Swiggy Sells Kitchen Infra ‘Access’ to Kitchens@ Amid Losses

• ByStartupStory     |    March 3, 2023

Swiggy, a major player in the foodtech industry, has sold its kitchen infrastructure business, Swiggy Access, to Kitchens@, a cloud kitchen infrastructure startup, in a share-swap agreement. This move is part of Swiggy’s efforts to reduce costs and achieve profitability. As a result of the deal, Swiggy will become a stakeholder in Kitchens@, and the combined gross merchandise value of the two companies is expected to reach $65 million. 

Two weeks after reports of Swiggy’s attempt to sell its Access business prior to its IPO, the company has successfully sold the kitchen infrastructure unit to Kitchens@ in a share-swap agreement. As part of cost-cutting measures, Swiggy had already downsized the business from approximately 200 sites to 30-35 before the sale.

According to Kitchens@ founder Junaiz Kizhakkayil, the acquisition of Swiggy Access kitchens will enhance the reach and functionality of Kitchens@ in 52 locations across four cities, increasing the number of kitchens to over 700 and providing customers with more convenient and efficient food delivery choices. Swiggy’s CFO Rahul Bothra commented that Access was introduced by the foodtech company to address gaps in restaurant supply.

Report says, Swiggy’s CFO Rahul Bothra stated that the company created Access to address the inadequacies in restaurant supply. Bothra expressed confidence that Kitchens@ has the capability to foster this ecosystem by introducing new supply innovations. He also mentioned that Swiggy retains its belief in the potential of this sector and remains invested as a stakeholder in Kitchens@.

Kitchens@, which was established in 2015 by Junaiz Kizhakkayil and backed by BEENEXT, asserts that it has around 700 kitchens spread across 52 locations in four cities. It also manages a variety of private labels that feature a variety of cuisines in India. The company has collaborated with various international fast-food chains and local foodtech startups, such as Subway, Domino’s Pizza, Wow! Momo, Chai Point, Chaayos, and Mainland China.

Swiggy’s sale of Access to Kitchens@ is expected to strengthen the latter’s network, technology, and equipment. However, for Swiggy, the move is a cost-cutting strategy as it prepares for its IPO. The decacorn foodtech firm is aiming to decrease its cash burn and consolidate its business verticals as part of its efforts to streamline its operations. 

Earlier this year, Swiggy fired 380 employees due to business restructuring and cost-cutting. The company also discontinued The Bowl Company, one of its private labels, in Delhi-NCR, and its meat marketplace due to non-performance. 

In FY22, Swiggy’s net loss was INR 3,628.9 Cr, a 2.2X increase from FY21’s INR 1,616.9 Cr, due to rising expenses outpacing revenue growth. In contrast, Swiggy’s total revenue grew 2.2X to INR 6,119.8 Cr in FY22, while expenses rose 2.3X to INR 9,574.5 Cr.

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