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Swiggy has sold its cloud kitchen business to Kitchens@, a cloud kitchen aggregator, in a share swap deal.
“The addition of Swiggy’s Access kitchens will bolster the reach and operations of Kitchens@’s in four cities across 52 locations and over 700 kitchens, providing customers with more convenient and efficient food delivery options,” said Junaiz Kizhakkayil, CEO of Kitchens@.
The current transaction enables a combined annual GMV of $65 million (₹520 crore) for Kitchens@. The company aims to reach $100 million in revenue within the next 6 months and has secured letters of intent with over 40 national and international brands to partner with it using a Master Franchise Model.
Kitchen Swiggy launched its cloud kitchen business Swiggy Access in 2017. The program allowed restaurant partners to establish kitchen spaces in neighbourhoods where they do not currently operate, with the goal of offering more variety and shortening delivery times for consumers.
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“Swiggy Access was started with the aim to bridge hyperlocal gaps in restaurant supply and solve for variety, quality, and convenience of food. Since its inception, Access has enabled several restaurant partners to innovate and expand their reach to new customers in a cost-effective manner. We are confident that Kitchens@ is fully equipped to nurture this ecosystem by innovating and building more supply. Swiggy continues to believe in the potential of this space and remains invested as a stakeholder in Kitchens@,” said Rahul Bothra, CFO of Swiggy.
‘Funding winter’
Last month, Swiggy laid off 380 employees citing challenging macroeconomic conditions and overhiring in 2021. At the same time, it also announced the shutdown of its meat marketplace as the vertical has not hit product market fit, despite iterations.
“Over the last year, under challenging macroeconomic conditions, companies around the world (public and private ) are adjusting to the new normal, with refreshed investment horizons and accelerated timelines for profitability. We’re no exception here, and have already advanced our own timelines for profitability on food delivery and Instamart,” Swiggy CEO Sriharsh Majety told employees in January 2023.
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