Tapping cloud kitchen biz, the Hoi way

Delhi-based foodtech startup Hoi Foods Concepts Private Limited, founded in 2017, supplies food to budget hotels and also serves consumers of online food ordering platforms Swiggy and Zomato, through cloud kitchens created in these budget hotels itself.

Hoi means Hello in Dutch, according to Indrajeet Roy, founder of Hoi Foods, it means saying hello to good food. An industrial engineer from IIT Delhi, Roy has the credit of forming two startups, SkillWill, an edtech company and consulting firm, Sookshm.

"Hoi Foods is in the stage of geographical expansion, strengthening team and closing the second round of funding. In November, we launch in Hyderabad and Bengaluru.

The plan is to launch cloud kitchens in 25 locations, starting with IT hubs such as Gachibowli, Hitech City, Financial District and later will branch out to locations in Old Hyderabad.

At present, we have finalised agreement with 15 hotels, wherein the Hoi kitchens in these hotels will be operational from November, whereas the partnership for 10 hotels is yet under process," Roy, also CEO of the company, told The Hans India.

Hoi Foods is supported by investors Sanjiv Mediratta, Director, Cafe Coffee Day Global Ltd, Sandeep Kohli, former MD, Asia Pacific, Yum Restaurants International and Pawan Raj Kumar who is on the board as co-founder and, also the founder of Supa Star Foods.

Roy said for Bengaluru, the plan is to launch 30 cloud kitchens at partnered budget hotels in November.With these expansions in place, 50 employees will be joining the team in Delhi and 300 workforce will be employed at the cloud kitchens in Hyderabad and Bengaluru, he said, adding, currently Delhi office is a 40-member team and the Hoi kitchens have 180. Moreover, the total number of customers served online are over a lakh, and in all 3,000 meals done per day, he informs.

Roy claims that at present Hoi Foods is serving 120 hotels in Delhi NCR, out of which 35 are cloud kitchens. The startup also has in place a hyperlocal cold chain that facilitates supply of food to intracity hotels from the centralised kitchens.

In the present city, North Indian and Chinese are the main cuisine served in hotels and for online orders. The price starts from a range of Rs 99 and goes up to Rs 300, this includes a la carte, bowls and combo meals. The same will be offered in Hyderabad as well.

"In this city of Nizams, where biryani is the prima donna of Deccani cuisine, we are bringing North Indian food, in bowls and combos for the foodies staying away from home and longing for home cooked food," the founder adds.

Initially, the investment was bootstrapped up to an amount of Rs 1 crore, which was utilised for setting the business, supply chain, R&D etc.

The pre series round of funding took place in 2018 and in the next 15 days, the second round of funding for $3 million will be finalised.

This investment will go into geographical expansion, strengthening the team and for a new product line. Without disclosing any financials, Roy said the startup has been growing at a rate of 10 per cent month-on-month.

According to the founder, an entrepreneur can open one or two cloud kitchens amid lack of knowledge about the food industry. However, scaling up holds the key for a startup's success.

In line with this thought, going ahead, Hoi Foods plans to come with multiple product lines. "The idea is to set up a network of kitchens where Hoi Foods product brands will use the same kitchen to enter different cities.

While Hoi Foods is a mass market brand, the new products that will be rolled out will be cuisine oriented. In next one year, the plan is to unveil three products, of which snack oriented product is one."

An idea that took birth for providing healthy and appetising food to budget hotels, evolved into a cloud kitchen. Explaining further, Roy said, "India faces high commercial real estate value, which makes setting up a restaurant or take away counter a costly affair.

Cloud kitchens have eliminated the place concept, hence, bringing down the cost. Moreover, cloud kitchens are not replacing fine dining restaurants, fundamentally it is replacing home cooking."

With the growing Indian economy, online food delivery market is estimated to grow to $12.53 billion by 2023, according to a report. Cloud kitchen segment has $552 million worth addressable market opportunity.

"In 2015, India witnessed online food delivery, picking up pace. In 2016, startups began to enter the cloud kitchen market and Swiggy, Zomato were in the maturing stage.

From 2017 till Oct 2019, these two platforms have enrolled one lakh cloud kitchens across India. Their prediction is there will be a demand for four lakh more such kitchens in the coming three years," Roy said, adding that this phenomenon of demand for online food ordering is not only seen in Tier 1 cities but is rapidly growing in Tier 2 and 3 cities.

"However, there is a supply - demand gap in Tier 2, 3 cities which will be bridged by new entrepreneurs like us. Making it more important for use to soon enter new cities like Jaipur and Indore," he concludes.