This startup is disrupting the QSR model with AI- & IoT-driven kitchen tech

Set up in a college hostel back in 2014, Mukunda Foods has sold its products to about 6,000 restaurants that make Chinese, South Indian, Mughlai and other genres

In 2022, when Zomato acquired 16.6 per cent stake in food robotics company Mukunda Foods, everyone wanted to know more about this firm. The investment led by Zomato valued the company at $30 million. It was also seen as a push for Zomato's pursuit of delivering fresh food in 10 minutes. That pilot has been closed.

Rather many of the quick commerce players have shelved their instant food pilots or the time to deliver has gone up from 10-20 minutes to 20-30 minutes.

Mukunda with its robotics and automated cooking tech was supposed to be at the forefront but that has changed now.

However, co-founder Eshwar K Vikas is not much fazed by the fast changing dynamics of the industry.

“Our business is not dependent on zomato buying machines. Our business is dependent on restaurants that buy them,” he tells Business Standard.

He further explains, “Quick commerce is under question not just in food, but even in groceries, not because the model does not work but because the economics don't work. Even Zepto was doing 10 minutes, now they do 25-30 minutes. Blinkit was doing 8-10 minutes, now they don't officially say its not 8-10 minutes, but it is 20-25 minutes or 30 minutes.”

Early start

The story of Mukunda Foods is quite interesting. The business was started with an ambition to disrupt the QSR model, but pivoted also in manufacturing automated food machines.

Vikas and his batchmate Sudeep Sabat established Mukunda Foods in their hostel room at the SRM  Institute of Science and Technology, Chennai: "McDonalds is the biggest player in the QSR space globally, with some 40,000-odd outlets. Dominoes and Pizza Hut have roughly 18,000-20,000 each. But even the largest Indian F&B brand has no more than a paltry 150-200 outlets."

The firm has a third cofounder in Rakesh Patil, who is also the CTO, and who was at one time working on the Tejas aircraft.

Vikas spotted an opportunity here, because, "though Indian food is loved everywhere, not a single brand could be regarded as even pan-India, let alone having a global presence".

So he and Sabat started Mukunda Foods with the aim of selling just 3-4 items in a 'McDonaldalised' set-up--a nice looking QSR, bright lights, smart looking staff, the works. The first outlet was set up in Chennai in 2012-13, when the two were still studying. It sold idli, dosa and vada that people could order on the go and take out fast.

"When the first joint did well, we set up the second and then the third in our bid to build 1,000 outlets. But as soon as we got past the second outlet, things began getting difficult as we lost focus on quality, and customers were very dissatisfied," says Vikas. "We realised this problem stemmed from our being very people-dependent instead of being process-dependent. If the chef was in a good mood, the dosa or idli would turn out well, not otherwise."

The unforeseen transition

Brands like McDonalds thrive because of the standardisation they have managed to get across their menu. Go to any McDonalds store and the food tastes the same.

"That's when I realised that in order to get that kind of consistency, we'd have to move from people-dependency to process dependency--from a 'traditional' attitude to having a 'shop floor' attitude," says Vikas.

But it was here that he encountered a hurdle. Vikas claims automated south Indian food processing machines weren't available globally and some of the country's top engineering colleges that they approached weren't inclined to work on one. So he and Sabat decided to develop automated food processing machines on their own, given their engineering background.

"The tech had to be local. You don't expect an Italian company to make a dosa machine--they can make a coffee machine yes, but not dosa," he quips.

The duo began working on its first machine, the dosamatic, upon graduating in 2014. Two years later they set up the machine at their own outlets. Their success made several restaurants reach out to them.

"We then realised that the problem is universal and had little to do with our being engineers and not seasoned F&B players. Besides, the problem wasn't limited to dosas but extended to Chinese, Mughlai, Continental and other genres," says Vikas.

That's when the duo decided to change tack and focus solely on selling the machines.

"Handling two different lines of business--food and machines, no matter how well integrated--was a tall order," says Vikas. "Long story short, we've automated cuisines across the board from South Indian, to Oriental to biryani at 5500-6000 restaurants. Burger Singh, and Bercos in Delhi NCR use our machines. Haldiram Nagpur is already using them, and Haldiram Delhi is likely to start soon."

Vikas claims Mukunda foods sold about 2,000 machines, even in tier-2 and 3. About 75-80 per cent of the business comes from medium and standalone restaurants. "We have set up the country's largest kitchen tech manufacturing plant with an installed capacity of 25,000 machines in Bengaluru," he claims.

What's so special about the machines? Speed, economy, yield. The dosamatic alone churns out a dosa a minute, or 60 in an hour. All Mukunda machines also reduce dependency on manpower and improve yields.

"For instance, one kg of uncooked rice along with a proportionate amount of meat or veggies will give you 2.25-2.5 kg of biryani cooked traditionally, once done. But in the automatic machine, with precise temperature and moisture control, you can get up to 3-3.5 kg," says Vikas. What's more, the Rico (Mukunda's branded rice cooker) takes less space and is economical. Vikas claims Mukunda Foods is currently selling 50-60 Rico cookers every quarter--within six months of launch.

Use of AI and IoT. Vias explains this with the example of a Wokie, a Mukunda product for oriental cuisine. "You will have your unique flavour, recipe and taste right? You need to differentiate else why would patrons come to you? So what wokie does is that it uses the tech layers built on it to learn your recipe. In fact, it will adapt to your cuisine/recipe in 4-5 minutes flat," he says.

He elaborates: "Which is why a Bercos fried rice will taste different from a Little Chef or Delhicacy (which has a more street food kind of flavour). The same machine can adapt to either of these three establishments.

The machines cost anywhere from Rs 35,000 for a Samosa fryer to Rs 2.5 lakh for a Wokie as it is capable of making a wide array of dishes such as a wide array of noodles, rice, paneer butter masala, chicken gravies, and pastas. A Rico costs Rs 80,000 or thereabouts.

Financials and funding

Vikas says Mukunda is at a Rs 24-25 crore annual revenue run rate right now, and is eyeing financial break-even in the current fiscal. "We've recently expanded to Chennai, Hyderabad, Kolkata, Pune, and Ahmedabad, so there has been some cash burn. Which also explains why we haven't broken even yet.

Most of its revenue comes from the domestic market, with exports accounting for just 15 per cent of the pie. Vikas says he isn't fixated on the 'exporter' tag, as the Indian market is huge, with about 2.3 million GST registered restaurants. "We haven't even scratched the surface," he quips.

The firm raised Rs 20 crore in a seed round from the Indian Angel Network back in 2018. Some of the investors included S K Munjal (Hero family office), Sanjeev Bhikchandani of Info Edge, Anupam Mittal of Shaadi.com and Rakesh Malhotra Of SAR group. Vikas says Malhotra later gave an exit to all IAN investors and supported the company with over Rs 28 crore in funding. Last year, Zomato put in $5 million in a Series A round.

Mukunda Foods has no further fundraising plans for the moment and hopes to use its internal cash flows to finance further expansion.