BEENEXT-backed cloud kitchen operator Kitchens@ acquires Kitchens Centre

DG Ventures and BEENEXT backed cloud kitchen company Kitchens@ has acquired Delhi-headquartered Kitchens Centre in a share swap agreement. Investors in Kitchens Centre, including Village Global and AngelList India, will be given equity in the merged entity under the Kitchens@ brand, said a senior executive.

The acquisition will provide Kitchens@ with a pan-India presence, and the estimated revenue of the combined entity in the first quarter is expected to be $30 million in recurring revenue terms, Junaiz Kizhakkayil, Founder and Chairman, Kitchens@, told YourStory. 

The cloud kitchen company did not disclose the size of the deal, though it confirmed neither the founders nor investors in Kitchens Centre had taken secondary exit as part of the deal.

Founded in 2018 by Junaiz, Kitchens@ has a presence across 12 hubs with over 350 kitchens in Bengaluru. It works with brands such as Dominos, Subway, ITC, Mainland China, Barbeque Nation, and others.

Set up with initial seed capital from Zomato, Kitchens@ bought back the shares from the foodtech major in 2019, said Junaiz, who previously worked with the Empire chain of restaurants in Bengaluru for 26 years. 

ALSO READ

Why restaurants are increasingly going for a cloud-kitchen model like Swiggy Access

Gurugram-headquartered Zomato had also started its infrastructure-led cloud kitchen business Zomato Infrastructure Services in 2016, which later shut down in 2018. Rival Swiggy also saw its cloud kitchen business suffer due to the COVID-19 pandemic, with contractual staff getting laid off in 2020. 

Kitchens@ continues to work with aggregators such as Swiggy, Zomato, and Amazon Foods for demand generation and logistics while it focuses on the supply chain and culinary operations. 

“The acquisition will help us expand to cities outside of Bengaluru. Also we plan on pivoting the model of Kitchens Centre from a brand operated kitchen to a culinary operations kitchen model, which has better margins for the business. Going ahead, we will move from an equal distribution of the two to an 80-20 mix,” Junaiz told YourStory. 

Started in 2019 by Lakshay Jain, Kitchens Centre is present across 20 cities at 90 locations and operates 700 kitchens. The company works with restaurant partners, including Mainland China, Wow Momo, Barbeque Nation, Biryani Blues, and others. 

Junaiz added, using Kitchens Centre’s network, the combined entity will be able to target new cities with a single hub and increase supply density around an area. 

While the first six months of the pandemic affected Kitchens@'s business adversely, the company has seen its GMV grow nearly 10X in 2021 from the base year of 2019. Gross Merchandise Value (GMV) denotes the total value of sales over a stipulated period.

According to Redseer, the GMV for India's cloud kitchen business is set to grow to $3 billion by 2024, as compared to $400 million in 2019. 

Besides regional players, the business also includes multi-brand cloud kitchen operators such as Rebel Foods and Curefoods, which have a house-of-brands approach.