Indonesian cloud kitchen startup Legit banks $3m seed funding

Legit Group, an Indonesian cloud kitchen startup offering several delivery-only restaurant brands, has raised 43 billion rupiah ($3.02 million) in seed funding. East Ventures led the round, with fellow Jakarta-based VC firm AC Ventures joining.

‘Virtual restaurant’ Legit was launched in February this year as a joint venture between Yummy Corp — which claims to be Indonesia’s largest cloud kitchen management platform — business accelerator GK Hebat, and hospitality company Ismaya Group. The startup says it wants to become “the leader in creating delivery-first food and beverage brands in Southeast Asia.”

It offers three brands for delivery: Korean fried chicken by Juju Chikin; Italian-Japanese fusion food from Pastaria; and Sei’Tan, which serves the regional delicacy of Timorese barbecue. The startup works out of 45 distribution points across the Greater Jakarta area, selling dishes via food delivery apps such as Gojek and Grab.

In a statement, Legit said it will use the seed funds to launch two more brands and add another 90 distribution points by the end of this year.

As AFN has previously reported, the Covid-19 pandemic  served as a major catalyst for ‘contactless’ food retail technologies and business models. With consumers either under lockdown, or reducing their time in public places to avoid potential exposure to the virus, demand for services such as meal delivery and e-grocery skyrocketed.

Indonesia’s on-demand food delivery market is estimated to be worth $3.7 billion, and is projected to grow at a rate of 35% year-on-year. The pandemic has only accelerated that trend, according to Legit co-founder and CEO Sumarno Ngadiman.

“We believe this trend will stay even when the pandemic ends. The DNA of operating a delivery-first F&B business is completely different from the traditional offline restaurant business, which is why many offline restaurants have struggled to compete in the delivery market [amid Covid-19],” he said in a statement.

“The key to success for a delivery-first F&B business is to be able to create time-conscious, consistent, high-quality food that stays optimal during the delivery process – and price it affordably.”

Legit claims that since it launched in February, its sales have grown almost 10x. Between June and July, it reported a 61% increase in revenue.

Ngadiman said that Legit’s strategic relationships with Ismaya Group and Yummy Corp will enable it to expand more rapidly than some of its peers, without the need for large upfront capital expenditure.

“This allows us to widen our coverage quickly, lowering the delivery charges and providing a better overall experience to the customers. We have been in the F&B business for more than twenty years and we will be able to draw on our experiences and create the products that customers want with the utmost standard of food safety and handling practice,” he said.