Inside Curefoods: How Ankit Nagori is building a Thrasio of cloud kitchens

Former Flipkart executive and Cultfit founder Ankit Nagori wants to disrupt the cloud-kitchen segment with a Thrasio model. He is buying up cloud kitchen brands under a Thrasio-like umbrella called Curefoods.
 
Thrasio has become a buzzword in the Indian start-up space. The model, named after a company with the same name, means buying up small, successful e-commerce fashion brands and powering them with more capital and technology.
 
Last week, Curefoods acquired seven food brands, taking its score to 10, which include entrants like CakeZone, Ammi’s Biryani, ParthaBox, and MasalaBox. Curefoods is looking to take that figure to 25 soon, with the company having signed 15 more letters of intent (LoIs). Curefoods boasts cloud-kitchen brands like YumLane, Sharief Bhai, and Aligarh House.
 
Curefoods has raised $13 million in an equity fundraise and $10 million of debt. Nagori believes the time to create a Thrasio-style cloud kitchen offer has come.
 
He said: “The most important metric in this business is orders per kitchen, much like revenue per square foot and the number of footfalls in malls. You need multiple brands, which people can order from at different occasions. A Saturday night is very different from Wednesday, a Sunday brunch is very different from a Monday lunch.”
 
Curefoods wants to be a $100-million revenue business by the end of 2022-23. In the nearer term, it is aiming to triple its number of cloud kitchens from around 50 outlets now to 150 by March 2022.
 
While Curefoods is targeting acquisitions of food brands, which can provide a diverse mix across the country, there is a lot more than cuisines and palettes going into deal making. The sweet spot for an acquisition is a food brand with Rs 25-50 crore in gross annual revenue, three-seven cloud kitchen outlets, a back-ending process for centralising operations, and ratings of 4.3 to 4.4 out of five on Swiggy and Zomato.

However, the most important factor is profitability. “In this space, it does not make sense to say you will become profitable at 10 times the volume. At group level, the central costs will amortise over a larger base in three years, but every brand has to be profitable,” said Nagori.
 
While cloud kitchens, which do not have dine-in spaces and hence can operate multiple food brands from a single location, became an attractive proposition with the rise of online food ordering that was further accelerated due to the pandemic, few have succeeded in the space.
 
As a strategy Nagori is making sure the company is acquiring a 60-80 per cent stake in each of the brands.
 
Curefoods’ strategy is the opposite of that of Rebel Foods, which became a unicorn this month and is the only significant national cloud-kitchen player as yet. Rebel Foods’ approach to the cloud kitchen business has been to build food brands like Faasos, Behrouz Biryani, Ovenstory and Slay from the ground up.
 
Ankur Bisen, senior partner at management consulting company Technopak, said: “The larger problem with cloud kitchens is not whether the acquisition approach is better or building brands ground up, but whether it can replicate the brand connect of an offline eatery. Low entry barriers, slim margins and high marketing costs are also problems”.
 
Ankur Pahwa, partner at manage-ment consulting firm EY, said: “The roll-up model of buying smaller brands creates capital efficiencies. I don’t see any problem with the house of brands approach if you have the capital and want to scale up.”