Faasos halves losses, revenues rise 65% in FY16

Priyanka Pani Mumbai | Updated on January 12, 2018

Jaydeep Barman, Founder/CEO, Faaso's Food Services Pvt Ltd. Photo: — N. Ramakrishnan

Sequoia Capital-backed Faasos seems to be the only startup in the Indian food-tech space that is bucking the trend. At a time when the losses at most of these startups are growing multi-fold, this Mumbai-based company has been working towards reducing its losses. In the financial year 2016, the company's revenues grew about 65 per cent at Rs 61.9 crore as against Rs 37.5 crore in the previous fiscal. However, the company has been able to bring down its losses by 54 per cent at Rs 111 crore in FY 16 compared to Rs 243 crore in FY 15. In FY 14, the losses were pegged at Rs 178 crore, according to business research platform for Indian businesses Tofler that sources financial data from Registrar of Companies.

Faasos is also one of the most highly-funded food startups. The company, founded in 2011 by two friends Jaydeep Barman and Kallol Banerjee, had venture capital firm Sequoia Capital as its early investor and has raised about $54 million from four investors including Lightbox Ventures and Russian firm ruNet so far.

The company, which retailed self-branded food from its own kitchens in about 15 odd cities, went for a revamp of its business model in late 2015 in an attempt to turn profitable while increasing its revenues by keeping the costs down.

The company changed its business model from an inventory based to strategic partnerships. The company tied up with several home chefs to expand its menu and also improve its delivery time. The company has also tied up standalone food joints, restaurant chains and independent caterers to boost its revenue without having to invest much in setting up own kitchens. Meanwhile, another Mumbai-based startup Holachef that started by tying up with homechefs has changed its model to having a standardised menu that is served to customers from the company-owned central kitchen.

The food-tech startups in India having been going through a bad phase since the last two years with some being forced to shut down the business while a few going through series of pivots. Companies like Zomato, Roadrunner, Swiggy, FreshMenu have tweaked business models. Others like Tinyowl, Eatlo, Dazo shut shops after incurring huge losses.

Food segment is considered as a very high cash burn business, according to the industry experts. While the customer acquisition costs remain high in the segment, the consumer stickiness is the lowest. Most of the companies were trying to outdo each other by roping in same set of customers and restaurants through massive cash backs and incentives respectively, say investors.

Published on February 10, 2017

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