Home > Companies > Start-ups > Oyo Rooms looks to build own cloud kitchen brands

Bengaluru: Budget hotel startup Oyo Rooms (Oravel Stays Pvt. Ltd) plans to create cloud kitchen brands, as part of its strategy to become a full-fledged hospitality chain, said three people familiar with the company’s plans, requesting anonymity.

While the core idea is to standardize food across Oyo properties, it is also looking to list the brands on food delivery platforms, such as Swiggy and Zomato, the people added.

“Food will form an ancillary revenue stream for Oyo, and they have been experimenting with different models for a while now," said one of the people cited above. “Earlier, they used to have tie-ups with multiple restaurants, but now they are building their own food brands, which will be served to guests and also delivered (at home)."

Oyo is currently doing a pilot of its first cloud kitchen under the Adrak brand.

The company was in advanced talks to buy a significant stake in cloud-kitchen startup FreshMenu to enter the online food delivery business, Mint had reported in February.

Several industry insiders, however, told Mint that there has been some uncertainty over the deal, and Oyo is currently building cloud kitchen brands on its own.

Oyo’s plan to add food as a category is targeted towards increasing the business for its hotel partners, apart from acting as a full-fledged hospitality brand. “The focus is going to be on hotels without any in-house food and beverage services," said the second person cited above, requesting anonymity. “They will also target hotel locations that have fewer or no restaurant options nearby."

Oyo declined to comment on specific details about its cloud kitchen brands. “As the largest hotel chain in India, operating franchised and lease assets, we do have an active play in the F&B business with an average of about 25% of our revenue coming through the kitchens we operate in some of our hotels," said an Oyo spokesperson in an emailed response.

Oyo’s entry into the food space comes at a time when the company is flush with funds and has been slowly venturing into different verticals—including home rental, co-working and co-living segments, besides its hotels and townhouse offerings.

It had recently raised around $1 billion from a clutch of investors, including SoftBank Group Corp., Grab Inc. and Didi Chuxing, and is aggressively expanding to several verticals and countries. More recently, on Monday, India’s third-most valuable startup raised $150-200 million from Airbnb Inc., the world’s largest home-sharing platform, as part of its Series E round.

Some industry experts said Oyo’s entry into food is influenced by its key investors, going by business strategies and current market trends.

“Today, startups like Uber and Ola are placing themselves as an urban mobility brand, but just three years ago, they were a taxi aggregator," said Aniruddha Malpani, angel investor, who has made a few hospitality bets. “Similarly, brands like Oyo are now looking to place themselves as a hospitality brand rather than an online hotel booking platform (which was the original thesis)."

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