With $1 billion in its pocket, OYO has been on an acquisition spree in 2019. After Innov8 and Keys Hotels, the company is now involved in due diligence of FreshMenu.
The deal is slated to be worth $50-60 million and will be finalised only after the due diligence is completed.
For FreshMenu, this is not the first time it has tried to sell its business to a larger startup. It had previously been in talks with Zomato, Ola, Swiggy, Eat.fit, and Faasos as well. These conversations didn’t go through due to a mismatch in pricing expectations where FreshMenu was looking at a figure up to $60 million.
Still, the company had been looking to make this sale for a while as it was failing to achieve scale even with no lack of funds.
OYO Rooms is looking at this deal as a means to standardise its food and beverage services in its hotels and increase margins and the revenue share from that segment. Till now, the company had partnered with Zomato, Loyal Hospitality, and Swiggy for the same, and had earned 25 per cent of its revenues from this function.
With FreshMenu acquisition, the company can provide food to the customers via cloud kitchens and upscale its culinary design and food experience.
The deal seems to have been facilitated by Lightspeed Ventures that own a stake in both the companies. In OYO, the ventures own 11 per cent, while owning 30 per cent in FreshMenu, as reported in ET.
Out of $1 billion funding in OYO Rooms, $200 million was also achieved by the help of common investors. Grab and Didi Chuxing both shared SoftBank as a common investor with India’s largest budget hotel chain.