Most foodtech companies experienced negative growth for the first time in FY21 due to the pandemic. Where Zomato and Swiggy’s operating revenue shrank by 24% and 27% in FY21, full stack foodtech platform Rebel Foods also lost more than 27% of its scale.
On the lines of its peer (Rebel Foods), EatClub Brands (previously Box8) also found itself in the same boat as the company’s scale dwindled close to 30% in FY21. It operates eight brands, including Box8, Mojo Pizza, ZAZA Biryani, Globo Ice cream, Leancrust Pizza and NH1 Bowls.
EatClub’s entire revenue came from sales of food and beverages which shrank 29.7% to Rs 107.37 crore in FY21 from Rs 152.7 crore in FY20, according to the company’s annual financial statements.
Moving over to the expense sheet, cost of material is the major cost element for Box8 constituting 31.5% of the total expenditure. As the sale of food and beverages decreased in the fiscal year ending March 2021, cost of materials shrank 33.2% to Rs 39.93 crore from Rs 59.76 crore in FY20.
Employee benefits expenses was the second major cost forming 23.2% of the total expenditure. This cost fell 50.6% to Rs 29.37 crore in FY21 as the brand hired more personnel on contractual basis while the cost for contract labour charges recorded a jump of 2.6X to Rs 11.17 crore in FY21.
Expenditure on rent and utility decreased 42.5% to Rs 17.81 crore in FY21 from Rs 31 crore in FY20. Commission paid to agents like Zomato and Swiggy recorded a marginal change of 0.9% to Rs 5.47 crore in FY21.
EatClub also cut down advertising cost by 24.9% which came down to Rs 4.47 crore in FY21. Due to austerity measures, the company had managed to cut expenses by 33% to Rs 126.85 crore as compared to Rs 189.43 crore in FY20.
With the shrinkage of scale during FY21, EatClub managed to reduce losses by 50.03% to Rs 17.62 crore from Rs 35.55 crore in previous fiscal (FY20). Meanwhile, its EBITDA margin, ROCE and unit economics also improved. On a unit level, the company has spent Rs 1.18 to earn a rupee during FY21.
In December 2021, EatClub raised a $40 million round led by Tiger Global at an estimated valuation of $340 million. So far, the company has raised around $70 million from multiple investors including Indian Angel Network, Mayfield India, IIFL and Trifecta. According to an ET report, it is also finalising a $30 million secondary round in which Tiger will double down on its stake.
As of December, the Amit Raj and Anshul Gupta-led company was operating 150 kitchens across five cities in India including Mumbai, Bengaluru and NCR. During the last funding round the firm also said that it will increase its presence to more than 500 kitchens in 15 cities.
Besides Rebel Foods, EatClub directly competes with FreshMenu, Ankit Nagori-led Curefoods and several independent cloud kitchen brands.