How Does Rebel Foods Stack Up Against Competitors?

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“Zomato told kitchen brands ‘I’ll source for you, give you tech, and orders’. But it still didn’t work,” he says. Last year, food aggregator Zomato shut down its own cloud kitchen to invest in Bengaluru-based cloud kitchen company Loyal Hospitality. Swiggy, though, has two cloud kitchen brands.

In that light, perhaps Rebel is wary of overstaying its welcome in the cut-throat Indian food market and expanding overseas makes more sense. Enter, pivot five.

Rolling with the biryani

Back in 2004, Rebel was a venture selling rolls-and-wraps—fast food easily made with pre-prepared ingredients. It began as a small QSR in Pune started by Indian Institute of Management (Lucknow) graduates Barman and Kallol Banerjee.

Today, Rebel owns 11 sub-brands: Faasos (wraps and rolls), Behrouz Biryani, Navarasam (south Indian food), OvenStory (pizza), Firangi Bake (fusion food), Sweet Truth (desserts), Mandarin Oak (Chinese), The Good Bowl (bowl meals), Kettle and Kegs (tea), Lunch Box (home food) and Slay Everyday (coffee).

It was the quintessential Indian craving for biryani, though, that got Rebel more orders. While the company did not share the exact number of orders, Mehta of Lightbox Ventures confirms that biryani is one of the most sold items alongside rolls and pizzas. Swiggy says it gets 43 biryani orders every minute.

The fragrant and flavourful rice-based dish is an easy-to-consume option and a cross-country favourite. It has been the most ordered dish on both Swiggy and Zomato for the last three years.

On the production side, too, biryani is easily made in bulk and easy to pack. It is also popular in countries like Indonesia, whose cuisine is very similar to India’s. A plus for Rebel’s expansion plans.

But margins on biryani are not high, says the entrepreneur quoted above. “You need to use Basmati rice, good spices. These could cost between Rs 70-100 ($1-1.41) depending on ingredients and meat. You can sell for Rs 200-250 ($2.8-3.5). Pizza has the highest gross margins—75-80%—because of cheap cheeses and ingredients.”

Restaurants and kitchens aim for that sweet 70% gross margin, he says. This could mean 28-32% food cost.

But with everybody cashing in on the biryani boom, Rebel’s Behrouz Biryani knew it had to spin a narrative around its offering to make it sell, in tandem with its higher-margin businesses (read: OvenStory pizzas). An oft-romanticised food, biryanis often sell based on the origin of the recipe.

“Since biryanis are so common and easy to make, you need strong branding; a story,” the entrepreneur explains. Invoking Hyderabad’s famous Paradise restaurant biryani sold solely on its 1950s heritage, he says, “Behrouz created a story. If you want repeat customers, [you say] my biryani has a story. Arabian and foreign stories.”

It comes as little surprise then that one of Rebel’s biggest expenses is advertising and promotions. These costs totalled Rs 21.7 crore ($3 million) in the year ended March 2018, accounting for just under 10% of total expenses. It was topped only by employee benefit expenses.

What is Swiggy access?

And it is trying to push its three most popular food categories—biryani, pizza and rolls.

“Rebel Foods apparently spent Rs 20 crore ($2.8 million) on marketing Oven Story after their third (funding) round. Which is why today apart from Faasos, Oven Story and Behrouz Biryani, nobody knows their other brands,” says Kochchar.

Had Rebel not invested in brands like Behrouz and Ovenstory, it would have remained at the mercy of Swiggy-Zomato in a cloud kitchen market that was quickly getting populated.

In 2017, Swiggy started its own service called Swiggy Access, a cloud kitchen model similar to Kalanick’s CloudKitchens. (We wrote about it here.) Swiggy rents out kitchen space to restaurants that want to serve food in locations far from its properties. “Over the last 24 months, we have…brought over 450 quality restaurants to new cities and neighbourhoods through Swiggy Access,” said a Swiggy spokesperson.

Swiggy has also launched two private brands in the past two years—The Bowl Company and Homely—as part of its cloud kitchen project. Beyond aggregators, Rebel also faces competition from Food Vista India’s Freshmenu, Cure.fit’s Eat.fit as well as Box8; they’re all vying for a share of the same pie. According to a TechSci Research report, the foodtech market is expected to grow at a CAGR of 12% between 2016 and 2021.