London Firm Finnest Acquires Majority Stake in Indian Cloud Kitchen Startup Kitchens@

London-based private equity firm Finnest has solidified its control over Bengaluru-based cloud kitchen startup Kitchens@ through a strategic investment. This move signifies a significant development for both companies.

Fresh Capital Drives Expansion

Kitchens@’s board of directors approved a special resolution authorizing the issuance of 400,000 equity shares at Rs 3,000 per share, raising Rs 1.2 billion ($145 million) in fresh capital. Additionally, the company issued 450,000 Series C compulsorily convertible preference shares (CCPS) at Rs 3,000 per share, amounting to Rs 1.35 billion.

Majority Stake and Subsidiary Status

While the recent Rs 1.2 billion infusion represents new funding, the Rs 135 crore tranche likely stems from a previously announced $65 million Series C round led by Finnest in December 2023. Following this investment, filings reveal that Finnest now holds a controlling 53.75% stake in Kitchens@. This effectively positions Kitchens@ as a subsidiary of Finnest Holdings.

Post-Investment Valuation

Financial estimates from Fintrackr suggest that Kitchens@’s post-investment valuation stands at approximately Rs 21.14 billion ($255 million).

Comprehensive Solutions for Food and Beverage Brands

Founded in 2018, Kitchens@ caters to the evolving needs of food and beverage (F&B) brands. The company offers comprehensive turnkey solutions to facilitate brand expansion. This includes a range of end-to-end services encompassing infrastructure, technology, and operational support. Kitchens@ boasts a diverse clientele, partnering with renowned international chains like Domino’s, Subway, Taco Bell, and Nando’s, as well as established national chains such as ITC, Mainland China, and Barbeque Nation.

Strategic Acquisition and Expansion Goals

In an effort to expand its reach, Kitchens@ acquired Swiggy’s Access Kitchens business in a share swap deal during early 2023. This strategic move aimed to establish a presence across four cities, encompassing over 700 kitchens and 52 locations.

Financial Performance and Competitive Landscape

Kitchens@ demonstrated impressive revenue growth in FY23, with a 67% increase from Rs 37 crore in FY22 to Rs 62 crore. While the company continues to experience financial losses (Rs 27.3 crore in FY23), it has yet to file its annual results for FY24. Kitchens@ operates within a competitive cloud kitchen market, facing challenges from established players like Rebel Foods, Curefoods, EatClub, Biryani By Kilo, FreshMenu, Biryani Blues, Bigspoon, Dil Foods, Ghost Kitchens India, and HOI Foods.