Swiggy, a popular food delivery service, is reportedly planning to sell its kitchen infrastructure business, Swiggy Access, as it prepares for its upcoming IPO. Swiggy Access, which has been in operation for over five years, provides a kitchen-as-a-service platform for restaurants to establish their cloud kitchens. Due to the high costs of managing the infrastructure, Swiggy has decided to transfer its kitchen infrastructure business to another cloud kitchen company called Kitchens@.
Sources told ET that the costs of infrastructure were too high to sustain the business. “The biggest problems for restaurants are real estate and labour. That’s exactly what it was trying to solve. The trouble was its long gestation period as with most infrastructure-heavy businesses,”
Swiggy, which was founded in 2014, is an Indian food delivery company that delivers food from restaurants to customers’ doorsteps. Swiggy has been expanding its services over the years, and in addition to food delivery, it has also launched a grocery delivery service, Swiggy Instamart.
Swiggy Access, the kitchen infrastructure business that Swiggy is reportedly divesting, was launched in 2018 as a way to enable restaurants to set up cloud kitchens without investing in their own infrastructure. The idea was that Swiggy Access would provide the necessary infrastructure, while restaurants would focus on food preparation and menu development.
Cloud kitchens, also known as ghost kitchens or virtual kitchens, are delivery-only kitchens that operate without a physical storefront. They enable restaurants to expand their reach and increase their revenue without the need for expensive real estate or storefronts. Cloud kitchens have become increasingly popular in recent years, especially during the pandemic, as more people have turned to food delivery services.
Kitchens@, the cloud kitchen company that Swiggy is reportedly selling Swiggy Access to, was founded in 2015 and is headquartered in Bangalore, India. Kitchens@ claims to have a presence in 20 cities across India, with over 1,000 kitchens in around 100 locations. In addition to providing kitchen infrastructure, Kitchens@ also operates its own private labels across various cuisines, including Chinese, Indian, and Italian. Kitchens@ has partnerships with several international food chains and national foodtech startups, including Subway, Domino’s Pizza, and Wow! Momo.
Overall, the divestment of Swiggy Access and the sale to Kitchens@ appear to be part of Swiggy’s efforts to focus on its core business of food delivery and prepare for an IPO. By selling Swiggy Access, Swiggy can divest a business that was reportedly burning through significant amounts of money while still allowing restaurants to benefit from the cloud kitchen infrastructure that Swiggy Access provided.