Sales Dip, But Average Order Size Up For Rebel Foods; Expansion Plans On Hold
The cloud kitchens operator, which runs popular brands such as Faasos, Ovenstory and Behrouz, said it was not laying off any employees and would take this time to focus on "spring cleaning".
While the foodtech space in India has seen the rise of Swiggy and Zomato over the last few years, one company that has somehow stayed under the radar despite proving to be a giant force by itself is Rebel Foods. Formerly known as Faasos, the Rebel brand has almost become synonymous with cloud kitchens.
And now, with the Coronavirus outbreak wreaking havoc across industries, including online food delivery, Rebel too has seen its numbers going down. “Our sales have dipped by about 30 per cent from pre-COVID level,” co-founder Kallol Banerjee told Entrepreneur India in a telephonic interview.
However, on the bright side, the company’s brands have been doing better on a unit level wherever they are able to operate, said Banerjee. The average ticket size has gone up by 60-70 per cent. It is currently able to run 170-200 stores, compared to 320-odd that are open during normal circumstances.
On higher ticket size, Banerjee said, “That is a function of two things: one is reduced discounts because there is no point in marketing right now, and two, the order quantum has increased as everyone is at home, and you are going to have more people in one order.”
He says the increase is obvious considering how people are now more likely to choose trusted brands over unknown ones, and avoid experimenting when it comes to food consumption.
Doubling down on measures to ensure safety, Rebel claims to be the first in the industry to introduce temperature tracking of everyone involved in the making and delivery of its products. Separately, the company has partnered with telemedicine companies to conduct daily staff and kitchen checks, and is distributing free masks with orders.
According to Banerjee, these standards are going to remain important for consumer sentiment even after the lockdown is lifted. “I think it’s a good time for brands to talk about things like hygiene, safety, where the ingredients come from; because even with the lifting of the lockdown, everything is not just going back to normal,” he said.
No Layoffs, But No Expansion
There have been news reports of layoffs almost across the board for several companies, but Banerjee said they were not looking at letting anybody go. Rebel initially observed and assessed all stores, figuring out which ones were able to run at near-full capacity. There were certain stores which could only offer a few items on the menu, and those are now being closed. All employees at these stores are being assigned to the nearest store that is still operating.
“Before the lockdown, we were at an average of 250-260 orders across the network, and I think once we do this exercise, we should be in that ballpark, 200-plus at least,” said Banerjee.
To ensure business continuity and keep all people on board, Rebel has put on hold all expansion plans for the near future. While the two co-founders – Banerjee and Jaydeep Barman – have decided not to draw any salary till things get better while the executive management team has taken a cut of between 20 and 50 per cent.
Interestingly, Rebel recently raised $50 million in fresh funding. Banerjee said that money has been kept aside and is something they wouldn’t even “look to touch” for some time. “With whatever money we have, we are basically looking to reach profitability.”
Apart from putting a stop to expansion plans, the company is also reassessing all its product offerings, and seeing if there are those that can be removed. Equating the exercise to spring cleaning, Banerjee said it was a time to reduce burn and increase efficiency so that they have a run rate of at least two years with the money they already had.