East Ventures Leads Seed Funding for F&B Company "Legit Group"

The local F&B firm Legit Group announced $3 million seed funding (worth Rp43 billion) led by East Ventures with participation from AC Ventures. Legit Group will use the funds to launch two new brands focused on delivery services with marketing; and expand operations to 135 distribution points by the end of this year.

Legit Group is a multi-brand cloud kitchen conceptor and operator founded by Sumarno Ngadiman, Monica Evanti, and Asrul Abraham Hendrata in early February 2021. Sumarno was previously the founder of Eatwell Group, the owner of a restaurant group network that operates the Ta Wan, Ichiban Sushi, Warung Solo, and Eat and Eat.

Currently, Legit Group operates three brands, Pastaria, Sei'Tan and Juju Chikin which has 45 distribution points. They designed the business by utilizing delivery solutions generating big opportunity during this pandemic.

According to data compiled by Statista, Indonesia is the largest food delivery service market in Southeast Asia with a value of $3.7 billion and accounts for 31% of total deliveries in the region. This value is recorded to grow continuously by 32.5% every year.

In the midst of a pandemic situation, the majority of the global community experienced changes in their consumption behavior of F&B products. Consumer behavior that tends to reduce their intensity to eat and drink out (dine-in) has created great opportunities for F&B businesses that focus on delivery services.

Legit Group's Co-Founder & CEO, Sumarno Ngadiman said, "The DNA of an F&B business that prioritizes delivery is very different from that of an offline or traditional restaurant business, which is why many traditional restaurants find it difficult to compete in the delivery service market.

"The key to the success of a F&B business that focuses on delivery services is being able to create high quality food that has consistent timeliness and remains optimal during delivery and at an affordable price, therefore, customers can make it a part of their daily habits."

He believes that the trend of adopting food delivery services will continue until the pandemic is over. Legit Group's sales have grown 9.5 times since its estabishment, and saw a 61% increase in revenue from June to July.

Legit Group has built strategic partnerships with Ismaya Group, Yummy Corp, and GK Hebat to accelerate expansion and drive business growth strategies. This position allows companies to use its existing infrastructure to rapidly expand operations without large upfront investments.

"This has allowed us to rapidly expand our coverage thereby lowering shipping costs for customers who order our products. We have been in the F&B business for more than 20 years and will use our experience to create the products that customers want while adhering to food handling standards. the best safety," Sumarno added.

East Ventures' Managing Partner, Roderick Purwana said, since the beginning of the pandemic the F&B sector has been significantly impacted due to restrictions on mobility and eating-in activities. They can no longer rely on traditional dine-in sales, they have to include online food delivery services, which is a necessary step to stay afloat.

“Despite being recently launched earlier this year, Legit Group has proven its ability to create unique and attractive F&B brands with impressive growth. Thanks to a very solid team with industry-leading experience for this achievement is,” he said.

East Ventures' operating partner, David Fernando Audy added that Ismaya's role in the F&B industry is unquestionable. Now the concept is being replicated through Legit Group by leveraging their kitchen and network infrastructure with various online initiatives and technology to deliver quality food with great taste and affordable prices.

“At the level of speed and economies of scale it will make Legit Group a great player in the on-demand food delivery business.”

Indonesia's cloud kitchen industry

According to the e-Conomy SEA 2020 report, the transportation and food delivery industry will be worth $16 billion (GMV) by 2025, from $5 billion in 2020. The main engine of the digital economy in this country is still dominated by trade via e-commerce platforms which is projected to worth $83 billion.

The food delivery service ecosystem is also driven by the development of the cloud kitchen industry. In Indonesia, citing the Rise of Virtual Kitchen 2021 report published by Savills Research & Consultancy, the cloud kitchen model currently operating is targeting different consumers from restaurants in malls.

It is estimated that there are 70 cloud kitchen outlets operated by seven players in Jakarta. Ismaya Group, through one of its affiliates, Yummy Kitchen.

-Original article is in Indonesian, translated by Kristin Siagian