Rebel Foods, which operates a large network of dark kitchens in nearly a dozen markets, is the latest Indian startup to achieve unicorn status.
The 10-year-old Indian startup said Thursday that it has raised $ 175 million in its Series F funding round that valued it at $ 1.4 billion, up from $ 800 million last year. Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, led the financing round with the participation of existing investors Coatue and Evolvence. Rebel Foods also counts Sequoia Capital India and Goldman Sachs among its investors.
Rebel Foods is the third Indian startup to become a unicorn this week, and the 31st to become a unicorn this year, as dozens of high-profile investors, including Tiger Global, SoftBank, Sequoia and Temasek, aggressively double down their bets to back to young companies in the second largest Internet market in the world. (And many more are starting to explore India. A16z made its first investment in an Indian startup this week).
Rebel Foods operates the world’s largest number of what it calls “Internet restaurants” in 10 countries, including the United Arab Emirates, Indonesia and Malaysia. More than 45 brands, many of which are owned by Rebel Foods and also several by partner firms such as Wendy’s and Mad Over Donuts, prepare food exclusively for delivery rather than serving take-out or take-out customers. The startup says it operates more than 4,000 of these internet restaurants.
The idea behind dark kitchens, also known as ghost or cloud kitchens, is to make foodservice operations more economical. Establishing and operating a restaurant is expensive, as they are, after all, pieces of real estate too. Cloud kitchen setup enables restaurants and partner brands to move away from more expensive retail locations and also streamlines business by focusing only on food production.
“The big disruption to the cloud kitchen model is that you don’t have to put five real estate [locations] to run five different restaurants,” said Jaydeep Barman, founder and CEO of Rebel Foods, in a virtual conference call at early this year. As automakers churn out dozens of models from a factory, “using technology, supply chain and workflows, you can actually have a kitchen for five restaurants,” he explained.
Many investors say that the cloud kitchen model is also crucial for food delivery companies, restaurants and brands to reach a larger market. In many developing markets, including India, the ticket size for a lunch or dinner order is $ 3 to $ 5, making existing business models unfeasible for companies to make a profit.
This would explain why both Swiggy and Zomato, the top two food delivery companies in India, have made various efforts to explore creating their own kitchens in the cloud.
Swiggy, for example, announced in late 2019 that it had invested in more than one million square feet of real estate space in 14 cities across the country to help restaurant partners of all sizes expand to more locations both within their city. as in new cities through kitchens in the cloud. The firm, which invested more than $ 25 million in its cloud kitchen business, cut it down significantly last year after the pandemic hit. Like Swiggy, Zomato has also struggled to make inroads with its cloud cooking efforts.
But the model is here to stay, and investors are buying. “Working for Rebel is the loss of investor interest in single brand entities, given that these brands do not have the ability to drive the profitable unit economy of just operating one brand. Scaling a single brand across the cities require much higher capital investments than for brands that are part of a larger portfolio, where fixed costs are controlled, “reported Indian news and analytics publication CapTable, which also picked up fundraising conversations last week. pass.
Why have large companies struggled to make inroads with cloud cooking? TechCrunch spoke with Ravi Golani, chief strategy officer at Rebel Foods, who said that one challenge he sees with the cloud kitchen model is that there are several different strategies at play and they are yielding different results.
“We are combining the best of both worlds, digital and physical, to understand how to expand a particular brand, make the unit economy work, and ensure a proper supply chain and take advantage of technology. It’s a completely different ball game, “he said, adding that some of the other companies have only managed to achieve a few of these. Rebel Foods works with food delivery companies as its distribution and delivery partners.
“If you think about cloud kitchens in general, you imagine five or more different cabins in a kitchen. They have their own staff, production material and delivery links. In our kitchens, what we have done is organize all the design by workflows instead of restaurants, “he said.
The startup said it plans to deploy the fresh funds to expand its international presence and also explore acquisition opportunities. It is also considering going public within two years, said Piyush Kakkad, the startup’s chief financial officer. Rebel Foods current annual execution rate is $ 150 million.
