Rebel Foods: Reinventing Cloud Kitchens through Innovative Tech
| Case Code: ITSY127 Case Length: 16 Pages Period: 2016-2021 Pub Date: 2022 Teaching Note: Available |
Price: Rs.300 Organization: Rebel Foods Pvt. Ltd Industry: Foodservice Countries: India Themes: Innovation, Digital Strategy, Internet of Things,Business Models |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Business Model Transition
As Faasos grew, the challenges of building a retail network started surfacing. These included location failures, high rents for good locations, and the difficulty in balancing dine-in and delivery customers from the same store network. Faasos’ topline increased from Rs. 40 million in 2012 to Rs. 620 million in 2016. Although Faasos was doing well in terms of revenue, exorbitant rents and labor costs made Rebel Foods doubt the sustainability of the business model..
Multi-Brand Cloud Kitchen Model
Once Faasos had shifted to the new business model, many opportunities and options opened up for it, and the company expanded exponentially. From 2016 onward, Faasos became a sub-brand of the group and the company was renamed Rebel Foods..
Innovative Tech-Enabled Operating Model
Rebel disrupted the cloud kitchen space in India with the introduction of patented machinery and a highly efficient operating system. Rebel Foods’ OS was based on culinary delight and technology. It was an end-to-end full stack platform built on an integrated software where food discovery to preparation to delivery – everything was managed by the company..
Marketing watson or overhype?
While Watson’s use in cancer care was still in its development stage, in 2013, IBM released an article stating MD Anderson “is using the IBM Watson cognitive computing system for its mission to eradicate cancer.” However, medical researchers opined that the system had a long way to go to be used in patient care..
Global Expansion
In global markets, Rebel Foods offered a brand-as-a-service model wherein it offered its existing brands, the know-how, dish selection, and design of a menu, besides marketing to local restaurants. Rebel Foods offered its own bouquet of brands to restaurants having the infrastructure to set up a kitchen. It offered backend tech and brand-marketing activities for a royalty fee. This model was capex light as it did not have to invest in building its own kitchens..
Results
In 2018, Rebel Foods established 1100 internet restaurants with 176 cloud kitchens across 15 cities in India. It was next to the leading pizza brand Domino’s in owning the highest number of internet restaurants in 2018 in India. In 2018, Rebel Foods’ revenues almost doubled to Rs. 1,460 million compared to FY 2017 annual revenues. Losses went down by 7% to Rs. 740 million in 2018..
Challenges
One of the biggest challenges for Rebel Foods going forward would be the growing competition in the cloud kitchen space. The company faced strong competition from food aggregators such as Zomato and Swiggy, who also had their own network of cloud kitchens. Other competitors in the cloud kitchen space included Ola Foods, FreshMenu, Box8, Innerchef, and QSR Foods, among others (See Exhibit VIII). With its brand Ovenstory, the company competed with the likes of Dominos’, Pizza Hut, Pizza on My Plate, and more; while for its coffee brand Slay Coffee, it competed with Starbucks, Café Coffee Day, Blue Tokai, etc..
Exhibits
Exhibit I: Rebel Foods Brands*
Exhibit II: Operating Model of Rebel Foods
Exhibit III:
Annual Revenue of Rebel Foods (2012-2020)
Exhibit IV: Rebel Foods: Losses (2012 to 2020)
Exhibit V:
Annual Revenue of Rebel Foods’ Brands (as of March 2020)
Exhibit VI: Shareholding Pattern of Rebel Foods
Exhibit VII:
Investor Funding at Rebel Foods
Exhibit VIII: Rebel Foods vis-à-vis Competitors
Exhibit IX: Share of Online Food Delivery Market in India and Global
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