Ankit Nagori: The Digital Foodpreneur The founder of cloud kitchen startup, Curefoods, is on the Digital Cover of Entrepreneur India for May 2023
Opinions expressed by Entrepreneur contributors are their own.
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Unlike most people who hail from business families, Ankit Nagori, founder, Curefoods wanted to steer clear of taking over the business from his parents. He wanted to carve a niche for himself in the business world. Though the family business was running well at a moderate scale, he wanted to create a larger impact and build employment opportunities for many. And, to enable that, what better than building a tech business in India today?
That is why he jumped into the world of entrepreneurship right after graduating from IIT Guwahati and launched a startup called Youthpad in 2007 that offered a social media tool to the youth to create a brand marketing experience. The startup did not take off and so, after doing it for two and a half years, he joined Flipkart.
I was fortunate enough to become a part of the Flipkart team very early on. Then of course the next six and a half years were great. I think whatever the Flipkart mafia has created is incredible and for everyone to see.
In 2016, Nagori again stepped into entrepreneurship and launched Cure.fit (rebranded as Cult.fit) with Mukesh Bansal (founder Myntra). The company launched many verticals including Cultfit, Mindfit, Care.fit, EatFit, among others. In 2020, Curefit announced that its food vertical, EatFit would be an independent entity from then on, led by Nagori.
Pioneering House of Brands in F&B
Today, Curefoods claims to be the second-largest cloud kitchen player in India in terms of footprint. Along with EatFit, the company houses brands like CakeZone, Nomad Pizza, Great Indian Khichdi, Sharief Bhai, and Iceberg Ice Cream, among others. It has over 150 kitchens that cater to over 10 cuisines, across 15 cities in India.
When asked about how easy or tough it is to establish HoB in food and beverage (F&B) over doing the same in retail, he said, "Food is very different from other consumer categories as it has distinct segments and one customer actually plays across many segments. It's not like washing powder or cooking oil, wherein once the customer has moved on from segment A or brand A to brand B or segment B, he or she sticks around for a very long period. From an F&B consumer consumption point of view, there are 28 consumption points a week, seven times a week, four times a day, lunch, dinner, snacks, breakfast etc. And all of these have very distinct consumption patterns. Breakfast on a Monday will be different from breakfast on a Friday or brunch on a Sunday or a Saturday. Then there are different cuisines and different price points," he said.
In addition to that, Indian consumers love street food as much as they love fine dining restaurants. That's why Nagori strongly believes that to keep the orders flowing through the day, you need multiple products. "Imagine a cloud kitchen like ours, if we didn't have a breakfast plan and a snacks plan, we will not have any orders till lunch or dinner. That is why we need multiple brands. Likewise, how can only a pizza player or only a biryani player get enough numbers of orders in a day," he said. So, from a profitability point of view, he believes that it makes sense to have multiple sets of brands and that's exactly what he is trying to build. Nomad Pizza and Sharief Bhai are among its fastest-growing brands, growing at about 50% on a quarterly basis, the company claims.
Nagori has also taken a lot of inspiration from companies like Unilever and P&G, in terms of structuring the company and building the right focus and team head for each brand. Nagori also spends a lot of time understanding the brand he plans to acquire. This also makes the process of running all the brands seamless. Product market fit, customer love, and founders' attitude are some things he looks at while acquiring a brand.
But, does he get time for himself when he is building a HoB? "I do take a holiday, but I think when businesses are doing well, you don't want to cut off a lot. You want to continue the momentum."
Momentum is very hard to get by and right now India as a country, we as an industry and Curefoods as a brand, we all have some significant momentum. This is the best time to build and continue to be in the game.
Cloud kitchens before and after the pandemic
Cloud kitchens as a segment has seen many ups and downs. A lot of players came in and a lot of players shut down. Even restaurants in five-star hotels pivoted to the cloud kitchen model to survive the lockdowns.
When asked to share his thoughts on how the segment has performed pre-pandemic, pandemic and in the new normal, he said, "The genesis actually is a few years back when online ordering was becoming a very big thing in India globally. But, a lot of old-school restaurants were not able to cater to the online demands, like packaging, right portion sizing, delivery on time etc. And that's where a bunch of cloud kitchen companies across the world cropped up and a lot of them in India as well. After the pandemic, there was a clear trend of people moving to online-first," he said.
As the pandemic started receding, people started dining and Nagori agrees that numbers came down. However, he added that it was slightly bigger than the pre-pandemic number, which was the natural progression.
But, do we need cloud kitchens today, in the new normal?
"People are still ordering online. But, India is a brand-starved country. So, either they can order from big American QSR (quick service restaurant) chains, or they can order from stand-alone restaurants. There's nothing in the middle and that's where the Indian multi-brand cloud kitchen companies are fitting in, which is us and a bunch of other skilled players."
Nagori believes that this 15% to 20% year-on-year growth for the segment will continue for the next ten years. This means that a lot of these cloud kitchen players including Curefoods can become a pretty large part of the Indian F&B ecosystem, and in many cases, even surpass American QSRs.
However, there have been complaints about unhygienic working conditions at certain cloud kitchen platforms and news like this has put a black mark on the industry. How can we solve for that? "It's not a new problem. It's a very common saying that you should never go into the backside of the restaurant because you'll never come back. Industrial-scale kitchens have traditionally been like that. But, there are new restaurants which are breaking the norm. Likewise, any cloud kitchen can have either very clean kitchens or bad kitchens. But platforms like Swiggy delists unhygienic ones. Customer rating at the end of the day takes care of everything," he said. About 70% of its orders are fulfilled by Swiggy and Zomato, and the rest 30% through its own delivery network. It expects its own network to be about 40 % by the end of 2024.
- Commenced operations in 2020
- Operates over 150 multi-brand cloud kitchens including EatFit, Yumlane, Aligarh House Biryani, Masalabox and CakeZone
- Serves over 200 locations in 15 cities
- Raised INR 300 crore in funding round in April 2023
- Total funding raised is more than $220 Mn
- Mayank Agarwal, Varun Dhawan, Mithila Palkar and Nora Fatehi are some of the celebrities associated with the startup
- Other key investors include Binny Bansal, Ion Pillar, Chiratae Ventures, Sixteenth Street Capital, Accel Partners
- Has 5 manufacturing units in cities including Delhi, Mumbai, Bengaluru, Chennai, and Pune
Future plans and offline expansion
Nagori strongly believes that there is an opportunity for startups to build a large food and beverage play in India, but one cannot miss out on the offline aspect of it. This is because eating out is a very large part of our lifestyle and culture. During the pandemic, a very small part of that has moved online, where people now at least think of celebrating indoors.
"But, a large part of the weekend eating happens outside and we don't want to miss out on any celebration days. I think that if you really want to cover all 28 meals that I spoke of, it's super important to have at least 25%-30 % slots with offline ordering," he said. That's the share of the business that the company envisions.
I think in a couple of years, 25%-30% of our revenue will be offline. While we continue to build our core thesis of online-first.
This year, Curefoods aims to expand in Tier I and Tier II cities in North and West of India. The cloud operator has also set an objective ARR of INR 1000 crores by the end of 2023. In the same period, the company also plans to open 50 more locations with the aim of managing two million orders a month. It also aims to get an EBITDA level positive in Q1 FY 2024, and might plan to go for a pre-IPO round within two years.It will also look to hire about 500 more people to strengthen its workforce
While this is what he has planned for the company, what is it that keeps Nagori going?
"For the next 10 years, irrespective of what the political outcomes of the country are, irrespective of what the impact of China is, or global recession, India's growth momentum will continue and a large part of that momentum will come from technology. So, the thought of what we can build in the next ten years keeps me going."