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    Ola scales down food business, looks to integrate it with 10-minute grocery delivery

    Synopsis

    Ola’s cloud-kitchen business under Ola Foods has nixed its expansion plans as it looks to sell most of its kitchen equipment at up to 30-50% discount, people in the know said.

    Ola foodsETtech
    Illustration: Rahul Awasthi
    Bengaluru/Mumbai: Once again, Ola is scaling down its food-delivery ambitions.

    The mobility company’s cloud-kitchen business under Ola Foods has nixed its expansion plans as it looks to sell most of its kitchen equipment at up to 30-50% discount, people in the know said. ET has reviewed an email sent to prospective buyers on the products that are up for sale.

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    "They are looking to completely exit the business… which means transfer and end existing leases for its facilities, let go the staff and sell their equipment," said one of the persons on the condition of anonymity.

    Ola Foods runs brands like Khichdi Experiment, Biryani Experiment, Paratha Experiment, Bowlsome, Daily Diner, Nashta Express, Gulpp and That Pizza Place. Only the brands which can operate on the 10-minute model will be retained, said a source.

    The Bengaluru-based firm initially planned to expand its cloud kitchen business significantly and run over 500 facilities across the country, according to a source aware of the matter. It operated close to 50 cloud kitchens as of 2020.

    So what went wrong this time?
    Two people familiar with the matter told ET that Ola Foods failed to garner traction for its cloud--kitchen brands. “ This is not an easy business to run. The management bandwidth was also an issue as the company focuses on Ola Electric (its EV arm),” one of the people said.

    Three people confirmed to ET that Ola had approached them to sell off its cloud-kitchen equipment. Ola was offloading these but not selling the business separately, one person who had been approached said on condition of anonymity.

    “It is not like they are out to sell the business or the brand… but if you are looking for a buyer for the machines, equipment and assets then it means it is not a priority,” another person said.

    All three parties eventually passed on the offer, due to their existing presence at those locations and the availability of cheaper equipment in the market.

    Ola did not respond to ET's queries on the status of its cloud-kitchen business under Ola Foods.

    OlaETtech

    Integrating food with Ola Dash

    According to two sources familiar with the matter, the company is in the process of integrating some of its cloud kitchen brands with Ola Dash, its 10-minute grocery delivery business.

    ET was the first to report on April 12 that Ola was conducting trials for a 10-minute food delivery service. It began by offering select food items in a few areas of Bengaluru through its on-demand grocery delivery arm Ola Dash. Items on the menu included khichdi, pizza and rolls, which Ola described as “freshly prepared”.

    Ola’s experiment with 10-minute food delivery followed food aggregator Zomato’s foray into the category through Zomato Instant, ET reported in March. Zomato has also been re-evaluating Zomato Instant, ET reported on May 13, as it hasn’t been able to meet the target time for all orders.

    Rival Swiggy is also exploring faster food-delivery, though it isn’t clear if it is targeting doing that in 10 minutes. Meanwhile, Zepto, the youngest ultra-fast grocery delivery startup, is experimenting with Zepto Cafe, where it sells ready-to-drink coffee, chai, and packaged snacks.

    Ola Foods’ integration with Ola Dash signals the company’s increased focus on quick food and grocery delivery.

    In the ultrafast grocery space, Ola competes with Swiggy Instamart, Zepto, Blinkit, Dunzo, and BB Now.

    An Ola delivery executive told ET that the company started integrating cloud-kitchens and some of its ‘dark stores’ in Bengaluru from last week. Ola Dash currently operates 200 dark stores across nine cities, the company said in January.

    Dark stores are small warehouses located in the heart of a city through which orders can be delivered quickly.

    The Ola Foods section on the Ola app says it is unserviceable in prime locations in Bengaluru.

    Sources said the company had already pulled out of Swiggy and Zomato over a month ago and is only selling through its own app.

    The idea is to avoid paying commissions to Swiggy and Zomato, and instead focus on catering to the existing captive user base of the Ola app, the sources added.

    A former Ola employee said that Ola Foods shuttered many food counters inside the company headquarters in Bengaluru. Only Biryani Experiment and That Pizza Place were open during lunch hours, said a current employee.

    Food experiments

    The food delivery business at Ola has undergone several pivots over the years. The first attempt was made in 2015 when Ola launched a 20-minute food delivery service Ola Cafe but shut it down soon.

    It later forayed into the food-delivery business in 2017 by acquiring Berlin-based Rocket Internet's online food delivery platform, Foodpanda India, in an all-stock deal. The ride-hailing major said it would infuse $200 million into Foodpanda's India operations at the time. But by 2019 Ola suspended its food delivery business and fired employees to focus on home brands and the cloud kitchen business.

    Ola Foods was launched in 2019 and it grew its presence to six cities, including Bengaluru, Mumbai, Delhi, Hyderabad, Chennai and Pune. It started off with Khichdi Experiment.

    Ola's first employee and founding partner at the company, Pranay Jivrajka, the CEO of Ola Foods, left the company last year. Gaurav Srivastava, who was the chief operating officer of Ola Foods also quit. Vinay Bhopatkar, a former executive from coffee chain Cafe Coffee Day, is currently heading both the food and grocery businesses.
    The Economic Times

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