Why OYO’s foray into meals may be an uphill undertaking

by Lionel Casey

25-12 months-old Ritesh Agarwal’s OYO has been developing leaps and boundaries and is reported to be South Asia’s biggest lodge chain with a presence in approximately 10 international locations. Going past hospitality, the group has now moved into new territory — cloud kitchens. In February this 12 months, Entrackr pronounced that OYO listed cloud kitchens on India’s largest food aggregators — Swiggy and Zomato.

What reportedly started off 20 cloud kitchens in Bengaluru and Gurugram has now grown, with its manufacturers Adraq via OYO and O’Biryani through OYO being present in numerous places across more than one towns. But how does access into a highly fragmented section with cut-throat opposition augur for the hospitality main?

While OYO has actively begun working these cloud kitchens, the enterprise has saved mum. “As the most important lodge chain in India, operating franchised and rent property, we do have an active play in the F&B enterprise with a median of about 25% of our revenue coming thru the kitchens we operate in a number of our accommodations and as a result of culinary design and proper food experience are treasured to us. We have nothing further to announce in the meantime,” the organization advised TNM.

On checking on both Swiggy and Zomato, TNM has discovered numerous listings of Iraq by way of OYO and O’Biryani by OYO in Bengaluru, Chennai, Mumbai, and Hyderabad.

While food is a pretty aggressive sector, OYO has succeeded in a couple of sectors, and in preference to many other players and has the money and infrastructure required to combat for a chunk of the cloud kitchen pie — which has gamers along with Swiggy’s The Bowl Company, Faasos, Freshmen, amongst others.

Diversification

Sanjay Jesrani, the Founder and CEO of Go North Ventures says that cloud kitchens are a logical extension to OYO’s enterprise and that in the budget in the quarter, it’s miles an opening place in which they could be able to earn sales.

“What OYO is doing looks like they’re acquiring cloud kitchens, wherein without setting up huge constant infrastructure they are able to, in reality, build that gets entry to. In my view, it is a great policy. It isn’t necessarily a non-middle diversification, but an adjacent region,” he says.

While Murali Bukkapatnam the Chairman of Volksy Technologies too has the same opinion with the feasibility element for OYO to diversify, he says that the meals area remains a tough nut to crack.

“People are looking to create an area of interest cloud kitchens where they are able to carrier people of various genres and distinct necessities. Will Ritesh (Agarwal) has the capability and consciousness to serve a gap product wherein it may generate enough sales which could count number for his balance sheet? That I doubt,” he says.

Business sense

OYO has seen an exponential increase and has finished thirteen rounds of funding. SoftBank on my own has led 4 rounds of funding. Flush with the budget, OYO is constantly stepping into more recent markets. It is presently looking at elevating $1 billion in its next investment round and is eyeing a market valuation of $10 billion.

The cloud kitchen brands that OYO currently has are being piloted through Swiggy and Zomato. “With the amount of money OYO has, it could basically go with the flow masses of brands and in the end tell Swiggy it push out others. OYO will initially use Zomato and Swiggy’s distribution to create the logo and post that, they can likely say that ‘in case you don’t push out others, I will take my brands on my own platform’,” says Madhukar Sinha, the founding companion at India Quotient.

 

 

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