Indian cloud kitchen company Rebel Foods valued at $1.4 billion with $175 million fundraising – TechCrunch
Rebel Foods, which operates a large network of dark kitchens in nearly a dozen markets, is the latest Indian startup to gain unicorn status.
The 10-year-old Indian startup said Thursday it has raised $175 million in its $1.4 billion Series F funding round, up from about $800 million last year. The Qatar Investment Authority, the sovereign wealth fund of the State of Qatar, led the financing round with the participation of existing investors Coat & Evolution. Rebel Foods also includes 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 prominent investors including Tiger Global, SoftBank, Sequoia and Temasek are doubling down aggressively in their bets to support young companies in the United States. The second largest internet market in the world. (And many are starting to explore India First investment in an Indian startup this week.)
rebellious foods It operates the largest number of what it calls “internet restaurants” in the world in 10 countries including the United Arab Emirates, Indonesia and Malaysia. Over 45 brands, many of which are owned by Rebel Foods and several partner companies such as Wendy’s and Mad Over Donuts, prepare food exclusively for delivery rather than catering to takeout customers. The startup says it operates more than 4,000 of these internet restaurants.
The idea behind dark kitchens – also known as ghost and cloud kitchens – is to make catering operations more economical. Setting up and running a restaurant is expensive as they are also, after all, parts of real estate. Setting up cloud kitchens allows restaurants and partner brands to move away from expensive retail locations and also simplify business by focusing only on food production.
“The big disruption that the cloud kitchen model has created is that you don’t have to put up five properties to run five different restaurants,” Jaydeep Barman, founder and CEO of Rebel Foods, said at a virtual conference earlier this year. Since automakers produce dozens of models from one factory, “using technology, supply chain, and workflows, you can actually have one kitchen for five restaurants,” he explains.
Many investors say that the cloud kitchen model is also important for food delivery companies, restaurants, and brands to reach the larger market. In many developing markets including India, the ticket size for ordering lunch or dinner is between $3 and $5, making current business models unviable for businesses to make a profit.
This would explain why Swiggy and Zomato – India’s two largest food delivery companies – are making so many efforts to explore creating their own cloud kitchens.
Swiggy, for example, announced in late 2019 that she had done it Invested in more than 1 million square feet of real estate space Across 14 cities in the country to help restaurant partners of all sizes expand to more locations within their city and across new cities with cloud kitchens. The company, which has invested more than $25 million in its cloud kitchen business, cut it significantly last year after the pandemic. Like Swiggy, Zomato has also struggled to make inroads through its cloud kitchen efforts.
But the model is here to stay — and investors are buying. “Working for Rebel is losing investors’ interest in single-brand entities because these brands do not have the ability to drive profitable unit economies from just operating a single brand. Scaling a single brand across cities requires much higher capital investment than the brands that Form part of a larger portfolio, where fixed costs are controlled,” mentioned Indian news and analysis magazine CapTable, which also garnered fundraising talks last week.
Why have big companies struggled to make inroads with cloud kitchen? TechCrunch spoke with Ravi Golani, chief strategy officer at Rebel Foods, who said the challenge he sees with the cloud kitchen model is that there are many different strategies at play and they yield different results.
“We combine the best of both worlds – digital and physical – to understand how to expand a particular brand, to make unit economics work, and to ensure the right supply chain and benefit from technology. It is a completely different game,” he said, adding that some other companies have only succeeded in making some Inc. Rebel Foods works with food delivery companies as delivery distribution partners.
“If you think of cloud kitchens in general, you can imagine five or more different kiosks in the kitchen. They have their own staff, production materials and delivery networks. In our kitchens, what we’ve done is organize the entire design through workflows rather than restaurants,” He said.
The startup said it plans to deploy new funds to expand its international presence as well as explore acquisition opportunities. Piyush Kakade, the startup’s chief financial officer, said the company is also looking to go public within two years. Rebel Foods’ current annual turnover is $150 million.