Investors line up for cloud kitchens, online food delivery brands

1

Mumbai: Hygiene BigBite — a cloud kitchen backed by Serial entrepreneur K Ganesh — has raised $15 million from Falcon Edge, two people familiar with the development told ET, amid heightened investor interest in the sector.
Last week, Rebel Foods, among the largest cloud kitchens in India, became a unicorn
as it raised $175 million in its latest round at a $1.4-billion valuation.

Hygiene BigBite is part of Ganesh’s entrepreneurship platform GrowthStory, which was founded in 2013. Ganesh was an early promoter of startups like online grocery major BigBasket and home decor provider Homelane.

Hygiene BigBite’s founder Kiran Prasad confirmed the fundraise to ET.
Founded in 2016 by Prasad as business-to-business (B2B) delivery startup BikeNinja, the Hygiene BigBite pivoted to a multi-brand cloud kitchen model in 2017. It currently operates 10 brands — including Gunpowder and Biryani Trip — across 50 kitchens. The company is finalising at least one acquisition, Prasad said, and planning to add five more brands in the near future.

Cloud kitchens are facilities set up for the preparation of delivery-only meals. As restaurant dining took a severe hit amid the pandemic, the cloud-kitchen industry got a major boost.

ALSO READ TECH NEWSLETTER OF THE DAY

On Monday, Facebook, WhatsApp and Instagram went offline for six hours. That was only the second worst thing to happen to the social media behemoth this week.


Read Now



Over the last 18 months, all major brick-and-mortar chains
have expanded their cloud kitchen network, ET reported in August. Executives told ET that restaurants without physical stores, which only deliver and operate through cloud kitchens, could outpace growth of physical outlets in the next 12 months, despite the reopening of dine-in.
Prasad said the company had scaled from five kitchens before the second wave of the Covid pandemic to 50 kitchens in Bengaluru, Pune, Hyderabad, and Chennai. It intends to expand to 100 by next year.

“When the market was uncertain, nobody knew what they were doing, what to do next, will the lockdown continue? But we took an aggressive step to expand to more kitchens. Now we are opening over 10 kitchens a month,” Prasad said, adding that the company was also planning to get into packaged food.

online foodETtech

Big expansion

Other well-funded fast-food brands like Tiger Global-backed Wow! Momo Foods, which recently
raised $17 million, are also looking to expand their cloud kitchen business.

Rebel Foods, meanwhile, is expanding its international footprint and opening kitchens in tier-two markets in India. The company, famous for its Faasos and Behrouz Biryani food brands, is said to be investing in other brands from its portfolio like Slay Coffee and Biryani Blues. Ankur Sharma, chief business officer at Rebel Foods, told ET in July that 25 brands were part of its launcher’s programme through which it invests, acquires and helps them scale via its supply chain. Sharma said the company was planning to add 25 more brands to its programme by the end of the year.

“There have been players which have leveraged our supply chain to open in new cities. Longtail is about not only taking the established brands across India, and giving them deeper penetration, but also finding unknown brands, where the product is amazing. We are working with entrepreneurs, taking their product pan-India or a pan-city,” Sharma had said.

Having spun off from Curefit, Curefoods, which operates cloud kitchen brand EatFit, recently raised $13 million. It is creating its own house of brands and also acquiring or investing in brands and expanding them to other regions.

Curefoods, founded by Ankit Nagori, is also in talks to raise $30 million in fresh funding, according to an industry source familiar with the deal, who did not wish to be named. Curefoods has acquired six brands and is in talks to take over 10 more in the next few months.

Nagori did not respond to ET’s request for comment.

“While there has been expansion, the industry has also witnessed high mortality in this hyper-competitive market and established or upcoming brands with deep pockets are looking to consolidate in the space to cater to a wider segment of customers both in terms of cuisines and reach,” said Ankur Pahwa, partner and national leader — ecommerce and consumer Internet, at EY.

The myriad models are peaking investor interest in the food and beverage space, he said. “Even the current large players are still figuring out what works; there is no clear playbook and hence investors are taking calculated bets.”

Leave a Reply