Rebel Foods scales down 27.5% in FY21, losses hit Rs 364 Cr

Cloud Kitchen brand Rebel Foods, which operates 9 sub-brands including Faasos and Behrouz Biryani in 3 countries, had a busy fiscal year ending in March 2021. It managed to raise successful rounds of funding from New York-based Coatue Management.

Similar to big QSR brands like Dominos and Burger King, which fell nearly 16% and 41% respectively, Rebel Foods’ operating income shrank 27.5% to Rs 405.1 crore in FY21 from 558, Rs 7 crore in FY20, its financial statements filed with the Ministry of Corporate Affairs (MCA).

Rebel Foods claims to have 450 kitchens in 70 cities in India and abroad (UAE and Singapore) and derives 99% of revenue from food sales. This fell by 27.6% to Rs.400.7 crore in FY21 from sales of Rs.553.6 crore in FY20.

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The remaining 1% is earned from providing delivery services and canceling fees charged from its customers.

The reduction in operational scope due to lockdowns is clearly reflected in the cost of raw materials consumed, which is the company’s largest cost center at 26% of annual costs. Commodity consumption fell by just over 42.1% to Rs.199.62 crore in FY21 compared to Rs.345 crore in FY2020.

Rebel Foods management, led by co-founder and CEO Jaydeep Burman, has implemented critical cost-cutting measures to reduce costs across all verticals of operations, which is reflected in the income statement. The company’s second largest expense, employee benefit expenses, accounts for 25.4% of annual expenses and was cut 14.3% yoy to Rs 195.07 crore in FY21. Notably, the share of employee stock options (ESOPs) in those employee payments doubled from 7.04% in FY20 to 14.1% in FY21.

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Expenditure on promotions (including commissions paid to platforms such as Swiggy and Zomato) was also checked, cutting 35.2% from Rs.221.1 crore in FY20 to Rs.143.3 crore in FY21. Legal and professional expenses fell 50.2% yoy to Rs 20.2 crore in FY21 while utility costs rose 27.5% to Rs 32.5 crore over the same period.

Overall, the company’s annual expenses were trimmed in line with the drop in revenue, totaling Rs.769.3 crore in FY21, down 25.1% compared to the expenses of Rs.1,026.7 crore in FY20. At the unit level, Rebel spent Rs 1.9 to generate a single rupee in revenue in FY21.

Rebellious Foods

Diminishing in size, operating cash outflow increased by 29.1% to Rs 244.53 crore while annual losses in FY21 were reduced by 19.8% yoy to Rs 364.12 crore. EBITDA margins improved slightly to -52.93% in FY21 from -65.36% in FY20 while outstanding losses stood at Rs 1,294.7 crore at the end of March 2021.

Foodtech companies have been among the hardest hit due to the lockdowns caused by the pandemic. That’s evidenced by the roughly 25 percent reduction in the Zomato scale in FY21. Swiggy has yet to file its full-year results for FY21, but it’s likely that it experienced a similar loss in its magnitude last fiscal year. That pressure may have been a factor that convinced doubters to expand its offering to include grocery delivery in the case of Swiggy, where it has increasingly invested in Instamart.

Although Rebel Foods’ size has suffered due to unavoidable circumstances, the company appears to be showing a strong recovery in current fiscal year FY21-22.

The company raised nearly $190 million in its Series F round at a unicorn appraisal a few months ago and plans to invest $150 million in India to strengthen its network of cloud kitchens and more to bring product lines to market. As it focuses on its core cloud kitchen and its own branding model, the company has no choice but to wait out the Covid phase and then try to capitalize big.

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