Online food start-up FreshMenu on track to profitability, rules out sell-off

Online foodtech start-up FreshMenu is on track to hit profitability next quarter but has ruled out any plans for a sell off.

The start-up which had targeted to exit fiscal 2018 with a revenue of ₹300 crore, will, however, fall short of its target by half, yet again this fiscal.

“We will hit profitability in three months, this June. Our business is more rounded and robust now as we are catering to changing trends in the market. For instance, the Fit n Fab range of salads, snacks, soups, low-carb and high-protein meal in a bowl options, which we introduced last year, contributes to 20 per cent of our sales today. Two months ago, we started selling fresh marinated meat boxes (250 g, 500 g) of fish and chicken on Dunzo and last week we introduced sugar-free Lava Cake in a Jar to cater to customer demand for low carb desserts. We will soon introduce do-it-yourself barbecue boxes with dips, and sides,” Rashmi Daga, Founder-CEO of FreshMenu, told BusinessLine.

FreshMenu grew its revenue base from ₹76.04 crore in FY 2017 to ₹123.72 crore in FY 2018. Although expenses mounted in 2018, losses were flat at ₹43.88 crore in 2018, as per RoC filings accessed by paper.vc.

The numbers

Daga says the start-up will exit fiscal ending March 2019 with a revenue run rate of ₹140 crore.

Asked why the company hasn’t been able to achieve its revenue targets two years in a row, she said, “Our revenue is four times higher since our last fund raise of $16.5 million in 2016. However, although demand peaked in the last 6-8 months it was largely discount-driven demand created by food aggregators that we are listed on, like Swiggy, Zomato and Uber Eats. We would like to invest for natural demand, which is currently at 5 – 5.5 lakh orders a month and not for artificial demand created by discounts.” As of December, Swiggy delivered 28 million orders per month and Zomato 21 million orders.

Funds, biz model

Daga said, “We have raised a bridge round of ₹21 crore from existing investors in January and are in the final stages of closing our Series C round. There has been a lot of inbound interest to invest in our company and to acquire us, however, I have no plans to either be acquired or sell out.”

FreshMenu has set up a network of 39 kitchens in its three markets and is also exploring ‘kitchen-as-a-service’ model with Swiggy and Zomato which provide plug-n-play kitchen spaces to their restaurant partners.

The start-up — which currently operates in Bengaluru, Mumbai and Delhi — has delayed its expansion plans into Hyderabad, Pune and Chennai, initiated last year, till it closes its Series C fund-raise.

Since its inception in 2014, FreshMenu has raised $24.4 million in funding from Zodius Capital, Lightspeed Venture Partners and Growth Story.