- OYO will add in-house kitchens and Townhouse Cafe9/QSR carts to 1,500 company-serviced Townhouse hotels in India by FY2026.
- A 100-hotel pilot launched in January 2025 across Delhi, Bengaluru, Hyderabad, and Gurugram drove the decision to scale.
- Management targets a 5 610% per-hotel revenue uplift, though profitability hinges on execution, standardization, and cost control.
- The rollout supports OYOs premiumisation push and plan to raise company-serviced hotels share of booking revenue from ~22% to ~44% by FY26.
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OYO’s foray into food & beverage (F&B) via in‐house kitchens, Townhouse Cafés, and QSR carts is a clear strategic pivot designed to enhance revenue per hotel and improve guest experience. The pilot across 100 hotels in Tier-1 cities revealed sufficient promise—recognition both operationally and by customers—leading management to commit to a large-scale rollout covering 1,500 company-serviced properties by FY 26. This is concurrent with OYO’s broader premiumisation strategy and expansion of its company-serviced portfolio, which it expects will contribute nearly half of its booking revenue in India by that same period.
Revenue uplift expectations of 5-10% per hotel are material if achieved: for hotels operating on lean room rates, F&B can meaningfully augment margins. However, the scale and profitability of this endeavor depend heavily on kitchen setup (from full commercial kitchens to pantry-style), geographic location, guest mix, and effective cost controls. A mismatched investment in infrastructure (for instance, overbuilding kitchens in properties without sufficient foot traffic) presents execution risk.
Further strategic implications include competition intensification in hotel F&B offerings, especially in Tier-2/3 India, where branded dining is sparse. OYO’s ability to source expertise (hiring F&B experts in major cities) and standardize offerings under the Townhouse-centric brands will be key differentiators. It may also pressure smaller independent hotels who may struggle to match quality or scale. Additionally, enhancing guest stickiness via improved amenities may support OYO’s premium brand shift and reduce customer churn.
Open questions include: Will OYO maintain food quality and consistency across diverse properties? How will margins fare given variable infrastructure costs, staffing, supply chains, and regulatory compliance (e.g., food safety)? To what extent can F&B operations be profitable versus just additive revenue? And finally, how will OYO measure success beyond revenue—guest satisfaction, occupancy uplift, ancillary spend, cross-selling, and brand perception?
Supporting Notes
- OYO intends to introduce in-house kitchens and QSR carts at 1,500 of its company-serviced hotels under its Townhouse by OYO brand by fiscal year 2026.
- The pilot programme commenced in January 2025, covering 100 company-serviced hotels located in Delhi, Gurugram, Hyderabad, and Bengaluru.
- Depending on hotel infrastructure and profile, setups range from full commercial kitchens to pantry-style kitchens; ready-to-eat and grab-and-go options via Townhouse Café will also be deployed.
- Projected revenue increase at hotel level is estimated at about 5-10% once operations are stabilized.
- OYO is investing in building a network of F&B experts in multiple Indian cities: Delhi, Mumbai, Bengaluru, Hyderabad, Pune, Indore, Kolkata, Jaipur, Lucknow.
- As part of its broader strategy in India, OYO is aiming to double its company-serviced hotel booking revenue contribution from ~22% to ~44% by FY 26, expanding the number of such hotels and entering more cities.