FreshMenu might be bought out by Oyo for $60M

Hotel room aggregator giant, Oyo, has recently closed a funding round with $1 billion in capital thanks to a group of investors, which included SoftBank, and two ride-hailing giants in Asia, Didi Chuxing and Grab. With this added funding, Oyo is now on the market for buyouts.

Oyo is in talks to acquire cloud kitchen startup FreshMenu for $50-60 million, three people aware of the developments stated. The round closure is subject to due diligence, these sources said on the condition of anonymity.

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

While F&B operations have always been a critical function for hospitality chains, over the last few years, hotels are increasingly focusing on food and beverages operations to boost revenue and drive profits. For instance, for Marriott, F&B contributes 40-45% to its overall revenue.

Lightspeed Venture Partners is the common investor between the two companies. It owns about 11% in Oyo and 30% in FreshMenu.

Over the last couple of months, Foodvista India, which owns FreshMenu has explored acquisition talks with a bunch of startups including Swiggy, Ola, Eat.fit, Zomato, and Faasos, according to multiple people. "Pricing expectation mismatch is the main reason why none of these materialized for Freshmenu," said another person, adding that the company expected to be valued at up to $60 million.

"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. We have nothing further to announce at the moment," an Oyo spokesperson said.

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