According to Market Research Future, the Indian online food ordering market is expected to grow at a CAGR of 16.2% to $17.02 billion by 2023 driven by the rising number of logistics providers. A rising trend in the sector is the cloud kitchen model, which is being adopted by restaurants, delivery companies, and even cab services. A rising cloud kitchen player is Rebel Foods, which was earlier known as Faasos.
Rebel Foods’ Journey
Pune-based Faasos was founded in 2004 by INSEAD alumni Jaydeep Barman and Kallol Banerjee and incorporated in 2011. They wanted to build a national quick-service chain with small-format restaurants and home delivery for Indian wraps. Over the next two years, Faasos expanded rapidly, opening 75 restaurants across India’s major cities.
Around 2014 when restaurant aggregators Zomato and Foodpanda were gaining ground and Swiggy was making a mark in the food delivery market, Jaydeep realized that about 70% of his business was through deliveries. The company then started shutting down restaurants and leasing lower-rent spaces for kitchens that were closed to customers. It soon launched the Faasos app and started making wraps only for delivery.
With the shift from a traditional fast food format to a cloud kitchen model, the rent-to-sales ratio dropped from 15% to 4% over the next two years and took away the pain of finding great retail locations. It paved the way for rapid growth. The company then added more brands to entice its customers. These included Behrouz for biryani, Oven Story for pizzas, and Firangi Bake for oven-baked dishes with an Indian twist.
In 2018, the company rebranded its parent entity to Rebel Foods Pvt. Ltd. Today, it runs over 200 kitchens across 15 Indian cities including New Delhi, Mumbai, Chennai, Bangalore, Hyderabad, Nagpur, Gurgaon, Pune, Ahmedabad, Vadodara, Indore, Noida, Bhopal, Ghaziabad, and Faridabad. It has served over 4 million customers and serves over 30,000 orders per day. It competes with FreshMenu and Box8.
Rebel Foods’ Financials
Rebel Foods reported revenue of INR 149 crore ($21.5 million), up 67% and net loss narrowed by 10% to INR 74 crore ($10.7 million) for financial year 2017-2018. It expects to end financial year 2018-2019 with revenue of INR 300 crore ($43.3 million).
Rebel Foods has so far raised $119.6 million in venture funding from investors including Sequoia Capital India, Lightbox, Evolvence India Fund, Alteria Capital, RuNet South Asia, and Sistema Asia Fund. It last raised $15.9 million in its ongoing Series D. It is looking the raise $100 million in its Series D at a valuation of $400 million. Last year in August, it had raised $15 million in series C at an estimated valuation of $200 million. The company plans to open three kitchens in Dubai in 2019. It also plans to add 300 cloud kitchens in the next three years.
There is increasing activity in the cloud kitchen space. Swiggy launched Swiggy Access cloud kitchen 18 months ago and Zomato has invested in cloud kitchen company Loyal Hospitality. There is a lot of money riding on the food tech market. Online food delivery and grocery players have raised about $2 billion in the financial year 2018-19. Even ride-share apps Uber and Ola as well as hotel startup Oyo Rooms have entered the space. Uber has launched UberEats and has partnered with Café Coffee Day to launch virtual restaurants across India. Ola acquired cloud kitchen network Hola Chef last year. Oyo Rooms has launched Oyo Food and 20 cloud kitchens. Will we see any of these players acquiring Rebel Foods?