"There are 28 meal occasions in a week. You cannot expect one brand to be fulfilling every customer's needs on all occasions."
With that thought, Ankit Nagori found the key ingredient in the recipe for his next venture. Curefit, the health and fitness startup Nagori co-founded in 2016 with Mukesh Bansal, hived off its cloud kitchen vertical EatFit in October last year.
Nagori swapped his stake in Curefit for majority ownership of EatFit which became the first and the largest brand in Curefoods, the parent entity he created in 2020 to roll up popular food brands. Today, Curefoods owns and operates 10 brands from 90 kitchens across 10 cities.
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"Food is very diverse. Within every category, there could be different flavours and price points. We feel if we have to do justice to a full-fledged customer base, we need as many brands as possible," says Nagori.
The consolidation of food brands is the newest business model promising to spice up the cloud kitchen party, similar to how e-commerce was redefined by Thrasio-the US-based start-up, valued at $10 billion, which rolls up popular brands on Amazon's marketplace.
What was a private party comprising a handful of internet-first restaurant players a few years ago is now the new growth frontier that almost everyone in the food services business wants to have a stab at.
And it is a beast of a market, with enormous headroom for growth as people increasingly prefer ordering online to cooking or visiting restaurants, especially since the pandemic.
India's online food ordering market is estimated to be worth around $7.5-8 billion by 2022, according to a 2020 report by Google and Boston Consulting Group.
The cloud kitchen industry alone is expected to be worth $2-3 billion by 2025, according to research and consulting firm RedSeer Consulting.
Food is one of the largest internet business opportunities today and, therefore, there are going to be multiple business models, companies and brands.
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In fact, most cloud kitchen pioneers, including Rebel Foods, BOX8 and FreshMenu, began their cloud kitchen journey as single-brand platforms and functioned on a full-stack model.
Rebel Foods, which pivoted from a quick-service restaurant (QSR) chain to a pure-play cloud kitchen model in 2016, was among the first to capitalise on the multi-brand strategy.
"We have gone through this journey ourselves," says Ankur Sharma, Co-founder, Rebel Foods. "What we have seen is that the more you spread out your assets, the better it is. Many of our initiatives were born out of that, right from creating multi-brand cloud kitchens. It helped us not only serve many customer-first missions but also ensure the economics make much more sense for us," he adds.
Today, the Mumbai-based company is valued at $1.4 billion and operates more than 45 brands-including its own such as Faasos, Behrouz Biryani and Ovenstory-across 350 kitchens in 10 countries.
BOX8 recently raised a $40-million growth round from New York-based Tiger Global Management and rebranded to EatClub Brands.
It operates a slew of brands, including Mojo Pizza, Zaza (biryani), Globo (ice creams), LeanCrust (pizza) and NH1 Bowls (rice bowls). FreshMenu, which stuck on to its single brand, lost some ground over the years, with both revenue and profits taking a hit.
Today, it seems like a no-brainer to build a house of brands to capture a higher share of the wallet. It also offers substantial operating leverage at a per kitchen level.
"We are seeing a lot more cuisine diversification through separate brands. In full-stack models, they are trying to do multiple brands in a single kitchen, thus better utilising their kitchens. Given the value-conscious market, a lot of cloud kitchens are launching affordable brands, especially meals. Use cases are thus diversifying from a weekend kind of brand to daily meals, which is the larger market," says Rohan Agarwal, Associate Partner, RedSeer Consulting.
Of the 45-odd brands in Rebel Foods' stable, 30 are pure-play commercial partnerships. The company, which also offers commission- and rental-based infrastructure and services, inked a partnership with US burger chain Wendy's to run its cloud kitchens in India.
Sharma says they are in talks with at least five international brands to franchise their online operations in India and abroad. It has also invested in three partner brands-SLAY Coffee, Biryani Blues and Zomoz.
"From Rebel's perspective, our idea is that in every micro-locality, we should be able to serve 20-30 top customer missions in multiple shapes and forms. This can be a Rebel-owned brand or partner brand such as Naturals Ice Cream," says Sharma.
Nagori has charted out a similar brand acquisition-cum-franchisee route for Curefoods, except for Indian brands. He wants it to expand to 50 brands across 300 kitchens in three years.
Meanwhile, Hygiene BigBites, which had just one cloud kitchen pre-COVID-19, runs 60 kitchens and 10 brands today. The Bengaluru-based company is adding 8-10 kitchens every month.
But merely rolling up brands isn't enough. "Knowing your customers and building for them is super important," says Kiran Prasad, Founder and CEO, Hygiene BigBites.
He lays out the blueprint: "Use data to understand local nuances, position the right set of brands for that set of customers, be as close to the customer as possible, and build an efficient process internally so that the prep time is less, and deliver it to the customer without losing the charm of the food."
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