IPO-bound cloud kitchen company Rebel Foods is planning to invest as much as $25 million in American fast food chain Wendy’s over the next three years, aiming to more than double the brand’s retail outlets to over 400.
Rebel operates brands such as Faasos, Oven Story, Behrouz Biryani and others. It became the master franchise owner for Wendy’s in February 2023.
“We have opened 200 Wendy’s outlets across nearly 40 cities in India, and plan to double down on this over the next three years. We are looking to invest between $20-25 million in Wendy’s,” Ankush Grover, co-founder and CEO, India and MENA (Middle East and North Africa), told Moneycontrol.
Wendy’s outlets are present in more than half of the 70 cities Rebel Foods currently operates in. The company, which is currently has a footprint of around 370 cloud kitchens, is also aiming to take this figure to over 700 over the same period.
“Each outlet requires around Rs 1 crore in capex to set up, and we usually achieve break-even in two years. This is only slightly faster than our cloud kitchens,” Grover said.
This comes at a time when the larger food delivery market in India is facing a slowdown. Listed food delivery majors Zomato and Swiggy, which operate in a duopoly market, have reported slowing growth over the past few quarters, amid an ongoing slowdown in consumption.
Both firms have faced challenges in onboarding new customers and even scaling beyond the top eight cities, according to analysts.
According to Grover, Rebel Foods has also witnessed a similar slowdown over the last quarter due to reduced consumer spends and increased rental prices.
“We have seen growth taper down in urban markets. Rentals have gone up in the top 5 cities, which hampered our spends. But we are still growing. Tier 2 and 3 markets are growing well,” he said.
Rebel Foods has begun to see a gradual uptick in consumer spending as a result of celebratory occasions like Ramadan, Holi, and the recent Champions Trophy cricket tournament.
"Double-digit growth in FY25"
Over the last couple of years, Rebel Foods has been seen making improvements in its financial health. The company generated a revenue of Rs 1,420 crore in FY24, a 19 percent increase from Rs 1,195 crore in FY24, while reducing its losses by 42 percent, from Rs 657 crore in FY23 to Rs 378 crore in FY24.
“For FY25, we are seeing double digit growth, similar to what we saw last year. We are on track to turning profitable,” Grover said, without elaborating on the timeline for profitability.
To be sure, Sagar Kochhar, the co-founder and CEO of EatSure, Rebel Foods, in an interaction with Moneycontrol last month, said that the company will turn profitable sometime next year ahead of its planned initial public offering (IPO).
“We are growing at over 20 percent SKSG (Same Kitchen Sales Growth) on a year-on-year (YoY) basis. This is on account of the ability of our model to be able to serve multiple food missions from the same infrastructure," Kochhar had said.
15-minute food deliveries
The company is also betting big on 15-minute food deliveries as a key driver of growth going forward. It launched its own fast delivery service – QuickiES – last month as a pilot in Mumbai, and is expecting the service to bolster its supply in the near term.
“Just like how 30-minute deliveries were the norm before, 15-minute deliveries will now become the new norm. It will help us add more supply. We expect 15-minute food deliveries to become a big driver of growth for our brands,” Grover said.
This comes at a time when 15-minute food deliveries are picking up in a big way, with several companies jumping into the mix by launching their quick delivery services.
The company is also in talks with other global brands, other than Wendy’s, for partnerships, Grover said.
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