OYO and Freshmenu Negotiating over Acquisition for $60 Mn - Next Big Brand
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OYO and Freshmenu Negotiating over Acquisition for $60 Mn

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Written by Sourav
[email protected] | | Published on: February-22-2019 12:10 PM

Oyo Hotels, recently named the second most innovative company to come out of India, is currently in talks with Freshmenu to acquire the brand. Allegedly, the negotiation sum is around 50-60 Million USD and the acquisition is subject to due diligence at the moment.

A source that is close to this deal said “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,” The different source further elaborated on the deal saying “It will also significantly help improve margins,”

Food is, obviously a huge part of the hospitality industry. By standardizing their menu and recipes, OYO will certainly move up in the hospitality industry, in terms of the value it offers its customers.

Why does Freshmenu want to sell itself?

Freshmenu had been expecting a series C funding of close to 55 million USD. However, investors did not have as much a high opinion of the company as the company itself. As a result, they received a bridge funding that was worth a total of 21 Crore INR. Investors were disappointed with Freshmenu’s inability to scale up its operations, which is why the funding was lower than the expected amount.

This development has led FoodVista, the company that owns Freshmenu, to initiate sales talks. These sales talks have been happening for close to a year. The brand has been negotiating with various other entities including Swiggy, Zomato, EatFit, Ola, Faasos. However, none of these sales have gone through due to the breakdown in negotiations.

When asked about the Freshmenu’s self-valuation of 60 Million, a spokesperson from OYO said “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,”oyo rooms

What is Freshmenu?

Freshmenu is a start-up that controls all processes from sourcing ingredients to cooking and delivering food. It is an internet-first cloud kitchen startup. In 2018, Freshmenu had partnered with Zomato when the latter wanted to work on its own cloud kitchen initiative called Loyal Hospitality. They also partnered with Swiggy’s Access programme in order to scale up their business successfully without receiving any kind of upfront investments for them to open more kitchens.

Oyo’s success continues

Oyo recently received a fresh round of series C funding that is worth 1 Billion USD. Their investors include Softbank, Grab, and Didi Chuxing. Ever since the brand has received this funding, they have been on a vigilant lookout for buyouts. Now, it seems as though they have found the perfect company to acquire. Improving their food and beverage services is an organic and great step for Oyo.  

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