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Rebel Foods, the operator of popular cloud kitchen brands like Faasos, Oven Story, and Behrouz Biryani, is restructuring its operations and considering a potential exit from premium chocolate and dessert brand Smoor, according to sources familiar with the matter.
The company has reportedly been in discussions with prospective buyers to offload its 57% stake in Smoor, which it acquired in April 2022 in a deal that valued the brand at over $50 million. While talks are ongoing, no final agreement has been reached.
The move comes as part of a broader consolidation effort at Rebel Foods, which includes shutting down its offices in Gurugram and Bengaluru. The company said it is centralizing operations in Mumbai to streamline decision-making and improve internal efficiency.
“We continue to support Smoor and are committed to its long-term growth. In the last six months alone, we’ve made substantial investments, including a new state-of-the-art manufacturing facility. This capacity is being built to support Smoor’s next phase of growth over the next 5 years. We are actively backing Smoor’s evolution into a category-defining premium food brand,” a Rebel Foods spokesperson said in response to inquiries.
Despite investments, Smoor’s performance has lagged expectations, particularly in key metro markets like Mumbai. According to data from Tracxn, the brand posted a 16% rise in revenue in FY24 to ₹149 crore but saw its losses widen to ₹19 crore, up from ₹17 crore in FY23 and ₹10 crore in FY22.
Rebel Foods had initially planned to invest up to $150 million in acquiring and scaling food brands as part of its brand aggregation strategy. However, the company has not disclosed how much of that capital has been deployed to date.
The underwhelming performance of Smoor has added pressure on Rebel Foods as it prepares for a potential IPO. One person close to the company said Rebel is now prioritizing high-performing assets to present a leaner and more profitable portfolio to investors.
In December, Rebel Foods raised ₹1,750 crore (approximately $210 million) in a funding round led by Singapore's Temasek, maintaining its previous valuation. Financial filings show the company narrowed its net loss by 42% in FY24 to ₹378 crore, while revenue grew 19% to ₹1,420 crore.
The shake-up comes amid heightened competition in the cloud kitchen space. Rival Curefoods, founded by former Flipkart executive Binny Bansal, recently filed for a ₹800 crore IPO. Curefoods operates a portfolio of digital-first food brands, including EatFit, Nomad Pizza, and Krispy Kreme, and ranks as the second-largest player in the segment behind Rebel Foods.
Despite recent challenges, Rebel Foods CEO Jaydeep Barman signaled continued expansion in a recent LinkedIn post, stating the company will pursue acquisitions, investments, or partnerships with restaurant brands that have achieved "minimum scale" as part of its growth strategy.
