Ola bets big on food biz, to launch portfolio of in-house food brands

Ride-hailing firm Ola is betting big on the food business and is planning to launch a portfolio of in-house food brands and take them across the country. These brands would not only be available on external platforms like food delivery apps Swiggy and Zomato, but also offline stores including restaurants, cloud kitchens, food trucks and pop-up kiosks that Ola is also planning to set up.

Ola’s food business will focus on becoming a food-first company with a massive kitchen infrastructure and a slew of brands. These include brands related to desserts, rice bowls and biryanis which would be unveiled within this year. These initiatives will also help the company reach new customers by penetrating deeper into the existing markets and expanding to tier-2 and tier-3 cities and towns.

“It is a very big opportunity and there are very few food brands with a national footprint. Eating out was an indulgence four years back and now it is part of the daily routine. And the food and supply has to modify with that behaviour,” said Pranay Jivrajka, chief executive of  Ola’s food business. “We aim to have a national presence for our (food) portfolio and our goal is to have 80 per cent penetration in the top markets,” he added.

To begin with, the SoftBank-backed company has launched its flagship brand ‘Khichdi Experiment’ which has gone live in Bengaluru, Hyderabad, Mumbai, Pune and Chennai. It is offering more than 16 varieties of ‘khichdi’ and the flavours will keep expanding depending upon the feedback from the customers. ‘Khichdi’ is a comfort food which is liked by people across ages and demographics. Ola said the idea was to answer to the hunger pangs, reconnect with the nostalgia and comfort that one attaches with an item like ‘khichdi’ and at the same time surprise customers with different flavours of the dish.

According to sources, Ola was facing challenges for its food delivery business Foodpanda and is pivoting towards focussing on its own in-house food brands through its cloud kitchens. It has a network of 50 kitchens in Bengaluru, Hyderabad, Mumbai, Pune, Delhi NCR and Chennai. The firm is looking to expand this network in more than 80 cities over the next year. Ola had acquired Foodpanda’s India business from Germany-based Delivery Hero Group in December 2017 and had committed an investment of $200 million into Foodpanda India. It was competing with large food delivery players in this space, while burning a lot of cash in the process, with rising competition, according to sources.

However, Ola said that through Foodpanda, it realised that there is a need to solve for the overall food experience rather than just focussing on the logistics part of the business. Foodpanda would be a distribution channel for Ola’s own food brands as well as some other partner brands.

The concept of cloud kitchen has recently caught the attention of food tech companies and investors who are pouring millions of dollars into such facilities.

Mumbai-based food-tech firm Rebel Foods, known for brands like Faasos and Behrouz Biryani, operates more than 205 delivery cloud kitchens and 1,600 online restaurants across 18 Indian cities. In the next two years, the company aims to have around 500 cloud kitchens. Rebel also runs brands such as Mandarin Oak that provides Chinese cuisine; Oven Story that is known for pizzas, and Sweet Truth that offers desserts. 

Bengaluru-based Swiggy, a Naspers and Tencent Holdings backed food delivery firm, is expanding its cloud kitchen platform Swiggy Access to metros, including Delhi, Mumbai, Kolkata, and Hyderabad. The platform enables its restaurant partners to set up kitchen spaces in locations where they don’t operate but have a high demand for their product. Swiggy Access houses brands such as Truffles, Vasudev Adigas, and Leon Grill as well as the company’s private-label brands like The Bowl Company and Homely.