East Ventures Leads Early Stage Funding of F&B Company "Legit Group"

Local F&B firm Legit Group announced a $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 brand new marketing-focused delivery service; and expand operations to 135 distribution points by the end of this year.

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

Currently, Legit Group operates three brands, namely Pastaria, Sei'Tan and Juju Chikin which have been spread over 45 distribution points. They designed their business by utilizing delivery solutions that are getting a 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 continue to grow 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 outside (dine-in) has created great opportunities for F&B businesses that focus on delivery services.

Legit Group Co-Founder & CEO Sumarno Ngadiman said, the DNA of the F&B business that prioritizes delivery is very different from the restaurant business. offline or traditional, which is why many traditional restaurants struggle 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 so that 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 inception, and saw a 61% increase in revenue from June to July alone.

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 their 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 customers want while adhering to food handling standards. the best safety," added Sumarno.

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

“Despite only being launched earlier this year, Legit Group has proven its ability to create unique and attractive F&B brands with impressive growth. This achievement is thanks to a very solid team with industry-leading experience,” 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 that will make the Legit Group a great player in the online food delivery industry (on-demand food delivery business).”

Industry cloud kitchen in Indonesia

Menurut report e-Conomy SEA 2020, 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 the country is still dominated by commerce via e-commerce platforms which is projected to be worth $83 billion.

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

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