Exclusive: Dil Foods In Talks To Acquire Cloud Kitchen Pioneer FreshMenu

Virtual restaurant operator Dil Foods is in talks to acquire Bengaluru-based cloud kitchen brand FreshMenu in a distress sale, sources told Inc42. 

FreshMenu suspended operations nationwide in early April after running into a cash crunch. The company has also failed to pay its vendors and employees for the past few months, the sources said. 

Confirming the acquisition talks, Dil Foods founder Arpita Aditi said that the discussions between the two companies are currently ongoing. She added that the startup has currently entered into a brand licensing and operator agreement to restart operations at select cloud kitchens of FreshMenu.

“Dil Foods has entered into a brand licensing and operator agreement with FreshMenu, allowing us to restart operations at select locations under the existing FreshMenu brand. This lets the brand continue serving customers while we bring our operating platform, supply chain, technology, and restaurant partner network to support its revival,” she said.

“Broader discussions between the two parties are ongoing, and confidential at this stage… what’s in place today is a licensing and operating arrangement, not a company acquisition. On FreshMenu’s prior obligations, the same will continue to be governed by the respective contractual and legal relationships of the parties involved,” Aditi added.

Questions sent to FreshMenu founder Rashmi Daga didn’t receive a response till the time of publication.

Founded in 2014, FreshMenu was one of the pioneers of India’s cloud kitchen industry. The startup offers meal delivery through its network of cloud kitchens across Bengaluru, Mumbai, Delhi-NCR, Kolkata and other cities. 

FreshMenu was severely impacted by the COVID-19 pandemic, like many other restaurants and cloud kitchen brands. Later, it restructured operations, reduced costs, and secured new funding, allowing it to gradually stabilise and expand its kitchen footprint. At its peak, FreshMenu had over 1,100 employees and over 5 Lakh monthly users. 

The company is backed by marquee investors such as Lightspeed Partners, Zodius Capital, Innoven Capital, among others. In 2015, it raised $5 Mn in a Series A round from Lightspeed Partners. A year later, it raised $17 Mn in a Series B round from Zodius Capital, among others. 

The fresh development comes almost two months after Dil Foods raised ₹72 Cr (around $7.7 Mn) in a Series B funding round led by Bikaji Foods Family Office, with participation from V3 Ventures, MJV Ventures, and Alteria Capital. 

Founded in 2022, Dil Foods runs nine brands, including Khichdi Bar, Bihari Bowl, House of Andhra, Junglee Kitchen, Aahar, Dil Punjabi Daily, Bhole ke Chole, The Chaat Cult, Vegerama. The startup partners with local restaurants to cook and deliver food under these brands via apps like Swiggy and Zomato. 

Currently, Dil Foods operates in 340 pincodes across India and aims to expand its offerings to 600 locations by FY28.

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