The Theobroma Takeover: What ₹2,410 Cr Deal Means for India’s Booming Dining & Cafe Sector?

Ashish Dhawan-founded Indian private equity (PE) firm ChrysCapital is soon likely to seal the 90% stake deal worth ₹2,410 crore by acquiring homegrown bakery chain Theobroma. The local PE firm has entered into an agreement to buy a 90% stake from Theobroma’s promoters and investor, ICICI Venture, which commands an over 42% stake in the bakery chain, the Economic Times reported. 

While ChrysCapital is reportedly likely to emerge as the winner in the stake sale race, others who eyed the piece of the Indian bakery chain, included Bain Capital, Carlyle, and the Khorakiwala family-owned Switz Group. ICICI Venture had acquired the stake in Theobroma for ₹130 crore in 2017.

How Two Sisters Grew Theobroma into a Nationwide Brand?

The Bombay-based bakery chain was founded in 2004 by Kainaz Messman Harchandrai along with her sister Tina Messman Wykes with over ₹1 crore investment, which they borrowed from their father. Gradually, the duo scaled operations from their home kitchen to a pan-India bakery powerhouse with 78 outlets across major cities in the country, including Mumbai, Delhi and NCR, Pune, Hyderabad, and Bangalore. What set Theobroma apart is the fact that when the sisters' duo had decided to start the bakery chain, the cafe and bakery scene in India was still at a nascent stage even in bigger cities. 

“We set out on this journey agreeing to make only what we liked to eat. We promised to make it well and keep it simple. Our business has evolved, as have we. We didn’t have it mapped out,” Kainaz had earlier said, the Financial Express reported.

What it Means for Indian Dining & Cafe Sector? 

Although the deal is to be sealed at a price lower than the original valuation of ₹3,000 crore, the arrangement is still likely to set an example for the revival of high-value transactions in the Indian dining and cafes sector, which is experiencing a boom in scale and size. 

“Even though the Theobroma deal has been signed at a lower valuation compared to what was brought on the table first, it’s being seen as a precedent for revival of high-value transactions in the dining and cafes sector,” ET reported, citing people aware of the development. 

The development is significant for the Indian food service sector, comprising both dining and cafe businesses, which is projected to grow from $93 billion in 2024 to $1.2 trillion by 2030, according to a report by Indusfood and Bain & Company. The growth of the sector is fueled by factors like rising income, urbanisation, younger demography, and the e-commerce boom. 

Another study done by the National Restaurants Association of India last year revealed that the sector, which contributes around 1.9% to the country’s GDP, is set to grow from ₹5.69 trillion in 2024 to ₹7.76 trillion by 2028. 

Besides Theobroma deal, the local PE firm is reportedly in talks to buy food-based chain The Belgian Waffle Co., signalling its appetite to invest in the sector. 

Apart from Theobroma’s stake sale, other such deals too have made headlines in April this year, signaling a revival of merger and acquisition (M&A) transactions in the dining and cafes sector. KFC franchise firm Devyani International acquired over 80% stake in Sky Gate Hospitality for ₹419.6 crore. The acquisition included three brands of Sky Gate, like Biryani By Kilo, Goila Butter Chicken, and The Bhojan. 

Similarly, another transaction that became the highlight for the sector was when the quick service restaurant chain WoW! Momo raised ₹150 crore from Haldiram’s promoter Kamal Agrawal and Malaysian sovereign wealth fund Khazanah Nasional in a bridge funding round. 

These developments highlight the broader buzz around the Indian dining and cafe sector, particularly a revival bet on M&A related transactions.