Mukunda Foods sold its Zomato-partnered kitchens; product sales grew 16x (interview)

In an interview with ETHospitalityWorld published on 22 March 2023, Mukunda Foods co-founder and CEO Eshwar K Vikas confirmed the company had exited 'Nucleus', its kitchen-as-a-service (KAAS) venture started in partnership with Zomato in October 2021. 'We never launched any brand, but we launched three kitchens under our kitchen as a service business. We felt that the KAAS business was taking too much attention, energy and time. So we sold those kitchens to other brands including the assets and exited,' he said.

Vikas said running kitchens was a service-oriented business that was never Mukunda's forte, while its core kitchen-automation products were in very high demand as India's food and beverage industry automated fast amid an unprecedented manpower crunch. The company had just introduced three new machines at the AAHAR exhibition in Delhi: FiltrO, an oil filtration machine; an automatic sandwich griller; and an automatic pizza machine that cuts energy costs.

The numbers he cited for the product business: 300 units sold in FY2019-20 versus more than 1,000 units in the January-March 2023 quarter alone, growth he put at 16-17x year on year. He sized the wider opportunity at 1.6 million commercial kitchens in India, of which Mukunda's machines had touched about 5,000 so far.

Product sales rose from 300 units in FY2019-20 to over 1,000 units in the Jan-Mar 2023 quarter, 16-17x year on year (self-reported in the interview).

Service operations demanded management attention, energy and time that the faster-growing automation product business needed more.

KAAS was never the company's forte - Mukunda's capability is building machines, not running restaurants or brands.

Product demand made the trade obvious: 16-17x yearly sales growth versus a venture that consumed focus without compounding.

Selling the three kitchens intact, assets included, to other brands recovered value instead of shutting them down.

A product company that drifts into running services should sell the service arm early - focus compounds faster than adjacency, and the assets usually find buyers.

Vikas said the company saw room to double its growth every second quarter for the next two years, and argued that even if only 25% of India's 1.6 million commercial kitchens automated, each would spend USD 10,000-20,000 per kitchen - an USD 8-10 billion annual opportunity. He positioned Mukunda's machines as total kitchen automation against Western equipment makers whose products are 'just another equipment', noting 80% of global cuisines can be prepared on its machines. The interview did not disclose the sale price of the kitchens or name the buyers.