Oyo in talks to buy cloud kitchen co FreshMenu

Hospitality major Oyo Rooms is in talks to acquire cloud-kitchen player freshmen for $30-40 million in a primarily stock-based acquisition, said three sources directly familiar with the development. The consolidation move in the sector comes as the Bengaluru-based FreshMenu has been exploring a capital-raise for the last few months.

“The current deal will also involve a small cash payment to buy out some of the existing shareholders,” said one of the sources mentioned earlier, adding that a transaction has not been finalised yet.

This person added that Zodius Capital, which led a $17-million fund-raise for the company in 2016, is likely to be paid in cash, while founders and other investors like Lightspeed Venture Partners and GrowthStory will be allocated shares of Oyo, if the deal goes through. In total, the company has raised about $22 million from investors. Lightspeed is a common investor in both the companies. FreshMenu founder Rashmi Daga declined to comment on the acquisition talks with Oyo.

“We do not comment on industry speculation and therefore cannot comment on this.... As the largest hotel chain in India, operating franchised and lease assets, we do have an active play in the F&B business with over 25% of our revenue coming through the kitchens we operate in our hotels and hence culinary design and good food experience are valuable to us. We have nothing further to announce at the moment,” said an Oyo spokesperson in an emailed statement.

FreshMenu is said to be clocking 15,000-20,000 orders daily, according to sources. If the acquisition goes through, Oyo plans to leverage its infrastructure of 1,70,000 rooms across the country besides its ability to manage labour workforce at scale. The Gurugram-based startup also has a number of skill-training institutes, which it can leverage to train chefs and kitchen staff.

This comes when Oyo is also in final stages of formal paperwork to acquire New Delhi-based co-working startup Innov8. Oyo closed a $1-billion fund-raise recently, led by Japan’s SoftBank with participation from ride-hailing companies Grab and Didi Chuxing.

While some Oyo properties could leverage the skills for in-room dining, others can use it to upgrade existing restaurants and also build cloud kitchens where goods can be sold on food delivery platforms like Zomato and Swiggy.

FreshMenu sells via its own platform and it is also listed on Zomato, Swiggy and UberEats. About half of its sales come from these third-party channels.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/oyo-in-talks-to-buy-cloud-kitchen-co-freshmenu/68105700