with everything from tea to truffle). TinyOwl, Foodpanda, Qunito, EatOnGo and many others have stormed the e-commerce space, promising to sate the hunger pangs of busy Indians.

But not all is well in this world. Besides TinyOwl, Zomato has laid off around 300 staffers. Reports quoted a Zomato spokesperson as saying that most of the layoffs would be in content operations - teams that gather information about restaurants. TinyOwl CEO Harshvardhan Mandad said in a statement that the company was hoping to move towards "a viable business model" from a sustainability perspective. "We have unfortunately had to make some difficult decisions in recent times," Mandad said.

Newer players are finding it hard to survive and investors could be backing off. In April, Rs 561.84 crores was invested in food tech start-ups; in October, this was down to Rs 115.01 crore.

"It's an overcrowded space," reasons Saurabh Kochhar, CEO of Foodpanda. "There are so many players, and there's not a whole lot of innovation going on."

Food aggregators seem to be facing the most trouble. They don't have an obvious revenue stream or business model to generate income. Their main function is to let users search for places to eat, provide a phone number or link where the user can place an order from, all for free, while revenue is generated through commissions on every order placed through their service. This, some point out, cannot be a sustainable business model.

"Aggregators are trying to attract customers by giving discounts on the same product from the same restaurants without innovating. Commissions made on restaurant orders are also low, which makes it difficult for aggregators to recoup expenses," says Revant Bhate, head of marketing at Faasos, which describes itself as "your own personal kitchen".

The models work in many parts of the world, but Indian cities are full of neighbourhood stores or eateries that are ready to deliver food, points out Rajat Wahi, partner, management consulting, and head, consumer, retail and agri sector, KPMG India. "What other solid value are they giving their customers," he asks.

Some market watchers, however, believe that the model is fine, but the method was flawed. Many companies were heavily funded and tended to spend a lot on discounts and retaining customers, holds Prateek Aggarwal, co-founder, Bite Club, a Gurgaon-based company which ties up with chefs to create special menus and then delivers them.

Not everyone believes that food start-ups are going downhill.

"Earlier this year, food tech was hyped beyond belief. But as the year progressed, those numbers cooled, and people started seeing it as a slowdown," points out Sandeep Mitran, the brain behind several food start-ups. "All of food tech's big players raised their money late last year or early this year, which means that they are settled, cash-wise, for the rest of 2015. They don't need to raise more money, or strike any more deals."

Mitran points out that numbers across the board have all increased. "The number of players is up, the volume of orders coming in is up, the number of users is up. So can we really say that things are bad?"

Aggarwal calls the developments "mid-course corrections" and doesn't believe that these are signs of a bubble bust. Adds Wahi: "This is more of a 'shake-up', a good time for e-tailers to take stock and see what is working and tweak their business."

The food start-up experience isn't necessarily an omen for other start-ups either. "It may cause investors to scrutinise other companies a little closer, but that's about it," says Ravi Gururaj, chair of the Nasscom Product Council and angel investor.

In any case, Gururaj points out, the food start-up sector is different from others for it deals with tight deadlines, perishable products, lower skill manpower and razor-thin margins. "So what affects food tech need not necessarily affect other start-up areas," he says.

Durga Das, managing director and co-founder of Wassup, an online laundry service, doesn't believe that this is the start of the e-commerce bubble bust. "What's happening now is the result of companies growing too fast and too soon and dishing out huge discounts to aggregate customers," Das says.

Other e-commerce industry experts also feel that the shake-up would prompt the companies to stop hiring furiously and expanding at break-neck speeds.

"They are doing this to please investors who want some kind of fast returns. The value of these companies is based on flimsy grounds, like the number of deliveries they make or the number of customers they gain," says a consultant. "The angel investors are the ones to blame for this," he adds.

But there is a lesson for all start-ups, some experts hold. The only e-commerce companies that will do well are the ones that track costs, take charge of their last mile delivery and expand at a slow rate, Wahi maintains. And the mess the food tech start-ups find themselves in might just be the wake up call.