SUMMARY
The kitchen infrastructure business, Swiggy Access offers a plug-and-play kitchen-as-a-service product for restaurants
Swiggy is in the process of shipping off Access to Kitchens@, a BEENEXT-backed kitchen infrastructure startup
The deal is supposed to be a share swap deal, valuing Kitchens@ at $40 Mn and Swiggy Access at $10 Mn
Food delivery major Swiggy is reportedly trying to ship off its kitchen infrastructure business Swiggy Access as it gears up for an IPO.
The kitchen infrastructure business, which was launched more than five years ago, offers a kitchen-as-a-service product for restaurants to set up their cloud kitchens.
Swiggy is in the process of shipping off its kitchen infra business to cloud kitchen company Kitchens@, sources told ET. The deal is supposed to be a share swap deal, valuing Kitchens@ at $40 Mn and Swiggy Access at $10 Mn. The deal might also see some of Swiggy’s private labels become clients of Kitchens@ at some locations.
Further, going ahead with the plan, Swiggy has decided to scale back the kitchen infrastructure business from around 200 locations to 30-35.
While the kitchen infra business was strong in terms of plan and model, it looks like Swiggy has been unable to solve a few key problems with the business – real estate and labour. At its peak, the foodtech major was burning between $3 Mn and $5 Mn per month in this segment, according to sources cited by the publication.
Incidentally, Zomato also invested in Kitchens@ in 2018 and was running its kitchen-as-a-service business via the startup before shutting down the vertical altogether in 2020, ahead of its IPO in July 2021.
Founded in 2015, Kitchens@ is backed by the likes of BEENEXT and claims to have 1,000 kitchens in around 100 locations across 20 cities. It also operates several private labels of its own across various cuisines in the country.
According to its website, Kitchens@ has partnered with several international food chains and national foodtech startups including Subway, Domino’s Pizza, Wow! Momo, Chai Point, Chaayos and Mainland China, among others.
Swiggy is also preparing to hit the public markets by September this year, according to a report by Entrackr. However, given Zomato’s poor performance on the stock market, this timeline could be longer than expected.
However, even though Swiggy has said it has doubled down on its cloud kitchens and private labels business, Inc42 reported last December that the foodtech shut down The Bowl Company in Delhi-NCR.
Also, in its cost-cutting drive to become profitable ahead of the IPO, Swiggy has also laid off 380 employees earlier this year.
However, it posted a net loss of INR 3,628.9 Cr in FY22, a jump of 2.2X compared to INR 1,616.9 Cr in FY21. Swiggy’s total revenue grew 2.2X to INR 6,119.8 Cr in FY22 from INR 2,675.9 Cr in FY21, while its expenses grew 131% to INR 9,574.5 Cr in FY22 from INR 4,139.4 Cr in FY21.
