After Wendy’s, Rebel Foods Explores More Such Tie-Ups

A chef assembles a burger. (Photographer Andrey Rudakov/Bloomberg).

After Wendy’s, Rebel Foods Explores More Such Tie-Ups

Having partnered with American burger chain Wendy’s, online restaurant operator Rebel Foods Pvt. is looking for more tie-ups with international food brands looking to expand through cloud kitchens in India.

“I am not at liberty to give their names. But, hopefully, in the next couple of months, you will have another couple of brands operating under our umbrella, maybe in one shape or form,” Ankur Sharma, co-founder and chief business officer at Rebel Foods, told BloombergQuint over the phone.

Expansion through cloud kitchens comes as Indians continue to order online. Swiggy and Zomato to McDonald’s saw delivery demand remain steady during the deadlier second wave of the pandemic even as dine-ins have yet to pick up.

Rebels Foods partnered with Wendy’s in December. The burger chain, having entered India in 2015, has more than 30 cloud kitchens in the country and the Sequoia and Goldman Sachs-backed online restaurant operator plans to take the count to 100 by the end of the year.

Rebel Foods has partnered with Sierra Nevada Restaurants Pvt., operator of Wendy's in India, and has exclusive rights for Wendy’s online orders. And from every new product development to the marketing strategies, it works closely with the quick service restaurant chain.

“While it’s a plug-and-play option for scale for Wendy’s, Rebel Foods, too, benefits by associating with a world class burger brand—which needs very little marketing effort for awareness building on delivery,” Sharma said. “This association lets us feed off each other's strengths.”

Rebel Foods will develop and operate approximately 250 Wendy’s cloud kitchens pan-India, it said in a separate response. The company, however, didn't disclose financial details of the partnership.

With brands like Faaso’s, Behrouz Biryani and Oven Story, Rebel Foods has a network of over 320 cloud kitchens in India and more than 350 in the U.K. and Indonesia. Sharma said the company plans to increase that to 800-900 in the next 36 months as the focus stays on the online model. The expansion plans come as the deadlier second wave of the pandemic did not impact business, unlike last year when people were concerned about contracting the coronavirus through physical contact.

India’s restaurants, along with hotels and airlines, were worst hit during the first wave of the pandemic as the nation was under one of the strictest lockdowns. While business started to recover after June last year, dine-ins have yet to pick up. More so after the second surge of the virus.

Sales took a hit during the first wave, Sharma said. Business reached pre-pandemic levels by December and now growing at 20-25% month-on-month basis even through the second wave, he said.

“The second wave has not impacted us at all … [apart from] some bit of on ground difficulties, which are bound to be there because multiple cities had multiple challenges,” said Sharma. “On the demand side, the business kind of stayed strong. Consumers have realised over the course of time that it (Covid-19) does not spread with through food. The first time around, the fear was much higher.”

He didn’t share latest financials. According to filings with the Ministry of Corporate Affairs, Rebel Foods ended fiscal 2020 with a consolidated revenue of Rs 577.8 crore and a loss of Rs 447.5 crore.

Sharma said resumption of dine-ins won’t dent growth for cloud kitchens. “Ensuring that the right brand/right product is available at the right locality is the key to growth,” he said. Even before the pandemic, people ordered food from its brands, he said. “When the pandemic hit, it gave us a chance to establish that our food is safe to consume. The launch of EatSure (which touts itself as a hygienic delivery option) helped us to give our consumers transparency and the highest quality of food.”

While the focus is on expanding through cloud kitchens, Sharma said the group is also exploring other models.

Pankaj Renjhen, chief operating officer and joint managing director at Anarock Retail, said cloud kitchen is the only model that QSR brands will try. The big chains will always look to have restaurants at prime locations, he said. "Cloud Kitchen is a great model for startups and lesser-known brands as the overall costs are low and also the expansion time is less.”

“For larger chains, it's a supplement model," he said. "It's not viable to open stores at all locations. Cloud kitchens can be a great experiment for a brand to test a market that may not be large enough to put up stores.”

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