Swiggy sells cloud kitchen business to Beenext-backed Kitchens@

Swiggy has sold its cloud kitchen business, Swiggy Access, to Bengaluru-based Kitchens@ for an undisclosed amount in an all-equity transaction. Through the share swap deal, the food delivery major now holds a stake in Kitchens@ (legally Loyal Hospitality), the company said in a statement.

The move is part of Swiggy's efforts to cut costs by scaling down unprofitable verticals amid tough macroeconomic conditions. Last month, the Prosus-backed firm shutdown its meat delivery marketplace as it had not hit product market fit despite "iterations". It also laid off 380 employees as part of a restructuring exercise the same month.

"While our cash reserves allow us to be fundamentally well positioned to weather harsh circumstances, we cannot make this a crutch and must continue identifying efficiencies to secure our long-term," Sriharsha Majety, Co-founder and CEO, said.

In November last year, it shut its cloud kitchen brand The Bowl Company in Delhi-NCR as the service did not perform as expected in the region.

Swiggy piloted Access in 2017 to enable restaurant partners to set up kitchen spaces in locations they do not operate in, aiming to shorten delivery time and widen delivery radius.

Kitchens@, backed by investors such as Beenext, DG Ventures, and Trifecta Capital, operates a kitchens-as-a-service model by providing kitchen infrastructure, culinary expertise, and supply chain assistance.

Founded in 2018 by Saurav Jha and Junaiz Kizhakkayil, the company has raised $17.5 million so far. Zomato invested $36.7k in Kitchens@ in 2018.

"The addition of Swiggy's Access kitchens will bolster the reach and operations of Kitchens@ in four cities across 52 locations and 700+ kitchens, providing customers with more convenient and efficient food delivery options," CEO Junaiz said.

ALSO READ

Appetite for cloud kitchens grows as COVID-19 eats into restaurant business

The cloud kitchen industry has been struggling to keep up with the rising costs and unsustainable economics. YourStory reported last month that two major businesses--Travis Kalanick's KitchenPlus and Zomato-backed Mukunda Foods's cloud kitchen business--have been shut down.

Kitchens@ aims to reach $100 million in revenue within the next six months by focusing on scaling operations across key demand areas in India through clusters. These clusters will comprise kitchen hubs that cater to specific micro-markets within cities, allowing them to reach a wider customer base, it said.