OYO is considering taking over FreshMenu, a Bangalore-based cloud kitchen startup. The deal might range up to INR 427 Crore. Previously, OYO closed its $1 Billion funding round after Didi Chuxing, Chinese ride-hailing service brand, channelized $100 Million into its stakes.
The main motive behind last week’s investment in OYO from Didi Chuxing is now surfacing. OYO is planning to standardize food experience in its enlisted hotels with this exclusive deal with FreshMenu.
OYO is showcasing fortified and overwhelming signs of strengthening its services in India and expanding in the international markets. It is also focusing on its latest online food and beverage service segment to generate more revenue.
FreshMenu was established in 2014. Rashmi Daga, Founder, provided a perfect online platform to find meal kit delivery from 35 enlisted cloud kitchens scattered in Delhi NCR, Mumbai, and Bangalore. It receives 13,000 orders daily with an average price of INR 325.
The success of FreshMenu also brought online food delivery giants Swiggy, Eat.Fit, Zomato, Ola, and Faasos. However, the mismatch in expectations did not let the deals go through.
In the same note, Swiggy is about to finalize the acquisition of Uber Eats. Uber Eats is the online delivery system of the globally-famous ride-hailing platform. The negotiations are in the final stages.
Acquiring Uber Eats will be the biggest venture for Swiggy to date. As per the sources, it will be a share-swapping transaction between the online food delivery giants. Uber will enjoy a 10% stake of Swiggy, the Bangalore based brand.
The estimated value of Uber Eats is $20 Billion. It generated business worth $1.5 Billion in revenue in the 1st quarter of 2018 globally.
A spokesperson concerned with the transaction said, “It is prudent to be invested in Swiggy than burn capital competing for the same set of restaurants and consumers. This should bring some rationality to the cash-guzzling food-delivery market.”
2018 witnessed Zomato and Swiggy raising capital for acquiring new customers. The heightened discounts and offers from FoodPanda and Uber Eats imparted a blow to the abovementioned companies resulting in high cash burns.
Uber Eats burns $25 Million every month on operations whereas Swiggy burns around $45 Million per month as per the industry estimations. Ola has cut down its customer acquisition and marketing plan by two-thirds.
As per TechSci report, the Indian food technology market is subjected to a CAGR of more than 12% in 2016-2021. The current online food delivery market will become more stringent and cutthroat. The brands are now focusing on Tier II and Tier III cities to acquire more customers and broaden the service to gain a stronghold in India.