Cloud Kitchen
Swiggy Access, the company’s cloud kitchen business, was launched in November 2017 to help restaurant brands set up kitchen-only kitchens in areas where certain types of food are unavailable.
Two months after axing 380 employees in a bid to fund a tough capital market, food delivery leader Swiggy has sold its cloud kitchen business in an exchange of shares in Kitchens@.
In an email to employees in January, Swiggy co-founder and CEO Sriharsha Majety said the company is taking a closer look at some of its business lines and closing its meat markets. “The number of food deliveries has decreased compared to our forecast (and many peer companies worldwide). This means that we need to review our overall budget to meet our profit objectives…” he wrote. in that email. Swiggy Access, the company’s cloud kitchen business, was launched in November 2017 to help restaurant brands set up kitchen-only kitchens in areas where certain types of food are unavailable.
“For example, if Swiggy sees a gap in biryani in the Bengaluru area, it will invite a famous biryani brand to set up a cloud kitchen with its real estate,” said an insider. By the end of 2019, the food delivery giant has spent Rs 175 crore and expanded the segment to more than 1,000 cloud kitchens in 14 cities. It has announced plans to spend another Rs 75 crore and expand its cloud kitchen business to 12 more cities by March 2020.
The onset of the Covid pandemic at the beginning of 2020 put a brake on these expansion plans and the company had to cut a large part of the sector. Before the agreement was announced today, its presence was only in 4 cities. Kitchens @, the company that acquired the Swiggy business, said that the acquisition will strengthen its presence in 52 cities. The increase in digital adoption during the pandemic led to a period of rapid growth in the food delivery industry that began after the first migration of Covid and continued until 2021. As a result, many restaurants have joined the online delivery bandwagon and there is no immediate need to sow seeds in many urban areas with cloud kitchens. So it is not surprising that the ax has fallen on the sector at a time when Swiggy is trying to cut costs and strive for profitability. Its food delivery business saw growth of 38% in terms of order volume and 40% in terms of value in the first six months of 2022. According to a report from its investor Prosus, delivery of restaurant food company GMV is $1.3. billion, while the GMV of the instant market is $ 257 million, at the end of the first half of 2022. did this further as technology peers such as Zomato, Paytm, Nykaa and Delhivery have destroyed the market. The company reported a loss of Rs 3,628.9 crore for FY22. The company’s revenue from operations increased by 125% to Rs 5,704.9 crore in FY22, according to financial data by economic intelligence firm Tofler.
