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Exclusive: Oyo wakes up to smell coffee, and more

By Priyanka Sahay

It is time for coffee.

After testing the food space through cloud kitchens, hospitality firm Oyo is entering the high-margin segment with the launch of its coffee chain, The French Press.

The Softbank-backed company has launched an outlet each in Delhi and Bengaluru and will open at least a dozen more soon, two people privy to the development have said.

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The launch was in partnership with a leading coffee chain through a franchise model, one of the sources said. Moneycontrol couldn't immediately ascertain the identity of the partnering coffee outlet.

Oyo confirmed the development in an email. It was operating these coffee shops and kitchens in many of its Townhouse properties, both independently and sometimes in partnership with an established brand, Oyo said. It, however, didn't name the partners.

In Delhi, the coffee outlet, launched earlier this month, is in the premises of the Townhouse in the up market Siri Fort area. It started off as a takeaway and a delivery service. The cafe is also listed on the food delivery app Zomato.

The café not only caters to the guests staying in the property but is open to all customers.

The company is following its room-pricing model for cafes as well. Food items are competitively priced and range between Rs 100 and Rs 250.

In the last one year, the hotel start-up’s focus on the food segment has grown exponentially. It hired Chandan Agarwal as the head of food and beverage and cloud kitchen unit in December.

Before joining Oyo, Agarwal founded cold pressed juice company Fresh Food Concepts Pvt Ltd, which sells its products under the brand name Imagine.

Oyo runs a bunch of cloud kitchen brands such as Adraq by Oyo and O'Biryani by Oyo catering to different palates.

It is a break from Oyo’s initial strategy when it aggregated or tied up with independent food delivery firms.

"As the largest hotel chain in India, we at Oyo, operate several full-service hotels around the country. We have an active play in the food and beverages business with over 25% of our revenue coming through the kitchens we operate in such full-service hotels. Hence, culinary design and good food experience are valuable to us," an Oyo spokesperson said.

The move comes at a time when Oyo founder and group chief executive Ritesh Agarwal has signed a $2-billion primary and secondary management investment round to buy back some of the company's shares.

Oyo last announced an investment from US-based home-renting company Airbnb in April. Earlier, it had raised over $1 billion from investors that included SoftBank, Didi Chuxing and ride-hailing firm Grab.