Ahmedabad-based cloud kitchen startup BigSpoon Foods Private Limited has received the first tranche of its $2 Mn Pre-Series A funding round for product and brand development. A clutch of venture capital firms and family offices like Urmin Family Office, Lemonade Ventures, TrueValue Group MD Yash Shah, investors from Vcats Network and others participated in this round.
It runs three cloud kitchen brands Makhni Brothers, Oven & Grill and Meals101 and an essential services brand called Makhni Brothers Essentials that delivers through Zomato and Swiggy stores.
The startups solely focus on Tier-II cities and have marked its presence in three cities — Ahmedabad, Baroda, and Surat. A part of this fund will be used to expand its presence across new cities like Indore, Jaipur, Surat, Pune, Bhopal and others.
The company will also be investing in building technology and robotics-based solutions to make their process simpler and hire leadership across several sectors that will help them scale. Besides this, the company is also looking to start two additional brands to cater to a wider audience and deliver 50K orders a month by the end of 2020
We have efficiently scaled to three kitchens across Gujarat, with three brands each. We would be launching in four new cities in the current quarter, and invest in efficient technology in food production, customer experience, and inventory planning,” said Mathrani.
BigSpoon Foods raised its first round of funding in July 2019 and then another in October that year. The company had also raised $200K from Urmin Family Office, Lemonade Ventures, LetsVenture, and marquee angel investors in March 2020. The company is also in talks to raise another round, cofounder Mathrani told Inc42.
The company believes that its target Tier II has helped it remain EBITDA (earnings before interest, taxes, depreciation, and amortization) positive since the advertising cost and customer acquisition cost is much cheaper than that of Tier I cities. Moreover, the logistics set up in Tier-II cities is much simpler and allows them to cover larger distances in a short span of time. Mathrani explained that it will take longer to cover 4 KM in Mumbai, than in any other Tier-II cities.
BigSpoon Foods relies on food aggregator Zomato and Swiggy, along with its own fleet powered by Mumbai-based hyperlocal and logistics startup Grab-A-Grub. The company also hires a few delivery partners on its own for weekend/weekday gigs.
According to Datalabs by Inc42+ estimates, the projected market size of cloud kitchens is expected to reach $1.05 Bn by 2023. The report ads that cloud kitchens are usually dependent on platforms such as Swiggy and Zomato for delivery, awareness, reach and customer experience. Therefore, the major operational costs such as marketing, discoverability and delivery are being borne by these food aggregators. Some of the prominent cloud kitchen networks in India are Hoi Foods, Rebel Foods, Box8 and more.
Commenting on the latest investment, Urmin Family Office said, “We believe the cloud kitchen segment provides immense growth potential and convenience along with superior capital efficiency for the business as compared to other dine-out options.”