AI on the menu: Rassense's bold bet in India's ₹25,000-cr food services market

Artificial Intelligence (AI) is rapidly transforming India’s food industry -- from food production to retail, and delivery -- by manifold improvement in efficiencies. And companies like Bengaluru-based Rassense Private Limited are at the forefront of this transformation. Leveraging AI and automation has helped Rassense emerge as one of the largest domestically owned food services companies in India. From predictive analytics to IoT-enabled waste bins, it is betting big on AI to scale in low low-margin corporate food services industry.

Sanjay Kumar, MD & CEO of Rassense, in an exclusive conversation with Fortune India, says the company is focusing heavily on the predictive aspect of AI, SAP-built enterprise architecture, which improved efficiency and helped keep a check on inferior material, particularly Friday deliveries, and festive deliveries.

The doubling down on AI has helped Rassense reduce rejections in real-time, which used to happen after a week or even a month. “For example, we make about 3,30,000 meals a day across the country. The data is fed into a digital platform built in-house and goes into analysing trends through predictive AI, which alerts when a spike will be seen and using that, we start vendor negotiations.”

Global AI use in food and beverages is seeing growth at a CAGR of 39.1% between 2024 and 2030, and India is at the centre of this change. Experts feel the new-age technology could have an immense impact on improving waste and food security.

For the fiscal year ended March 31, 2025, the company recorded a 29% year-on-year surge in revenue at ₹471 crore, and is targeting ₹564 crore plus revenue in FY26. In FY25, its EBITDA margins stood at 3.6%.

The food business is one of the trickiest businesses, where even a small percentage of rejection has a huge financial impact, especially in corporate food services. That's why, says Kumar, Rassense is heavily using AI in waste management as well. Its IoT-enabled waste bins provide real-time data to users on food wastage. As contracts are fixed-price, timely measures are important to keep margins in check. “While food is our business, our profitability lies in minimising waste,” says Kumar.

Besides, Rassense is also working on correlating consumption patterns to menus. “To understand which flavour is accepted where, impact on consumption and how the re-engineered menu looks, we've flagged off this process 6-8 months ago and expect menu analysis and patterns around to roll out next year.”

On the menu side, Kumar says leveraging AI has helped it gather data points to see how many items in a menu are being consumed and correlate that to consumption patterns. “We are working on it. It is very complex. So, the idea is to start with three sites initially and see if it works.”

India’s food service industry is estimated to be about ₹22,000-25,000 crore, but it’s fragmented because of mom-and-pop businesses dominating the sector. The corporate food services are largely dominated by two companies, Sodexo and Compass, which command a lion's share. That’s where Rassense comes in. This is the first time in India that an Indian corporate catering company crossed the Rs 300 crore revenue, shares Kumar. “The last time this happened was when RKHS was bought by Compass and then Compass exited the JV and Sodexo bought it out."

The corporate food service segment, in which margins are generally low, has suffered after the government removed the input tax credit introduced when GST was launched in 2016, which eroded 50% margins. “Unfortunately, I never built for a customer. I built for Maruti Suzuki, Tata Motors, and Ashok Leyland. But I'm treated like a restaurant,” rues Kumar. Consequently, more Indian companies sold out to the foreign players, he said, adding that somehow 'Make in India' didn't help the company but challenged them to find different ways to survive.

Kumar feels it can help formalise the agrarian economy if input tax credit is provided to the segment, as more formal capital will flow into the sector. “The reason we can come out of that is mostly by relying a bit on technology. But, of course, we are explaining to the authorities that it would really help if this input tax credit were given for this business."

Kumar, however, agrees that AI can help, but can't be the solution to all problems. That's why his company is focusing on other key areas such as building the right culture and removing unnecessary barriers. Rassense's '360 Degrees' initiative allowed everyone to get feedback about themselves, including Kumar. "Some of it was quite nasty, but I had to share it with my team because I wanted to build that culture. It wasn't easy. For instance, I always believed I was doing a great job—I was the CEO, after all. Naturally, I assumed I must be very good. But then I started hearing things like, "Yeah, you’re the CEO, but you’re quite reactive,” or “You don’t always make decisions after considering all the facts."

Everyone started sharing the feedback, which built trust and transparency, reveals Kumar. "Gradually, we reached a point where issues began to be discussed in the meeting room rather than whispered about in the coffee room. Building that kind of culture was far more difficult than driving revenue or improving margins. But if you get the culture right, those results will eventually follow."

He says another big change the company made was abolishing expense approvals. Earlier, there were people whose sole job was to scrutinise travel expenses—checking what ticket you booked, which hotel you stayed at, and whether it was too expensive. "We scrapped that and introduced a tech platform called Effortless. The system is linked to our SAP code. All these cultural changes helped us to secure a very entrepreneurial culture."

Despite tight margins, the company also offers equity to employees, because of which 4,000 families and around 15,000 human beings are benefiting, says Kumar, adding that it's all part of building an organisation that takes pride in what they're doing. "The idea of divesting equity came from the fact that we do not want the executive committee of this company to change phases. For clients, this is a big reassurance if you're going to stay. Almost all tech companies do it. We are not in the business of food. We are in the business of technology. Food is the medium. Ultimately, even for taste, you use technology."

Almost 30% of the company's EBITDA margin gets wiped out because of IT, AI, IoT, and automation, Kumar says. "But that’s the price we pay to survive and build trust in an industry where no food services company in India has ever been audited by a Big Five."

His long-term vision for the company is to create value for its employees. "If we respect each other, our clients will respect us. Plain and simple." Over the next two years, he sees the company strengthen its corporate food services and healthcare verticals, and then it aims to explore adjacencies like defence, railways, or restaurants. On his thoughts on fundraising and IPO, Kumar feels Rassense will aim for equity dilution once it repays the debt and builds strong net worth. He says the objective of an IPO can't be just to list but to "fix the basics and build a legacy, and then the IPO will follow naturally".