Tech keeps profit ringing for food services company Rassense

The key to running a profitable food service business depends on how well a business can keep its wastage levels to a minimum, and technology can play a vital role in this regard. 

Case in point: Chennai-headquartered Rassense operates a profitable, national-level corporate food service business by deploying artificial intelligence (AI) and Internet of Things (IoT) technologies. 

With an annual revenue of nearly Rs 500 crore, Rassense serves clients, including Maruti Suzuki, L&T, and IITs. “The profit margins in this business depend on how low one can keep their wastage,” says Sanjay Kumar, CEO of Rassense, in an interaction with SMBStory. 

He adds, “We are in the business of technology. The more technology is deployed, the better are the chances to improve the profit margins.”

Although in the early stages, Rassense has deployed technology across its operations to increase its business efficiency. According to Kumar, food service businesses generally have a gross profit margin in the range of 5-7%.

He believes these businesses in India have been slow in integrating technology into their operations. Rassense—which produces 3.3 lakh meals every day—uses a digital platform to note all the ingredients needed, which gives it instant feedback on the quantity and quality of these products.

As Kumar remarks, “Once the input ingredient is good, the output (food) is always good.” This digital map of the ingredients helps Rassense monitor the entire chain and quickly address any issues that might arise. 

The company also uses AI to understand which food menu would work well in particular locations. The AI helps curate menus based on historical data through predictive analysis, which helps the company deliver the right food based on the requirements in each geography. 

While Rassense is still in the early days of deploying technology in its operations, Kumar says, this engagement has delivered good results for the company.

According to the CEO, Rassense was formed through a leveraged buyout of a food services company CRCL LLP in 2023. At the time, the company clocked revenue worth around Rs 200 crore. Today, the figure has risen to Rs 480 crore for FY25, with an EBITDA margin of around 5%.

For Kumar, bringing the companies together and raising capital was not an easy task. He says investors were not keen on backing this project, but finally, Spark Capital came on board as an investor in 2023 after multiple rounds of negotiations.

Kumar's past work experience at companies like Shell, Altran India, and Elior — where he held leadership roles — came in handy as it helped him understand how to manage risks and raise external capital.

“The capital we raised did not go completely to the promoters but was used to run our business,” says Kumar. The company did not disclose the funding amount.

Even with strong competition from players in India, including Sodexo and Compass, Rassense caters across South, North and West parts of the country, with business coming from manufacturing, education, and healthcare sectors.

Meanwhile, to ensure a greater sense of ownership among its 4,200 employees, including chefs, purchase managers, logistics and sales personnel, etc., Rassense has provided company shares to a majority of them.

Kumar claims it has a 98% client retention rate and can manage employee attrition at a reasonable level.

“We have a chef-led model at each location, where the profit and loss are maintained at each site,” says Kumar. “The key to our success is the employee ownership model at Rassense, and deploying technology is making a difference.”

Rassense grew by 26% in FY25, however, it expects lower growth for FY26 as it sees an economic slowdown. Nonetheless, the CEO aspires the company to reach Rs 1,000 crore in revenue in the next five years.