Foodtech space in India is a high cash burn game with Swiggy and Zomato locked in a battle to command higher market share. As the two have scaled up quickly and collectively process over 90 million monthly orders, Faasos has come out as at a distant third place with its pure-play cloud kitchen model.
According to regulatory filings, revenue from operations for Rebel Foods (which runs Faasos) grew over 2X to Rs 305.11 crore in FY19 from Rs 146.81 crore in the previous fiscal.
Expenses too grew at a similar rate. The cost of materials consumed including shop utilities increased over 2X from around Rs 79 crore in FY18 to Rs 163.7 crore in FY19.
These expenses formed 37.1% of the total expenses during FY19, which stood at Rs 441.01 crore, a notable 2X growth from Rs 223.5 in FY18. Employee benefit expenses also grew 46% from Rs 63.3 crore in FY18 to Rs 92.37 crore in FY19. Finance costs jumped 2.5X to Rs 33.08 crores in FY19.
While total expenses doubled, losses grew by 75% from Rs 74.44 crore in FY18 to Rs 130.64 crore in FY19. The company lost money at a reduced rate of 42.81% in FY19 as compared to 50.7% in FY18.
This translates into the company spending Rs 1.44 to earn a single rupee of operational revenue, which is lower when compared to Rs 1.52 spent for the same in FY18.
Rebel Foods is a multi-restaurant cloud kitchen chain that owns popular brands like Faasos, OvenStory, Behrouz Biryani, Lunch Box, Mandarin Oak, among others.
Other expenses have been on making the brands more prominent. Ad promotion spends grew 3.4X to Rs 73 crore in FY19 from Rs 21.7 crore in FY18. Commission paid to aggregators such as Swiggy and Zomato also grew 3.75X to Rs 48.2 crore in FY19.
Faasos has been growing at a stupendous rate over the last one year. It raised $125 million from Coatue Management, Goldman Sachs, and Indonesian food-tech firm GoJek along with a few others in September. The Jaydeep Barman-led firm was valued about $525 million in the last financing round.
The firm also expanded its presence internationally this year aiming to become a global brand. There are also news reports around Uber’s Travis Kalanick investing in Rebel Foods for his current venture CloudKitchens.
Food tech market incumbent Zomato posted a loss of $294 million with a 3X growth on a revenue of $206 million during FY19. Swiggy is yet to file its financials for the year ending March 2019.
It’s worth noting that the Rebel’s auditor has disclaimed their opinion regarding internal financial controls as details regarding financial reporting with reference to the financial statements of FY19 were not made available to them. They couldn’t determine if the company has established adequate internal financial control or whether such internal financial controls were operating effectively as of March 31, 2019.