Food and grocery delivery company Swiggy has sold its cloud kitchen business to Loyal Hospitality, which rents out cloud kitchens under the brand Kitchens@.
This comes amid wider cost-cutting measures at the SoftBank-backed company. In a statement, Kitchens@ said that it had acquired Swiggy’s cloud kitchen unit Swiggy Access in exchange for shares. The acquisition brings Swiggy on board as a stakeholder in Kitchens@.
Kitchens@ said that after the acquisition, its combined gross merchandise value (GMV) would be about $65 million and that the company plans to increase that to $100 million in the next six months.
“The addition of Swiggy’s Access kitchens will bolster the reach and operations of Kitchens@'s in four cities across 52 locations and 700+ kitchens, providing customers with more convenient and efficient food delivery options,” said Junaiz Kizhakkayil, CEO of Kitchens@.
Swiggy Access rented out kitchen spaces to restaurants, both online and offline brands, in areas where they did not operate to ensure faster delivery. Access is separate from the cloud kitchen brands like Bowl Company and Homely, which are private-label brands operated by Swiggy.
This is the latest business that Swiggy is getting out of. The restaurant aggregator platform said on January 20 that it would be exiting the meat delivery business. Swiggy has been cutting costs amid slow growth in its food delivery business and a funding crunch caused by macroeconomic factors. Chief executive Sriharsha Majety said last month that the company had fired more than 300 employees.
Rahul Bothra, CFO of Swiggy said, “Swiggy Access was started with the aim to bridge hyperlocal gaps in restaurant supply and solve for variety, quality, and convenience of food. Since its inception, Access has enabled several restaurant partners to innovate and expand their reach to new customers in a cost-effective manner. We are confident that Kitchens@ is fully equipped to nurture this ecosystem by innovating and building more supply. Swiggy continues to believe in the potential of this space and remains invested as a stakeholder in Kitchens@.”
The company also recently tightened its password-sharing policy for its Swiggy One users, limiting multiple logins to two devices. Swiggy One user are eligible for free deliveries and other offers across the company’s various businesses like Instamart, and DineOut.
Prosus, one of the largest investors in Swiggy, said in a regulatory filing in November last year that its share of Swiggy’s trading loss increased to $105 million, from $34 million, driven by investments to increase growth in both the core food delivery business and in Instamart. This translated to a burn of over $300 million for the six months that ended in September 2022.
Swiggy recently launched several new units, including premium grocery delivery service Handpicked, direct-to-commerce e-commerce marketplace Minis, and restaurant table reservation service DineOut.