Food delivery giant Swiggy to sail off Kitchen Infra Business Ahead Of IPO
- ByStartupStory | February 15, 2023
Food delivery major Swiggy is reportedly trying to ship off its kitchen infrastructure business Swiggy Access as it gears up for an IPO. The kitchen infrastructure business, which was launched more than five years ago, offers a kitchen-as-a-service product for restaurants to set up their cloud kitchens. Swiggy is in the process of shipping off its kitchen infra business to cloud kitchen company Kitchens@ because of not being able to manage to yield substantial profits from this venture.
Sources told ET that the costs of infrastructure were too high to sustain the business. “The biggest problems for restaurants are real estate and labour. That’s exactly what it was trying to solve. The trouble was its long gestation period as with most infrastructure-heavy businesses,”
Swiggy Access had around 200 locations operational across Delhi, Hyderabad, Mumbai, Bengaluru, and Chennai, but the same was reduced to around 30-35. The acquisition of Swiggy Access by Kitchen@ is likely to happen in a share-swap deal, the report said. While Swiggy Access has been valued at $10 million (Rs 82.77 crore), Kitchen@’s valuation is at around $40 million (Rs 331 crore).
Kitchen@’s core business, unlike Swiggy, is its cloud kitchens. Its official website suggests that it has provided services for national chains like Mainland China, Keventers, Chaayos, and others.
Notably, Zomato, Swiggy’s chief rival in the food delivery business, was also an investor in Kitchen@’s parent company, Loyalty Hospitality until 2020. Zomato invested in the company after shutting down its own kitchen infrastructure business, Zomato Infrastructure Services, in 2018.
In Delhi-NCR, the company has shut down its cloud kitchen business, The Bowl Company, after trying to run it in a number of different ways. However, the same brand, along with Soul Rasa, are doing well in cities in southern India.
Swiggy is currently focussing its efforts on Instamart, on which it has been burning around $30 million (Rs 248.31 crore) every month since December 2022. The company is planning to release a number of FMCG brands on Instamart.
Swiggy raised around $700 million (Rs 5,794.56 crore) from investors in January 2022, which took its total valuation to $10.7 billion (Rs 88, 577.86 crore). Zomato’s market capitalisation is reportedly half of that of Swiggy’s, and if the latter wants to pitch high-priced shares to investors, it has to show its business verticals as profitable or with a considerable
Follow Startup Story
Related Posts
