After testing food space via cloud kitchens, OYO to now launch its coffee chain

As part of its strategy to become a full-fledged hospitality chain, Oyo rooms is planning to build its own cloud kitchen brands. The company also eyes to list the brands on food delivery platforms like Swiggy and Zomato.

A person familiar with the company’s plans said, "Food will form an ancillary revenue stream for Oyo, and they have been experimenting with different models for a while now. 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)."

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

Besides acting as a full-fledged hospitality brand, Oyo’s plan to add food as a category is aimed towards increasing the business for its hotel partners. 

An Oyo spokesperson said, "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." 

Oyo Hotels & Homes is in talks to buy cloud kitchen startup FreshMenu for $50-60 million.

The sources aware of the discussions said, "The move will help Oyo standardise its food experience across hotels, an initiative that has internally been in the works for more than a year. It will also significantly help improve margins."

This is not the first time that FreshMenu has tried to sell its business to a larger startup. Earlier, it had been in talks with Zomato, Ola, Swiggy, Eat.fit, and Faasos as well.

An Oyo spokesperson said, "We do not comment on industry speculations and therefore cannot comment on this. As the largest hotel chain in India, operating franchised and lease assets, we do have an active play in the F&B business with over 25% of our revenue coming through the kitchens we operate in our hotels and hence culinary design and good food experience are valuable to us."

On Monday, MobiKwik Independent mobile payments network said it has tied up with OYO Rooms online hotel aggregator and Zomato online food ordering application.

"Cumulative research indicates that online platforms will occupy 15-20 per cent of the total spend of the Indian economy by 2020. Our tie ups with category leaders such as OYO Rooms and Zomato positions us well to leverage that wave," said MobiKwik CEO Bipin Preet Singh.

By the end of the year, OYO has 10,000 plus rooms in 1,000 partner hotels across 45 plus cities in India and aims to expand to 2,000 hotels in 45 cities. Zomato is a restaurant search and discovery app, providing in-depth information for over 1.4 million restaurants across 22 countries.