STARTUP-STORIES

Finnest Acquires Majority Stake in Kitchens@ with $160 Million Investment

SUMMARY

London-based private equity firm Finnest has invested Rs 1,335 crore ($160 million) in the cloud kitchens-focused startup Kitchens@, becoming the largest shareholder with a 54% stake. This funding round valued Kitchens@ at $305 million and included issuing fresh equity and preference shares to Finnest.

Kitchens@, which provides support services for cloud kitchens and partners with major restaurant brands, operates in 45 locations across six Indian cities. The company plans to launch 150 fine dining spaces under the Dinerium brand in the next 18 months and aims to increase revenue from Rs 180 crore in FY23 to Rs 600 crore in FY24 while maintaining EBITDA profitability.

London-Based Private Equity Firm Takes Commanding Share in Cloud Kitchen Innovator

In a significant development for the food tech industry, London-based private equity firm Finnest has acquired a majority stake in the cloud kitchens-focused startup Kitchens@. This strategic investment, amounting to Rs 1,335 crore ($160 million), has positioned Finnest as the largest shareholder, holding nearly 54% of the company's equity, according to regulatory filings and industry insiders.

Investment Details and Financial Implications

The recent funding round valued Kitchens@ at a post-money valuation of $305 million. This substantial capital infusion included a $65 million investment from Finnest, previously announced by the Bengaluru-based startup in December last year. As part of the funding arrangement, Kitchens@ issued 4 million fresh equity shares and 450,000 compulsory convertible preference shares (CCPS) at Rs 3,000 each to Finnest.

Kitchens@'s Business Model and Market Presence

Kitchens@ specializes in providing comprehensive support services for cloud kitchens, including ready-made kitchen setups, supply chain logistics, and staffing solutions. The company collaborates with an impressive roster of restaurant brands such as Taco Bell, Subway, Nando’s, Mainland China, Domino’s, Barbeque Nation, Chaayos, and Wow Momos. Currently, Kitchens@ operates in 45 locations across six major cities in India, servicing 700 kitchens.

Expansion Plans: Introducing Dinerium

Looking ahead, Kitchens@ has ambitious plans to expand its footprint with the launch of 150 omnichannel, multi-brand fine dining spaces under the brand name Dinerium. This expansion is set to roll out over the next 18 months, aiming to enhance the company's market presence and diversify its service offerings.

Financial Performance and Future Projections

In the fiscal year 2023, Kitchens@ reported revenues of Rs 180 crore. The company's co-founder and CEO, Junaiz Kizhakkayil, has projected a significant revenue increase, targeting Rs 600 crore by the end of FY24. Despite this aggressive growth trajectory, Kitchens@ aims to maintain profitability at the EBITDA (earnings before interest, taxes, depreciation, and amortization) level. The firm has yet to file its earnings with the Registrar of Companies (RoC).

Industry Context and Competition

The cloud kitchen sector has seen notable activity and consolidation. In March, food delivery giant Swiggy sold its cloud kitchen business, Swiggy Access, to Kitchens@ in a share swap deal, further strengthening Kitchens@'s market position. The company faces competition from other players in the space, including Delhi-based Kitchen Centre and Hyderabad-based TTSF Cloud One.

The strategic investment by Finnest not only underscores the growing importance of cloud kitchens in the food tech industry but also positions Kitchens@ for accelerated growth and expansion. With robust financial backing and a clear vision for the future, Kitchens@ is poised to reshape the dining experience across India.