Licious, a renowned brand for premium meats and seafood, is set to open five physical stores in Bengaluru by June. Founders Vivek Gupta and Abhay Hanjura plan to expand the store network to 35-40 locations across two to three cities by the end of this fiscal year.
The initiative aims to tap into new users in the offline channel and eventually transition them to online transactions as well, they said.
In the upcoming five years, the Bengaluru-based startup has set its sights on establishing 500 stores nationwide, marking it as its “next big focus” area.
“Traditionally, meat has predominantly been an offline-focused category, and we’re simply following the customer’s preferences,” stated Hanjura.
This aligns with the trend of numerous new-age online-centric brands venturing into offline spaces to attract fresh customers. Additionally, there are reports highlighting how tech-first venture funds are supporting consumer brands with retail presence, particularly in the food and beverage sector.
While pursuing its omnichannel strategy, Temasek-backed Licious is also aiming to achieve profitability on an earnings before interest, tax, depreciation, and amortization (EBITDA) basis by the end of FY25, Gupta mentioned.
The founders stated that the company maintains an operating profit margin of approximately 6%, covering processing, wastage, manufacturing, and delivery costs, while excluding marketing and corporate expenses.
The decision comes just months after Licious cut 80 jobs as part of a plan to improve profitability.
In FY23, the company recorded a 9% year-on-year growth in revenue, reaching INR 748 crore, falling short of the projected revenue of INR 1,500 crore. However, there was a notable reduction in the year’s losses, decreasing by approximately 38% to INR 529 crore.
Continue Exploring: Licious records INR 748 Cr in meat sales for FY23 as growth plateaus
In November last year, reports indicated that online meat firms were reevaluating their business strategies to adjust growth expectations due to a slowdown in consumption. These firms were adversely impacted by the resurgence of physical meat and fish shops, as well as macroeconomic challenges such as inflation.
Licious’ main competitor is FreshToHome, which is backed by Iron Pillar.
Hanjura stated that Licious currently maintains a monthly revenue run rate of approximately INR 73 crore, with aspirations to reach INR 100 crore by the end of FY25. He mentioned that out of this target, INR 8-10 crore is expected to stem from offline sales.
He mentioned that the company’s monthly cash burn has decreased to INR 10 crore from approximately INR 50 crore per month a year ago.
Gupta stated that, in order to decrease cash burn, the company has implemented measures such as cost reduction in sourcing and processing, alongside enhancements in demand forecasting, among other initiatives.
Gupta mentioned, “We also integrated technological solutions such as proprietary software, which augmented the yield from each animal. For boneless chicken pieces, for example, the yield per chicken rose from 50% to 77%.” Additionally, he noted that wastage simultaneously decreased from 6% to 3.5%.
As per the founders, the premium meat and seafood market is still far from reaching saturation.
Gupta explained, “In the case of many grocery items such as milk, tea, flour, and others, FMCG companies levy a significant premium compared to prices offered by unorganized sellers. Similarly, we aim to establish a comparable premium in unorganized wet markets. However, the distinction lies in the fact that FMCG players have gradually implemented this strategy over many years, resulting in customers not perceiving the premium as prominently.”
Continue Exploring: Meat retailer Licious lays off 80 employees in bid for enhanced efficiency
Recently, Licious launched a subscription service called ‘Infiniti,’ which provides customers with perks such as free delivery and cashbacks on purchases. Presently, the company boasts 1.5 lakh subscribers, contributing to 40% of its revenue. Licious targets to increase its subscriber base to 2.5 lakh users by the conclusion of FY25.
For comparison, the company boasts more than 4 lakh monthly transacting users. Infiniti subscribers also demonstrate the highest monthly retention rates, exceeding 90%, in contrast to 30% for ‘light’ users. Additionally, they engage in over 60 transactions annually, with an average order value of INR 800, compared to the 25-30 transactions per year typically conducted by more casual users.
Hanjura emphasized, “Meat business thrives on repetition… Hence, growth doesn’t solely rely on expanding into new markets. It’s about delving deeper into existing markets, boosting consumption, and capturing a larger share of the consumer’s preferences.”
Approximately 85% of Licious’ sales originate from its proprietary website, while the remaining portion is generated through online grocery and quick-commerce platforms. In terms of value, chicken sales account for 45% of the business, followed by seafood at 20%, mutton at 18%, and the remaining portion is attributed to eggs and ready-to-eat products.
Continue Exploring: Licious crowned ‘India’s Juiciest Chicken’ by National Meat Research Institute
