Wendy’s to launch cloud kitchens with India’s Rebel Foods

American fast-food firm The Wendy’s Company on Tuesday announced plans to expand its presence in India over the next decade in collaboration with its master franchisee Sierra Nevada Restaurants and cloud kitchen specialist Rebel Foods, to open physical restaurants and cloud kitchens here.

Backed by Sequoia Capital, Rebel Foods will partner with Sierra Nevada Restaurants to develop and operate approximately 250 Wendy’s cloud kitchens pan-India, with Sierra Nevada starting another 150 Wendy’s brick-and-mortar restaurants here.

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The move comes at a time when covid 19 pandemic has disrupted the restaurant business globally with diners reluctant to return to food joints operating under physical distancing protocols. This has led to a surge in takeaways and online food ordering through aggregators and restaurant websites driving firms to enhance their online presence via cloud kitchens.

The partnership is game-changing, said Kallol Banerjee, co-founder of Rebel Foods. “For generations, brands building a national presence relied solely on a brick-and-mortar strategy and made significant investments over decades. By partnering with the Rebel Foods network of existing kitchens in India, Wendy’s will get immediate access to rapid scale across the country, at far lower levels of capital,” he said. Rebel Foods runs more than 300 cloud kitchens across India, UAE, South East Asia and the United Kingdom. It operates Faasos, Behrouz Biryani, Mandarin Oak, Oven Story, and the Sweet Truth restaurant concepts.

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Wendy’s—launched in India in 2015—already runs nine restaurants here including four traditional restaurants and five cloud kitchens in Delhi’s National Capital Region. Globally, the quick service restaurant (QSR) chain and its franchisees operate more than 6,800 restaurants.

However, in India its presence is dwarfed in comparison to rivals McDonald’s and KFC present in the market for over two decades, and even more recent entrants such as Burger King and Carl’s Jr.

McDonald’s is present in India through two local partners who together operate over 460 outlets. Burger King runs 260 restaurants here.

The QSR chain will need to market itself to Indian consumers in a market where existing players have built consumer equity through low-priced value-meal offerings and a strong brand recall.

The move, said Abigail Pringle, president, international and chief development officer of The Wendy’s Company, reflects Wendy's commitment to growing its international business in strategic high-growth potential markets through both traditional restaurant expansion and digital innovation with the meaningful addition of approximately 400 restaurants.

In 2018, India’s quick service restaurants market was estimated at ₹32,880 crore as per estimates by National Restaurant Association of India.

As India unlocked during the ongoing pandemic, restaurant companies upped their game online and expanded their cloud kitchens. Earlier this year, Lite Bite Foods that runs various casual and fine-dine restaurant formats said it will accelerate plans to open over 35 cloud kitchens in five cities as future of brick and mortar outlets remains uncertain.

Analysts view the Rebel Foods tie-up as a short-to-medium term solution. "This will help Wendy's cut time and be present across cities at a much lower cap-ex and start the ground running very quickly,” said Abneesh Roy, executive vice-president, research, Edelweiss Securities. However, Roy said that Wendy’s will need to work on marketing itself. While its cap-ex will be lower (due to low cost of opening cloud-kitchens) there will need to be higher focus on marketing spends, at least initially.

Sierra Nevada Restaurants is owned and managed by UK-based IMM. Hunch Ventures, a consumer-focused venture fund holds a stake in IMM. In India, IMM owns and manages Jamie Oliver Group’s restaurants.