Cloud kitchen firms cut their losses to cook up healthy numbers

India’s cloud kitchen startups discovered FY24 to be a extra stimulating 12 months, as most of them not simply clocked income progress but additionally lowered losses by controlling bills, together with these on advertising and marketing and staff, in accordance with the statements of those corporations sourced from the Registrar of Corporations (RoC).Nonetheless, within the ongoing fiscal, trade executives mentioned excessive inflation might put the margins of those corporations underneath pressure–a warning already sounded out by listed fast service restaurant (QSR) corporations.

Insurgent Meals, among the many largest cloud kitchen startups within the nation, posted a 20% year-on-year revenue growth in FY24 whereas slicing down losses by 42%.

Binny Bansal-backed Curefoods clocked a 53% topline progress and narrowed its loss by 53%.

Alpha Wave-backed Biryani by Kilo and Bengaluru-based Freshmenu additionally posted related traits. Notably, Lightspeed-backed Freshmenu, which was on the verge of being acquired in 2019, has charted a comeback story, crossing the Rs 100-crore income mark in FY24.

In 2023-24, the corporate posted a 73% enhance in working income from the earlier 12 months at Rs 121 crore. It lowered its web loss by 20% to Rs 8 crore in fiscal 2024. Throughout the 12 months, Freshmenu expanded its cloud kitchen presence throughout key geographies.

Insurgent Meals, which operates manufacturers resembling Faasos, Behrouz Biryani and Oven Story, noticed its worker profit bills scale back marginally to Rs 394 crore from Rs 405 crore. The model had laid off 2% of its workforce in January 2023.Its promoting and gross sales promotion value additionally got here all the way down to Rs 133 crore from Rs 197 crore in FY23.

Earlier this month, Rebel Foods announced closure of a $210 million funding spherical led by Singapore’s sovereign wealth fund Temasek, in a mixture of major and secondary share gross sales.

Curefoods, which runs manufacturers together with EatFit, Cake Zone and Nomad Pizza, considerably reined in its advertising and marketing prices, spending Rs 53 crore on promoting and promotion throughout FY24, in contrast with Rs 107 crore in FY23.

Biryani by Kilo additionally introduced down its promoting bills by 15% year-on-year to Rs 28 crore.

“Rising prices has been a priority this 12 months as properly…as a lot because it was within the final fiscal. We had hoped it might calm down however it didn’t occur. Costs of uncooked supplies resembling edible oil, wheat, greens have impacted probably the most, and within the meals providers market, passing on the price will increase to the customers isn’t as simple as it might be for biscuit or ketchup makers,” a senior govt at a cloud kitchen agency mentioned.

“Cloud kitchens have nonetheless managed to develop as a result of the size is relatively smaller and it addresses the demand for extra selections for the buyer…totally different corporations will develop at totally different charges however it’s going to proceed,” the manager mentioned.

Gurgaon-based Zomato’s meals supply gross order worth (GOV) grew by 23% year-on-year in FY24 to Rs 32,224 crore. In its previous earnings calls, the corporate’s administration had performed down the impression of inflation and consumption slowdown on its enterprise.

Its rival, Swiggy’s meals supply GOV grew by 15% in FY24 to Rs 24,700 crore.

“Whereas bigger restaurant corporations have flagged a slowdown in progress, aggregators haven’t felt the pinch as a result of much more progress is coming from new eating places and cloud kitchens which are increasing throughout the board,” an govt with one of many meals supply corporations mentioned.

Based on a report by the Nationwide Restaurant Affiliation of India (NRAI) earlier this 12 months, the expansion within the cloud kitchen sector through the interval 2019 to 2024 was within the 30-40% vary, and the outlook for the subsequent 4 years is compound annual progress price (CAGR) of 35%.