A plethora of homegrown food and beverage brands across categories such as pizzas, bubble teas, and burgers are drawing funding from early-stage institutional investors and high net-worth individuals (HNIs).
Investors are eager to capitalize on the increasing demand for specialized products, as well as the rapid expansion of these young startups into markets beyond tier I cities.
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Pizza Wings secured a $4 million investment from Gruhas, the venture capital fund co-founded by Nikhil Kamath of Zerodha, along with notable angel investors including Sujeet Kumar, co-founder of Udaan. Based in Rohtak, Haryana, the startup boasts nearly 50 stores spread across its home state, Delhi-NCR, and Goa. Over the past year, Kumar has collaborated closely with co-founders Aditya Dhanda and Rajpal Sangwan.
Bengaluru’s Boba Bhai is currently in talks with Snapdeal cofounder Kunal Bahl’s Titan Capital, among others. The bubble tea offered by Boba Bhai, a milk-based concoction with tapioca pearls, has become a popular trend among Gen Z.
This trend can be attributed to several factors, including an unmet demand for food retail outside major metropolitan areas, a notable absence of enduring loyalty towards global brands (barring a select few), and evolving consumer tastes and preferences.
“The growth potential in the food retail market is massive,” said a person in the know of such funding deals.
Referring to Pizza Wings as an example, he mentioned that the brand not only competes with established players like Pizza Hut and Domino’s but also attracts new customers by offering its products at a 10-15% lower price through supply chain optimization.
A high net-worth individual investor described it as a “highly intriguing market,” noting that consumers are increasingly open to exploring new brands spanning various price ranges.
Pizza Wings refrained from providing a comment, while an email sent to Boba Bhai founder Dhruv Kohli remained unanswered at the time of press.
The recent wave of funding for medium-sized brands includes Burger Singh, which saw its pre-Series B round led by Turner Morrison Ltd, with involvement from Homage Ventures LLP. Additionally, AKU’s, supported by Burger Co, has secured investments from Vikram Bakshi, former managing director of McDonald’s North and East.
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“Investing in AKU’s gourmet handcrafted burgers, given the rising demand for specialised food services among the growing affluent consumer base in India, is a strategic move,” said Bakshi who reckons this shift towards gourmet products indicates a broader trend towards sustainability, health consciousness and premium dining experiences.
Investor enthusiasm extends internationally as well. Malaysia’s Khazanah Nasional Bhd spearheaded Wow Momo Foods‘ INR 350-crore funding round, which also involved a secondary share sale, in January.
“Homegrown QSR (quick service restaurant) chains have turned into fertile grounds for investors,” said Sagar Daryani, cofounder of Wow Momo. “This is largely due to the expansion opportunities with lower capex and higher returns, as Bharat (non-metro markets) catches up in terms of eating out, disposable incomes and technology.”
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In February, Bengaluru-based Biggies Burger, boasting 130 stores nationwide, secured pre-Series A funding at a valuation of INR 210 crore, while cloud kitchen firm Ghost Kitchen concluded a $5 million funding round.
Cheelizza, an all-vegetarian pizza chain, has raised INR 10 crore through a blend of debt and equity in the past 18 months. Sources familiar with the negotiations suggest that the company is currently finalizing another round of INR 20 crore.
“Change in consumption patterns is leading to faster store rollouts, while 4G infrastructure has helped to scale digital footprints and given brands viable business structures,” said Daryani, who is an investor in Cheelizza.
Both Pizza Wings and Boba Bhai generate revenue through their proprietary platforms in addition to selling on marketplaces such as Zomato and Swiggy.
According to a report by the National Restaurant Association of India, the Indian Quick Service Restaurant (QSR) sector is valued at $25.46 billion in 2024, with projections indicating a growth to $38.71 billion by 2029.
Industry watchers note that the surge in interest towards homegrown brands is largely attributed to the challenges faced by major international food chains, with only the top three or four Quick Service Restaurant (QSR) chains managing to effectively engage and retain Indian consumers.
Global chains like Papa John’s and Carl’s Jr have either closed their operations or experienced limited growth.
“Homegrown chains are a massive opportunity now. Understanding local nuances, collaborating with suppliers, backend linkages – all are crucial. Some of the bigger global chains have not been able to crack this; something local ones are managing to,” said Gaurav Marya, chairman of licensing and franchising consultancy Franchise India, which is working closely with three to four food services startups-in-the-making.
Several gourmet and artisan pizza makers are also pitching for funding to a group of investors, according to a person who has reviewed such proposals.
Additionally, there are supplementary benefits through alternative sales channels. Chaitanya Bhamidipaty, co-founder of Roastea, emphasized that securing funding is an ongoing endeavor, particularly for vending machines in corporate settings and cafes.
“We are funding our expansion plans through internal accruals, promoter equity and debt. For FY25, we hope to raise INR 30-40 crore, of which we have closed about INR 15-20 crore,” he said. The coffee and tea vending machine platform has recently expanded to cafés and kiosks.
Last week, Nexus Venture Partners led a $3.4 million round in AbCoffee, highlighting its focus on the grab-and-go model.
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