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The Singaporean startup that ran a cloud kitchen before they got popular

Written by Vulcan Post Published on   4 mins read

While cloud kitchens rent their space to F&B companies as a cheaper way to make food for their on-demand delivery customers, Grain works with its own chefs, menu and delivery team.

“We were one of the very first few cloud kitchens that served customers without a storefront back in 2015. This was before the terms ‘cloud kitchen,’ ‘ghost kitchen,’ or ‘dark kitchen’ even existed,” said Yi Sung Yong, CEO and co-founder of Grain Singapore.

In 2014, the Grain team found themselves asking the same question every single day: ‘What do we eat today?’ It is a first-world problem and along the same vein, everyday eating should be as easy as a few taps on your phone—not some brain-cracking math question. This sparked the idea for Grain to be online-first.

Sung, together with three other co-founders—Ernest Sim, Gao Rifeng, and Isaac Tan—launched Grain in 2014. Their aim is to offer health-conscious, taste-conscious and everyday meals, working with their own team of chefs and delivery fleet in a so-called “full-stack” model.

Most food tech startups like foodpanda and Deliveroo partner restaurants to deliver cooked meals to customers. Grain’s co-founders went for a different approach. They adopted a cloud kitchen model—utilizing unwanted real estate space as kitchens.

While cloud kitchens rent their space to F&B companies as a cheaper way to make food for their on-demand delivery customers, Grain works with its own chefs, menu and delivery team. Their menu is designed by in-house chefs, and the platform features shared meals for groups, as well as meal box combos that come with sides and drinks. A regular meal costs from SGD 10.95 (USD 8.07) while their combos cost from SGD 16.95 (USD 12.49).

Besides individual meals, the startup also serves buffet catering for corporate events and parties during pre-COVID-19 days. These dishes are also developed by their R&D team and chefs. Users can place their orders via the website or mobile app through a standard e-commerce platform process. All food is prepared and packed inside Grain’s own facilities, then delivered to customers by their own fleet of couriers.

Photo courtesy of Grain via Vulcan Post.

They started the business with less than SGD 100,000 (USD 73,700) and after a year, Grain crossed the SGD 1 million revenue run rate. This is no mean feat as among the four co-founders, only one of them has F&B experience and is a chef.

Isaac had managed 4 different restaurants under the WWW Concepts Group at the age of 25 and is the main creator of the dishes on the menu. Albeit achieving success early into the business, Sung said that they faced challenges.

They received their very first external funding in January 2016—a SGD 2.5 million (USD 1.84 million) Series A round led by Openspace Ventures. Another Series A round was called at the end of the year and Openspace Ventures participated again injecting an additional SGD 1.7 million (USD 1.25 million). The four young gamechangers—their current average age is 32—soon received recognition and landed themselves on the Forbes 30 Under 30 List in 2016.

Photo courtesy of Grain via Vulcan Post.

While a full-stack model allows them to control everything, it also presented challenges. They were initially hamstrung by a small team of staff, and operated from a home kitchen. When it upgraded to a sprawling new office fitted with an industrial kitchen in 2017, Grain had to quickly adapt its processes. Subsequently, a venture round in February 2018 led by First Gourmet, FoodXervices, and Majuven raised them another SGD 1.7 million.

By December 2018, Grain achieved profitability, which was “a huge milestone for [them], because it proves that [they] have what it takes to be a sustainable company.” Their latest round of Series B funding in May 2019 raised USD 10 million led by Thailand’s Singha Ventures.

Grain was delivering “thousands” of meals per day in Singapore—its sole market—with eight-figure sales per year, Sung shared in a 2019 interview with TechCrunch. Growth reached 200% in 2018 and it was soon time to spread their wings overseas. The startup began looking to expand to other Asian cities, starting with Bangkok.  The funds raised would enable them to work with Singha to leverage its extensive F&B network across the country, including logistics and distribution.

By then, the 2019 funding round and business growth ranked Grain fifth among Singapore’s fastest-growing companies, according to a study conducted by The Straits Times and Statista.

Grain team in 2016. Photo courtesy of Grain via Vulcan Post.

In May 2020, Grain made its entrance into Thailand and opened three new branches in Bangkok in July. They also embarked on five new projects: Wokaholic (American-Chinese food), Hot Chick Buns (chicken-centric fast food), Holy Kao!, Krua Soi 9 (Thai favourites), and Fareground (a virtual food hall).

Sung, who is Malaysian, shared that, during COVID-19, “B2B took a big hit with offices going remote, but B2C experienced tenfold growth during this period.” Grain also quickly saw an opportunity to utilize their cloud kitchens to make bubble tea when standalone bubble tea stores were ordered to close. With the pandemic causing the closures of F&B establishments everywhere, cloud kitchens have emerged as a F&B alternative as the industry adapts to shifting consumer demand.

Just as co-working and shared office spaces have been touted as possible solutions for companies to provide the option of flexible office space once the crisis subsides, shared cloud kitchens could also help ease the financial burden on restaurants when it comes to renting kitchen space.

In addition, the expansion of cloud kitchens could help pick up the slack created by in-house restaurants being forced to close as a result of the economic fallout of the virus.

The next projects on their plate: launch high-quality brands with a lot of customer love and productize their restaurant tech stack, Grain Atlas, that wants to become the “operating system” of F&B. “We will also open up new cities slowly when we feel we are ready to provide a great customer experience,” said Sung.

This article was originally published by Vulcan Post


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