Bengaluru-based cloud kitchen start-up Freshmenu is gearing up for a comeback with a ‘house of brands strategy’ after the Covid-19 pandemic dealt heavy losses to the restaurant and food tech industry which wiped out revenues and jobs. Speaking to FE, Freshmenu founder and CEO Rashmi Daga said the start-up plans to expand its cloud kitchen density in the four cities it currently operates in, while also focusing on creating new private label brands catering to new cuisines.
Founded in 2014, Freshmenu is one of the earlier food delivery start-ups that adopted the cloud kitchen model in India. The start-up began doorstep food delivery at a time when the service was still very new to internet consumers in the country. Zomato, which was founded in 2010, did not get into food delivery until mid-2015, while Swiggy was founded only in August 2014.
Freshmenu first began its operations selling continental packaged foods in urban localities in Bengaluru, including Koramangala, MG Road, Old Airport Road, Indiranagar, and Ulsoor, and later expanded into new cities. It also began adding new cuisine options over the years.
The start-up has raised close to $25 million in equity and debt financing to date from investors such as Lightspeed Venture Partners, Innoven Capital, Zodius Capital, Growth Story, and many others.
Daga said the company also closed fresh funding worth $7 million from Florintree Advisors, a growth stage venture capital firm that invests in tech start-ups, giving the company a 12- a month runway. However, it plans to raise additional funding in the near future.
On the company’s future strategy, Daga said that Freshmenu will also offer new subscription-based plans, especially focused on healthy foods and keto options. It currently offers a three-tier subscription plans name ‘FreshPass’ starting from Rs 999 to Rs 1,999 that offers up to 25 meals in a package.
Currently, Freshmenu handles over 8,000 orders per day across four cities, including Bengaluru, Delhi, Gurgaon, and Mumbai with an average order volume (AOV) of Rs 350. The start-up makes around 85% of its revenues from food delivery aggregators such as Swiggy and Zomato, while the rest 15% comes from its own direct-to-consumer app.
In FY21, Freshmenu reported a lower revenue of Rs %0 crore, compared with Rs 105 crore in FY20. Daga said a pandemic-induced slowdown impacted its operations. However, the cloud kitchen start-up has already hit an annual revenue run rate (ARR) of Rs 200 crore for the ongoing financial year (FY23), she added.
“We also have plans to expand into Chennai, Hyderabad, Pune, and Kolkata later. We have a very clear understanding that the cloud kitchen business has to play at a city level and density is what drives revenues, hence we would want to expand current density before we go to more cities,” Daga added.
Freshmenu has a fully-managed model where it operates its own kitchen and last-mile delivery unit. It also owns three independent private food labels, including a health-focused brand named Green Cravings, a dessert brand named Edesia, and an Asian cuisines brand named Donburi. Each has its own independent branding and is separately listed on food delivery aggregators such as Swiggy and Zomato.
Daga said that the start-up is now planning to offer new labels based on plant protein, grain bowls, bbq and grill platters, seasonal fruits and vegetable-based collections, and Zero sugar desserts. It also plans to expand into new West Asian cuisines such as Moroccan, Egyptian and Lebanese in the coming months.
“We clearly believe there are large opportunities in private labels and we would work on introducing more of them. However, we’re not going after the Thrasio acquisition model, instead we will build new brands in-house,” Daga added.
Freshmenu competes with other cloud kitchen brands such as Box8 and Faasos who already racked up millions in funding recently as the food tech segment has once again become a hotbed for investors.
Faasos’ parent company Rebel Foods entered the unicorn club after raising a $175-million Series F round led by Qatar Investment Authority in October 2021. In December 2021, Box8’s parent firm Eatclub raised $40 million from Tiger Global at a $340 million valuation, while Food delivery brand Biryani By Kilo (BBK) also raised $35 million in a funding round led by Falcon Edge venture capital arm Alpha Wave Ventures in November 2021.
