Exclusive: Shadowfax forays into the cloud kitchen biz

Flipkart-backed on-demand logistics firm Shadowfax is diversifying its offerings. The Bengaluru-based firm has launched a cloud kitchen vertical which allows local restaurant brands of a city to be housed under one roof to cook delivery-only meals, according to two people familiar with the matter. 

It can then be ordered through online food aggregators such as Swiggy and Zomato.  

This service, which directly competes with Swiggy’s cloud kitchen business — Swiggy Access — basically provides a kitchen space to restaurants to be able to make more sales without having to invest in infrastructure.

Shadowfax, which has started this venture with Pune, has around 20 restaurant brands on board. The firm’s cloud kitchen business is expected to be spun off as a separate entity over the next few months, and it is already in the process of raising funds separately, added the people cited above.

“The company in talks with a few venture capitals to raise up to $20 million for its cloud kitchen business,” said one of the two people cited above, requesting anonymity.

Shadowfax’s cloud kitchen business has been operational from past three-and-a-half months is being spearheaded by Gaurav Jaythlia and Milind Sharma. It had clocked about Rs 3 crore in sales in November. 

Queries sent to Shadowfax by Entrackr didn't elicit any immediate response. We will update the post as and when the company responds.

While most cloud kitchen companies such as FreshMenu, Rebel Foods, etc, build their own food brands and then supply it through their cloud kitchens, Shadowfax is doing so with the already established restaurants. Moreover, the idea is not to go after the big brands in metro cities, but after smaller towns that have popular brands but haven’t been able to scale to different parts of the city and outside. 

Cloud kitchens have become a strong avenue for food aggregators to make money from as these mostly work on a revenue-share model. Just last month, Swiggy had announced that it would invest Rs 75 crore in its cloud kitchen vertical in the next six months.

Swiggy Access, perhaps the largest cloud kitchen business in the country, runs about 1,000 kitchens across 14 cities. Its rival Zomato had pulled the plug from running cloud kitchens for its private labels last year. It now runs around 650 kitchens across 50 cities, where it houses different restaurant brands. Online retailer Amazon, which is set to launch its food delivery service, has also been ramping up its cloud kitchen offering.

Shadowfax recently raised $60 million in a round led by online retailer Flipkart. Other investors that participated in the round include Eight Roads Ventures, NGP Capital, Qualcomm Ventures, Mirae Asset Naver Fund and International Finance Corporation (IFC).