Cold storage, hot halwa: This B2B startup is selling frozen Indian sweets

If you have ever ordered a side of gulab jamun to reach the minimum order value for free delivery on some popular quick service restaurants (QSRs), chances are that you might have received the sweet as a single serving in a transparent box. And, you likely assumed it was made in the restaurant’s kitchen. 

But these desserts were probably made months ahead and blast-frozen to retain their freshness.

Restaurants are quickly adopting frozen foods, especially desserts. And, Mumbai-based Scandalous Foods seems to have found the sweet spot in catering to this demand. 

Nashik-based company Aditof Private Limited, under its brand Scandalous Foods, cooks and sells frozen Indian sweets in single-serve formats to QSRs, hotels, and traditional catering channels. Sanket Shrikant and Pravesh Amin founded the company in 2022.

Co-founder Shrikanth, who previously founded Urban Spice, an out of home food company mainly in the event catering business, has 14 years of experience in the food industry. While trying to find gaps in the HoReCa (Hotel, Restaurant, and Café/Catering) space, he realised that side plates—categories that contribute lower to toplines but add up to a lot more to profits—have a huge gap. And, a solution catering to customers’ post-meal impulsive sugar cravings was lacking.

“Most of the side of the plate categories contribute to about 4-6% of the revenue, and, much more to the bottom line,” Shrikanth tells Yourstory.

He found that ice creams and brownies dominated the after-food sweet cravings. Customers tolerated them, restaurants thought they were convenient and all everybody cared about was the sugar rush at the end of the meal. Usually, a scoop of ice cream or similar products in a single cup/cone has a six-month shelf life. 

This is exactly the scenario Scandalous Foods wants to change. 

Desi sweets are a lucrative deal. The cost of making them is more than covered by the markup for which they are sold. The only risk factors include taste and longevity of the products. 

When it comes to single-serving sweets, hotels, and QSRs usually either commission supplies and labour to manufacture specific Indian delights, arrange it from local vendors or serve vanilla ice cream. Shrikanth knew he had to come up with a product with a longer shelf life, lower cost, and convenient serving sizes for it to be pushed with online orders. 

Is my gulab jamun 6 months old?

Scandalous Foods has a production capacity of 750 kilos per day and blast freezing capacity of 25 tonnes per month which can be ramped up to 60 tonnes per month.

It boasts an impressive menu of gulab jamun, shahi tukda, moong dal halwa, rasmalai, Arabic pudding and even Jalebi among other items. 

The company freezes the sweets it manufactures to sub-zero temperature through blast freezing technology which does not allow for biological processes to ferment and spoil food.

They are then transported in the frozen format to restaurants which store them at minus 18 degrees until use and can last for around six months. For consumption, restaurants can either defrost the product for 30 seconds in the microwave or keep it at normal temperature for a while before serving. 

“The only difference between ice cream and our sweets is, that ice cream is frozen and delivered. This is a frozen, microwaved, and delivered. That's it.” reiterates Shrikanth. 

Sweet deal 

The company raised Rs 3.2 crore in pre-seed rounds concluded in December 2023 and February 2024. It logged a revenue of Rs 1.2 crore in FY24 and plans to touch Rs 3.5 crore in sales in this financial year. It is currently profitable on gross margin levels and plans to touch EBITDA profitability by the end of this calendar year. 

Scandalous Foods currently has 11 key accounts with popular quick commerce chains and quick service restaurants including big names like Zepto and Swiggy. 

It also has six small clients, which are majorly funneled through company entry into corporate catering and event catering domain. Average order value stands as much as Rs 15 lakh for very big clients, some Rs 1.5 lakh for mid-sized clients, ones with smaller players placing orders as low as Rs 15,000. 

However, even when QSRs have accepted frozen as the new fresh, brands are not particularly inclined to be associated with highly convenient frozen food and customers are still hesitant to trust the quality and taste of frozen sweets. With restaurants not marking anything on the food being frozen, the system operates on the convenient assumption that what customers don’t know won't hurt them. 

The company still has to innovate to cater to customers who have altogether shifted away from traditional sweets. It “will have to try and innovate the products in such a way that could probably attract more Gen Z crowd because those are the crowds that have shifted from traditional meethais to your different form of sweets,” says Mrunal Jhaveri, from ICE Ventures, one of the investors in the company. 

Scandalous Foods now caters to major metros in India and has partnered with third-party cold chain solution providers. After some quarters, it plans to look at GCC for export in a bid to capitalise on the demand for affordable Indian desserts away from home.

The company eventually plans to explore direct-to-consumer options, including creating its own cloud kitchen for sweets under its in-house brand and even launching “Mithai Parlours” for single-serving Indian desserts.

The Indian packaged sweets market size touched Rs 5,231 crore in 2022, according to Research and Markets. Going ahead, researchers expect the market to reach Rs 15,057 crore by 2028, with a CAGR of 19.27% during 2022-2028. Scandalous has already cracked a set inelastic client base in an industry that is price-sensitive as it tries to understand and eventually launch directly to consumers.