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Zomato invests in cloud kitchen company Loyal Hospitality; shuts down own cloud kitchen ops

The restaurant listing and food delivery company Zomato has invested an undisclosed amount of money in a Bangalore-based cloud kitchen company Loyal Hospitality. Loyal Hospitality and Zomato, both confirmed the development to MediaNama. According to various media reports, amount of the deal is $15 million.

Meanwhile, Zomato is shutting down its own cloud kitchen operations under Zomato Infrastructure Services (ZIS) due to expansion concerns. Confirming both the development, Zomato’s spokesperson  Naina Sahni said that,

We have made a small investment for a minority stake in Loyal Hospitality. The purpose of ZIS was to bridge the supply and demand gaps in various micro localities across the country. We only had one pilot kitchen in Dwarka, and we are in the process of winding it down. We learnt that experienced people from the industry like Junaiz should be running operations like this. Hence we decided to back his ambitions with some capital and a lot of experience and data from what we do best – generating consumer demand for great restaurant brands.

At the core, we want the restaurant industry in the country to grow as that directly helps us grow. We will do whatever we can to enable the growth of the restaurant industry and provide better food to more people.

Loyal Hospitality was founded in 2014 by Junaiz K, who was earlier associated with Empire Group of Hotels in Bangalore for 25 years. The company provides ready-to-occupy Kitchen to the restaurants along with other operations solutions. These kitchens are equipped with the required amenities. And these outlets operate as a delivery-only branch, and will not have any dine-in facility.

Speaking with MediaNama, Firdos Khan, the Chief Business Office of Loyal Hospitality told that the company will use the fresh funding to expand its operations. The company has already associated with 79 restaurants in Bangalore currently. Going ahead, it plans to open 10 kitchens in next six months and expand to seven cities by end of this year. Khan added that in three years, it plans to have 500 outlets across India.

With this investment, Zomato might be looking at gaining a competitive edge against its rival Swiggy, which launched its own kitchen services in January 2017, and then later launched Swiggy Access, a programme which allows restaurants to move into or set up a kitchen in newer neighbourhoods in November 2017.

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