The Story of Rebel Foods

From a side hustle, to arguably India's largest cloud-kitchen brand. This one is awe-inspiring! Read on.

In case you love all things food and have always wanted to taste the joy of owning your own food chain, this one’s for you. 

Sounds cool. But, won’t it cost you a fortune?

Well, get the high real-estate cost, maintenance charges, and management fees out of your mind and let the food-dreamer inside of you run wild.

Why? Well, because cloud kitchens are real. And, financially flavourable. 

Curios? Read on.

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Today, we will talk about a company that dared. It was compelled to make several innovative and rebellious decisions to stay in business. And without even realising, its move ended up democratising the entire food industry.

Rebel Foods, a business founded in 2011 by Jaydeep Barman and Kallol Banerjee, shifted to a cloud kitchen model in 2016.

But, before we get into Rebel Foods, let’s understand cloud kitchens better.

Well, just as it sounds, it’s virtual. Yes, it is a restaurant with no physical boundaries, no parameters. It has a kitchen (of course), and a food-delivery service. That’s it. 

What’s the purpose of such a biz model, you ask?

All the prerequisites needed for high capital to build and run a restaurant go out of the window. There is no need for elaborate seating arrangements, no expensive decor, and no expenses for staff and servicing. So simple that it can be operated right from your home and kitchen. 

It's a win-win situation. Both, for the restaurants and the customers. Here, restaurants can focus more on providing high-quality food at a reasonable rate, while customers get their food delivered at their doorstep.

But, how is it any different from restaurants selling meals through Zomato or Swiggy?

Cloud kitchens use their own website, or alongside other food aggregators such as Zomato and Swiggy to receive orders. They have better access to customer data. By using data insights, they can analyse and predict changes in consumer behaviour patterns, which enable them to beat the competition and grow faster.

The biggest advantage here is that cloud kitchens can easily customise their menu according to their customers’ tastes and preferences. Dine-ins (physical restaurants), on the other hand, spend a big chunk of their time catering to their customers, taking orders and cleaning up. This makes customisation a costly and laborious affair.

Cloud kitchens, however, spend enough time experimenting with the food to match their customers’ tastes. They can then edit their menu online and inform their customers through text messages, app notifications, or emails.

They can also analyse and leverage this data to set up their kitchens in attractive locations. Unlike restaurants, they can easily set up multiple chains across a region. Interesting business model, no?

Now, let’s come back to Rebel Foods. 

It started its journey like any other Quick Service Restaurant (QSR) but soon turned to the road less travelled by. Starting out under the brand Faasos, Rebel Foods has come a long way.

Co-founder Jaydeep Barman was tired of the burgers and pizza floating around the market. He wanted to infuse a Desi Tadka to the not-so-Desi fast-food segment.

And so, he set up Faasos, an Indian wrap chain in 2004, with his friend, Kallol Banerjee. They got such a thundering response that within three months, Barman quit his job to launch a second outlet. 

Their outlets were profitable. It was going all good. Until…

They were financially exhausted. You see, they did not have the resources, or the insights to scale up. Having no other option left, they franchised the outlets to two friends and moved back to focus on their jobs. 

But, this was not a dead-end for Rebel Foods. In 2010, something happened that compelled them to fight back, to rebel.

Jubilant Foods, the franchise rights owner of Domino's went public. Now, Barman could not help drawing parallels between Domino's and Faasos’ business models - limited dish options, technology-first solution. He thought, if Jubilant Foods could be a success, so could Faasos. This thought fuelled him to scale things up, and so started their rebellion.

In October 2011, the partners raised $5 million from Sequoia Capital and Faasos quickly expanded across India’s major cities.

During 2011-15, Faasos launched its mobile application and website and started accepting online orders. The taste of success was sweet. But, the exorbitant rent kept adding bitterness to their sweet recipe. Here’s what Jaydeep Barman had to say-

“India has the highest rent-to-sales ratio in the world. Unless one has deep pockets, like Domino’s, one can’t build a QSR business in India.”

Fortunately, stars were aligned in their favour.

The online delivery revolution came as a light-bulb moment for them. 75% of their orders came through online deliveries. It was only a matter of time that the partners spotted the opportunity and came to a decision. 

They bid goodbyes to the outlets and booked kitchen spaces to start their “internet restaurants”. In the next 2 years, the rent-to-sales ratio fell from 15% to 4%, doing the magic trick for their business.

Ever since, they have been launching various brands like Behrouz and Oven Story, operating from the same kitchen, targeting a specific niche. In 2018, the parent company Faasos was renamed as Rebel Foods, while Faasos still operates as a sub-brand. 

They also launched several brands overseas: Banzai (Japanese) in Indonesia, 500 Calorie Project (Healthy Foods) and Sawa (Lebanese) in the UAE.

Today, Rebel Foods operates more than 325 kitchens across 35 cities in India. 

Its valuation is expected to be around $840 million after Coatue, a US-based hedge fund invested $50 million in July 2020. It is currently eyeing to enter the unicorn club (achieving a $1 billion valuation).

Now, high valuations don’t necessarily mean profits. 

But, it will be harsh to judge the company based on these expenses and losses. After all, the company is in a high-growth phase. It has already proved its mettle of being efficient and profitable in the past. Once its growth stabilises, shouldn’t it be capable of repeating that trick again?

While Rebel Foods is the leading cloud kitchen in India, it faces stiff competition from FreshMenu, BOX8, InnerChef and many more. The more lucrative an industry is, the more competition it attracts. (Tweet this)

How will Rebel Foods rebel against its present as well as future competitors?

It definitely won’t be a piece of cake. But it sure as hell has created a formidable empire and is now planning a public listing in the US within the next 18-24 months.

On that note, if you are looking to learn more about the food-tech space, and want to join and engage with a community of equally passionate zealots, you can check out this in-depth, yet easy to understand course on how Swiggy and Zomato make money (already taken by 200+ members, with an average 4.8/5 rating)!