December 7, 2022

meatatoneills

The Food Universe

Indonesia’s Hangry Raises $22 Million Debt, Equity

  • Indonesian cloud kitchen startup Hangry has raised $22 million in debt and equity funding.
  • The firm says it has grown amid COVID-19 lockdowns and growing uptake of delivery apps.
  • Hangry has 84 outlets in six cities, and expects to have 132 outlets across 10 cities by the end of 2022.

In the middle of March 2020, when the Indonesian capital city Jakarta went into lockdown, local startup Hangry saw its revenue slashed by a third, CEO Abraham Viktor told Insider.

Hangry is a “virtual restaurant” startup, cooking and serving food from commercial kitchens, primarily for delivery apps like Southeast Asia’s Grab. The idea is to tap into the huge demand for food delivery without taking on all the costs associated with owning and operating a physical restaurant in a tony location.

The Jakarta-based startup, which was only about four months old, had relied on Indonesia’s booming food delivery networks. It owns and operates several brands catering different cuisines such as Japanese beef rice bowls, Indonesian food, and Korean fried chicken.

As COVID-19 tore through the city in early 2020, Jakartans cut down on online food orders as they wanted to avoid being infected by deliverers and drivers. “We’ve never seen a threat during our existence, because we were so new — it was always an upward trend for us,” said Abraham. 

The trend eventually reversed, Abraham said, in keeping with the likes of Uber and Deliveroo in the UK reporting booms in food delivery orders as, bored with home cooking, people under lockdown turned to apps. 

“And that was when we all felt relieved, thinking: ‘We can still exist,'” he said.

Indonesia is the fourth most populous nation in the world, and the tenth largest economy in purchasing-power parity terms with a fast-growing middle class, according to World Bank estimates.

Hangry occupies a space in this wider ecosystem that it says is relatively uncontested, as “there hasn’t been a very strong incumbent cloud kitchen player in Indonesia, especially when you compare it to established food and beverage markets like the US,” said CFO Wenyou Tan.

In addition, Hangry caters only for the brands it owns, instead of allowing other restaurants to use its facilities and services, Tan and Abraham said. This way, it’s a “full-stack” player that not only runs its own operations, but also manages its own brands. It has also begun serving customers in its first dine-in restaurants, they said.

Investors put $22 million into the firm in mid-April through a mix of equity and debt funding, bringing Hangry’s Series A funding to $35 million, according to a release from one of Hangry’s investors. The equity funding portion was led by new investor Journey Capital Partners, with participation from Orzon Ventures, Sassoon Investment Corporation (SassCorp), and other existing investors including Alpha JWC Ventures as one of its first institutional investors.

With the investment, Hangry will buy up food and beverage brands in Indonesia, said Abraham. So far, it’s been able to gobble up brands to diversify its offerings, he said. As recently as January, it had only four brands, and three months on, that’s expanded to seven, bringing in Indian cuisine and a pizza outlet, Abraham said.

The startup is also investing into its customer service.

“If you’re in a restaurant and there’s something wrong with your order, you can just raise your hand and someone will come to you. But for cloud kitchens which rely on food delivery, it’s really hard to complain,” he said, adding: “Recognizing that, we make sure that for customers to complain, it’s very, very easy.”

Hangry currently has 84 outlets throughout six cities in Indonesia. By the end of 2022, it expects to have up to 132 outlets across 10 cities and food categories.

“The more categories we’re in, the more tummy share we get,” said Abraham.

Check out the pitch deck Hangry used for its latest funding round below: