Rebel Foods claims to be the world’s largest chain of ‘internet’ restaurants which runs around 10 brands across 11 countries. The Mumbai-based firm is also the only cloud kitchen brand to be valued at over $1 billion from India. It entered the unicorn club with a $175 million round led by the Qatar Investment Authority in November 2021. The firm’s transition from a single brand offline chain (Faasos) to a multi brand online only presence has been well chronicled and praised even.
The big funding round had helped the Sequoia Capital-backed firm to back that transition strongly, helping double up scale while controlling expenses last year. Rebel Foods’ revenue shot up 2.1X to Rs 859 crore in FY22, as per the company’s annual financial statements with the Registrar of Companies (RoC).
Sales of products (food items) formed 98% of the total operating revenue which surged by 2.1X to Rs 845 crore in FY22. Income from delivery and cancellation of orders jumped 2.8X to Rs 14 crore. Besides selling on Zomato and Swiggy, Rebel Foods also has its own distribution channel for which it charges (read as delivery income) from consumers.
The firm’s income from fixed deposits increased 59.3% to Rs 48.42 crore in FY22 and pushed its total revenue to Rs 907 crore.
When it comes to expenses, the cost of materials accounted for 31% of the overall cost for Rebel Foods. In line with its revenues, this cost also escalated 2.2X to Rs 446 crore in FY22. Expenditure on employee benefits increased 54.9% to Rs 302 crore which also includes Rs 29.28 crore as ESOP expense (non-cash expense).
Advertising and promotion costs shot up 2.8X to Rs 188 crore in FY22 from Rs 67 crore in FY21. Rebel Foods’ payment to online ordering platforms such as Swiggy and Zomato spiked 86.8% to Rs 142 crore.
Legal and professional fees for the Jaydeep Barman-led company stood at Rs 57 crore and pushed its overall cost by 85.8% to Rs 1,429 crore in FY22 from Rs 769 crore in the previous fiscal year (FY21).
With increased expenses, Rebel Foods’ losses spiked 54.9% to Rs 564 crore in FY22 from Rs 364 crore in FY21. On a unit level, Rebel Foods spent Rs 1.66 to earn a single rupee in the last fiscal year (FY22).
The improvement in unit economics augurs well for the firm, even as it has some way to go to actually break even. The high advertising and promotion costs, while understandable due to its stand alone status and multiple brands, will still need to be tracked closely. Post covid, there does seem to be a slight shift towards lesser discounting from food delivery platforms, and that should offer some hope for the future too for firms in the business. Quite simply, Rebel Foods needs to build stronger loyalty for its brands and benchmark with the efficiency of a Domino’s in delivery over depending on discounts.
