Industry Veteran Sabbir Ansari Brings India's First Chef-led Cloud Kitchen Brands

The Indian food industry is changing fast. People now prefer ordering food online instead of dining out. Cloud kitchens have emerged as a game-changer in this space. These kitchens operate without a dine-in facility and focus only on food delivery. They help restaurant brands save money on rent, staff, and other costs.

In India, major players like Rebel Foods, EatClub, Biryani by Kilo, and Curefoods are leading this revolution. With rising demand and technology-driven operations, cloud kitchens are reshaping the restaurant industry.

Know more: How to Start Your Own Restaurant Business

What is a Cloud Kitchen?

A cloud kitchen is a commercial kitchen that prepares food only for delivery. Unlike traditional restaurants, they do not have a dining area or waiters. They rely on online food delivery apps like Swiggy and Zomato to reach customers. Cloud kitchens offer low-cost business models and help food brands scale up quickly.

There are different types of cloud kitchens:

Type	Description	Example Brands
Single-brand kitchen	Operates one brand per kitchen	Faasos, Behrouz Biryani
Multi-brand kitchen	Hosts multiple brands under one parent company	EatClub, Curefoods
Franchise cloud kitchen	Operates under a franchise model	Biryani Blues, Wow! Momo
Aggregator kitchens	Third-party spaces leased to restaurant brands	Swiggy Access, Zomato Infrastructure Services

Read more: Maximize Your Restaurant Profit Margin with these Proven Strategies

The Indian Cloud Kitchen Market: Growth & Potential

The Indian cloud kitchen market is experiencing rapid growth, driven by the increasing demand for online food delivery and changing consumer preferences. In 2023, the market was valued at USD 969.5 million, and it is estimated to reach USD 1.13 billion in 2024. Analysts suggest that the market could even surpass USD 2 billion by 2024. Looking ahead, the industry is projected to grow at a CAGR of 13.2% between 2024 and 2032, reaching approximately USD 2.948 billion by 2032. Some reports indicate an even higher CAGR of 16.66% through 2030. The rise of cloud kitchens is fueled by cost-effective business models, reduced operational expenses, and the growing preference for food delivery over dine-in options. With strong investor interest and technological advancements, the Indian cloud kitchen market is set for significant expansion, making it one of the fastest-growing segments in the food service industry.

Also Check: Restaurant vs. Café:  What Truly Sets Them Apart?

Is Frozen Food a Health Hero or Hidden Villain? The Shocking Truth Revealed!

Why Cloud Kitchens are Disrupting the Indian Restaurant Industry

1. Lower Costs, Higher Profits

Traditional restaurants spend lakhs of rupees on rent, interiors, and staff. Cloud kitchens cut these costs and focus only on cooking and delivery. Cloud kitchens operate at lower costs while earning similar or higher profits than dine-in restaurants.

2. Fast Expansion & Scalability

Cloud kitchens help brands expand quickly. A restaurant that needs ₹50 lakh to set up a new outlet can start multiple cloud kitchens with the same money. For example, Rebel Foods started with a single brand, Faasos, and now operates 50+ brands across multiple cloud kitchens.

3. Tech-Driven Efficiency

Cloud kitchens use AI and data analytics to:

• Predict demand based on customer preferences
• Optimize kitchen operations
• Manage delivery logistics effectively

This data-driven approach helps them reduce wastage and improve food quality.

Also check: Is Frozen Food a Health Hero or Hidden Villain? The Shocking Truth Revealed!

Top Players in India’s Cloud Kitchen Revolution

Several startups and food brands are leading the cloud kitchen revolution in India. These brands are using technology, branding, and operational efficiency to dominate the cloud kitchen space.

Brand	Parent Company	No. of Kitchens	Funding Raised
Rebel Foods	Faasos, Behrouz Biryani, Oven Story	450+	$700M
EatClub	Box8, MOJO Pizza, Itminaan Biryani	2000+	$80M
Curefoods	EatFit, Yumlane, Nomad Pizza	1500+	₹350 crore
Swiggy Access	Multiple restaurant brands	100+	Part of Swiggy

Challenges Cloud Kitchens Face in India

Despite the growth, cloud kitchens face several challenges:

• High dependency on food aggregators – Swiggy and Zomato charge 25-30% commission, making it harder for cloud kitchens to profit.
• Brand visibility – Without a physical store, it’s tough to build customer trust.
• Quality control – Maintaining consistent food quality across multiple kitchens is challenging.
• Customer retention – Since people can’t walk in and experience the brand, customer loyalty is lower.

Many cloud kitchen brands are now focusing on direct orders via their websites and apps to reduce reliance on aggregators.

What’s Next? The Future of Cloud Kitchens in India

• AI & Robotics in Food Preparation: Some brands are testing robotic kitchens to automate food preparation. This ensures speed, hygiene, and consistency.
• Direct-to-Customer (D2C) Models: Many cloud kitchen brands are building their own ordering platforms to avoid paying high commissions to food aggregators.
• Focus on Sustainability: Cloud kitchens are adopting eco-friendly packaging and reducing food wastage to attract environmentally conscious customers.

Is Cloud the Future of Food?

Cloud kitchens are changing the Indian restaurant industry. They offer lower costs, better profits, and faster scalability than traditional restaurants. Despite challenges, they are expected to dominate the food delivery market in the coming years. For entrepreneurs, this is the best time to invest in a cloud kitchen model. With the right branding, technology, and strategy, cloud kitchens can redefine the future of food in India.

 

Have you ever imagined if there are any new age cloud kitchen brand which revolutionizes the food industry? Now, turn your imagination into a reality with ‘Speed Kitchen’ which is a ‘Co-Working Cloud Kitchens’ also known as ‘Delivery only kitchens.’ Sounds interesting right?

The Speed Kitchen is a plug-and-play, fully hygienic, and ready-to-move-in model. It's open 24/7 and 365 days a year. It is a vibrant hub created in 2021 by the childhood friends Paurav Rastogi and Shamin Kapoor to support food entrepreneurs by providing infrastructure, licenses, and ready-to-use commercial cooking facilities. Let's explore Speed Kitchen's thrilling voyage and the Sharks' impression of the duo.

The Brand Mission
Speed Kitchen believes that its cutting-edge platform may assist food entrepreneurs in avoiding the usual difficulties of acquiring real estate, negotiating with landlords, obtaining licenses, and overseeing operational areas. Food brands can concentrate on providing quality meals and satisfying client experiences with Speed Kitchen since they don't have to bother about locating a kitchen or chasing down the licenses and authorities.

Meet the Founders
Paurav Rastogi's own experience in the food sector served as an inspiration for the launch of Speed Kitchen. After working for OYO for a while, Paurav has traveled a lot and learned about the challenges restaurant entrepreneurs face, especially finding a suitable space and negotiating the complicated leases. 

This made him want to find solutions to these issues, and he teamed up with Shamin Kapoor to start Speed Kitchen. They came up with the idea of a platform that would provide food entrepreneurs all the tools they need to operate a profitable cloud kitchen company. Shamin has an impressive background, having worked in Dubai and other places; he joined Paurav to build this venture.

Bringing Uniqueness in the Cloud Kitchens

As a co-working cloud kitchen, Speed Kitchen provides food brands with an adaptable and affordable means of starting and growing their businesses. The platform frees entrepreneurs from the burden of high operating costs by substituting a revenue-sharing model for fixed rentals, allowing them to concentrate on their culinary company. Speed Kitchen offers a completely integrated ecosystem that streamlines kitchen operations and compliance issues with its plug-and-play setup. With more than 130 kitchens and operations in four Indian cities, the company currently collaborates with over 50 brands. 

The Numbers Behind Speed Kitchen’s Growth

Despite, facing an EBITDA loss of 13-18% for the FY24-25, the company has already earned Rs 3 crores.

•    FY 21-22 - Rs 36.5 lakhs
•    FY 22-23, Rs 1.51 crores
•    FY 23-24, 3.25 crores

Last year, the unadjusted EBITDA was roughly around 13 % and PAT was 9.5%. For FY 23-24, the audit number shows EBITDA OF 4.5% which has tripled this year.

The Shark Tank Pitch

Paurav and Shamin requested Rs 2 crore investment for a 3% equity stake in their quickly expanding business when they presented Speed Kitchen on Shark Tank India. The Sharks had some initial reservations, including worries about the company's price, but were persuaded by the team's distinct vision and strong performance history.

Notably, Speed Kitchen has already attracted notable customers like Haldirams and Chef Ritu Dalmia, solidifying its position as a major force in the cloud kitchen market. Additionally, Paurav disclosed that they have landed a lucrative contract with ITC that should bring in a sizable sum of money each month.
 

The Winning Deal
Aman had offered 2 crores for 10% equity, but he backed out since he wasn't prepared to negotiate with the brand, while Vineeta didn't give an offer.  After a lengthy discussions and negotiations, Speed Kitchen struck a major deal with Three Sharks Ritesh Agarwal, Azhar Iqubal, and Kunal Bahl for Rs 2 crore for 6% equity.

A New Chapter with the Sharks

With this significant deal, Speed Kitchen is well-positioned to expand quickly. The company will be able to grow its reach and improve its infrastructure with the help of well-known investors like Ritesh Agarwal, Azhar Iqbal, and Kunal Bahl, as well as their vast experience. 

Paurav shares, “We are happy to get three sharks on board. With their expertise, we will be scaling the brand in new heights.”
 

 

The convenience of online meal delivery is attracting more and more customers, which has led to an accelerated rise in the cloud kitchen business in recent years. Since there are no dine-in customers, food in a cloud kitchen is exclusively made in a commercial kitchen for takeout or delivery. Cloud kitchens enable restaurant owners to swiftly launch a digital brand or grow an already-existing company. Innovative developments such as Artificial Intelligence (AI) and the Internet of Things (IoT) are revolutionizing the cloud kitchens. According to reports, the online food delivery market in India is expected to reach US$43.78 billion in revenue by 2024, with a compound annual growth rate (CAGR) of 15.98%. This growth will culminate in a projected market volume of US$91.88 billion by 2029. The best practices for guaranteeing food safety include laying the groundwork, adhering to regulations, conducting routine audits and inspections, certifying staff, maintaining hygienic food handling practices, FIFO, cleaning protocols, and using technology.

Sustainability is likely to receive increasing attention from the cloud kitchen sector as customers grow more ecologically aware. This can entail buying foods from sustainable and local sources, utilizing eco-friendly packaging materials, and streamlining culinary processes to cut down on food waste.

How AI is Enhancing Safety

Safety remains of utmost importance in the cloud kitchen industry, especially in the wake of the pandemic, which has underscored the importance of stringent hygiene protocols. “AI and IoT devices play a crucial role in monitoring kitchen conditions, ensuring compliance with health standards, and minimizing the risk of contamination,” said Chef Mohammed Anas, Co-founder, Beyondburg Inc. who elaborated that where the demand for food delivery is high, such technologies are essential for consumer trust and maintaining high safety standards.

Food safety is a critical aspect of cloud kitchens. “Following the strict hygiene standards and conducting regular audits ensures that the end products meet the highest safety standards. Extensive training of the staff and using fresh, quality ingredients are essential as well and with that maintaining transparency in operations and adhering to regulatory guidelines is important to build consumer trust,” added Himanshu Chawla, Co-Founder, Bakingo by pointing that in any form of food business, maintaining food safety is non-negotiable and fundamental to delivering a reliable and satisfying customer experience. 

"To ensure consumer trust and regulatory compliance. Maintaining hygiene, using quality ingredients, and adhering to food safety standards help prevent foodborne illnesses and protect the brand’s reputation. The key safety concerns includes hygiene practices and ingredient quality," said Richa Sanghvi, Owner, All things Jain who highlighted that AI can help in monitoring kitchen conditions, tracking ingredient and ensuring compliance.

Cloud kitchens in India are addressing food safety concerns through strict hygiene protocols, prevention of cross-contamination, and the use of advanced technology. Varun Madan, CEO & Founder, Salad Days shared, “Measures such as frequent handwashing, the use of protective gear, and color-coded utensils ensure a safe dining experience. Additionally, cloud kitchens monitor food temperatures and implement the FIFO method to reduce spoilage, while following thorough cleaning schedules and complying with food safety regulations, including obtaining FSSAI licenses.”

How AI is Increasing Efficiency, Profitability 

Artificial Intelligence (AI) has revolutionized the cloud kitchen industry, optimizing operations from inventory management to customer service. In tech-centric cities like Bangalore, AI-powered analytics predict customer preferences, streamline delivery routes, and minimize food waste, thereby enhancing efficiency and profitability. “Delivery platforms in India, fully leveraging technology, offer real-time insights into order updates, delivery times, customer feedback, and quality metrics, making AI indispensable for modern cloud kitchens,” added Anas.

AI is transforming the future in every industry including the cloud kitchens, bringing efficiency, personalization and innovation. “Various processes can be optimized through AI like inventory management, reducing food wastage and streamlined deliveries. It can help enhance order accuracy and speed through predictive analytics and automated workflows. Individual preferences and dietary needs can be catered by AI-powered data insights for personalized customer experiences. Additionally, AI-driven systems are deployed to monitor and control the temperature and humidity during the logistics as well as storage, which help to maintain the quality of the food. This not only improves the quality and safety of food but also contributes to sustainability by reducing waste,” commented Chawla.
 

 

Bengaluru as a city has given many firsts to the Indian dining and delivery scenes. From being the first city to accept the global flavours to becoming the largest nightlife and brewery hub, it was also the first cosmopolitan city to accept the delivery and cloud-kitchen model in the country. From brands like Empire that is running the business from last six decades starting the delivery model to Freshmenu becoming one of the first brand to experiment with cloud kitchen model, we have seen and witnessed many firsts in the city. Now, that we see brands and restaurants are looking at giving an omni-channel experience to their customers by being available on both the platforms and models, we can surely say that going forward ‘phygitisation’ will surely be the keyword in restaurant and dining space. 

Recently, Restaurant India hosted its Bengaluru Edition of the Restaurant India Conference Awards on 1st May at Sheraton Bengaluru, where it discussed and talked about being omni-channel. Here are key highlights from the session:

Focusing on Consistency: “Today, for any restaurant business, the biggest challenge is handling people, labour. And we see technology already replacing humans at countries like Korea, Singapore and others. Though in India, the labour cost is not as high as other countries but the consistency is a challenge as you expand. So, consistency has to be taken care of and that was the prime objective on how do we take care of this by using technology,” shared Mahesh Reddy, CEO, GOPIZZA India that invested a lot in the backend technology to focus on consistency, standardisation of the product. Today, the brand has 50 outlets and are looking at 100 outlets by this year end.

Automation is Important: “We are helping our partners For any biz, if you have acceptable product, price and profit and that’s when we say it’s a sustainable, profitable model. The most important thing we follow is the collaboration. We are not directly involved with customers but QSR partners and understanding what consumer is asking for,” pointed Sumit Nair, GM, IFFCO Group that is focusing a lot on automation by technology and embibing it in becoming a great product company. The brand has also minimised human intervention by using automation. 

Relying on Data: “Some of the things that we as a company do is to enhance the online ordering experience for the customers and data has allowed us to do way better in terms of managing consumer timelines, restaurant cancellations, menu availability, forecasting orders and what should you be prepared of because you have a pattern of orders and acceptations and I think the use of data in combination with learning over the years has helped us optimise the online customer experience,” mentioned Rashmi Daga, Founder, Freshmenu. 

Accessibility is the Key:  Empire is a brand that is there in the business for almost six decades now. “We always want to be recalled and we serve a very neutral rather a habitual cuisine. So, we have a certain key factors that Empire is always accessible to its customer,” shared CEO, Shakir Haq of NKP Empire Ventures as it was as early as in 2007 that they introduced the home delivery at that time, having their own bikes, riders.  “We went investing in right ways in technology, various systems, and processes. So, today omni-channel is the strategy for the older brands,” he added as they have now entered into the cloud kitchen segment with their brand Easybites by Empire. 

Collaborating for Growth: “Our aim is product innovation and innovation by application. We are collaborating with restaurant chefs to create unique recipes and consistency in the products. Our focus is always to work closely with restaurant partners to create standardisation and consistency in the product,” added Jaineet Kalra, Key Account Manager- South, Nestle Professional.

Innovation is Constant: “At Sheraton, innovation is constant for us. Health comes in picture first of all, giving the variety is the other important thing as we have eight FnB outlets and we also accept every customer and believe in creating experience,” concluded Mahesh Padala, Culinary Leader &  Director of Operations, Sheraton Grand Bangalore Hotel at Brigade Gateway.
 

 

Dil Foods is a Bangalore-based virtual restaurant operator that won ‘Cloud Kitchen’ of the year award at the prestigious 12th Indian Restaurant Congress & Awards held in September 2023. Recently, the brand ventured into the Shark Tank India season three by cracking a joint deal of Rs two crore with four sharks. 

Bringing the diverse flavours of India directly to the plate, ‘Dil Foods’, has been making waves in the hospitality industry since 2022. The company was founded by ex-Swiggy, Arpita Aditi to support the small and medium-sized restaurant businesses. Excerpts from the interview: 

How it all began

When I was with Swiggy, I used to interact with lots of restaurants especially the large chains like Freshmenu, Chai point and CCD to name a few but a lot of local restaurants reached out to me stating that they are at the verge of getting shut down. That’s when I started digging deeper and realised that things are very difficult for these local, small and medium size of restaurants because they are just one man army, taking care of everything from end to end. So, that’s really took a toll on their business and they can hardly focus on growth. That’s when I thought of doing something for this segment of the industry, the people who contribute more than 90 per cent in the F&B industry. Initially, I started a consultancy where we used to mange end to end online business management for them so they would take care offline customer experience and we would take care of online business like menu engineering and become the face of their brand for Swiggy, Zomato and all of that so we ran that for two years and realized while top line was increasing for them bottom line was still a challenge because their cost of marketing was super high and the cost for acquiring each customer was super high and that’s how Dil Foods came into appearance.

On Funds Raised

We have raised around 17 crore so far. When we started we raised around 1 crore during the inception of the brand from angels and post that we did some bridge rounds in between and raised another crore and the last year we did pre series A through Mount Judi Ventures and V3 Ventures. So, the money that we have raised in Shark Tank would be used on technological advancement for bettering our supply chain and also expansion in newer cities as right now we are live in Hyderabad, Bangalore and Chennai. We also now looking at expanding to Pune, Mumbai, Ahemdabad, Coimbatore and NCR as well.

On winning big at Shark Tank

I’m super excited to have the kind of investors that we have brought on board during Shark Tank. We have Piyush Bansal, who is the god of tech and the way they have solved their supply chain, we really hope that we learn a lot from them and better our operations too. Then, we have Vineeta Singh, who has joined hands with us in building our brand. We also got Ritesh Agarwal on board who’s the founder of OYO and Dil Foods is quite similar to Oyo. And, I’m really looking forward to learning from him and getting to know about his journey during his initial days and then we also got Radhika on board who will help us and guide on building a large business, having tight control on financial activity aspects ensuring that the financial health is super healthy, super critical and it would be really helpful for us to ensure that we are moving in the right direction not just businesswise but financially as well. 

What’s the process of getting into Shark Tank?

There’s a long process to get into Shark Tank. For us, Shark Tank happened by chance. One of our team member was really pushing for it and she/he randomly applied for it and then we got a call. So, there are multiple round before you go for the final pitch. So, first is of course the application round where you send written application and then you are suppose to send a video or message talking about your brand and after that there is another audition round which for us happened in Mumbai where they get to know about all your business metrics and your camera presence on how solid your business is. And, after that if you are selected you are called for the final pitch round where you pitch in front of the sharks.

How many brands you have?

We have 8 brands in total serving different state foods and cuisines in total. We also serve snacks from different parts of India. We have been operating these 8 brands so far and are launching 4 new brands. The average ticket size for us is above Rs 300 per order.

 

The rich tapestry of India's culinary traditions is undergoing a remarkable transformation, all thanks to the innovative strides of food technology. With the Indian food-tech market projected to soar from $3.1 billion in 2020 to a staggering $20.2 billion by 2025, the landscape is witnessing a flavorful revolution.

The driving forces behind this remarkable growth are manifold. A surge in demand for convenience food, coupled with the rise of cashless payments and a heightened awareness of health and wellness, forms the bedrock of this transformation.

Smart Vending Machines: The Game Changer

At the heart of this culinary metamorphosis lie smart vending machines. Predicted to grow at a CAGR of 18% from 2022 to 2028 in India, these machines are heralding a new era. They aren't just serving food; they're reshaping traditions and expanding horizons.

Imagine vending machines that offer a wide array of health-conscious snacks and meals – salads, fruits, and yogurt. The era of convenience is upon us, resonating especially with the increasingly fast-paced lives of Indians.

Preserving Heritage, One Package at a Time

These machines are also gatekeepers of India's rich culinary heritage. By offering pre-packaged versions of beloved classics like vada pav, samosas, and idli, smart vending machines are safeguarding traditional flavors for urban dwellers.

But the real magic happens when tradition meets innovation. Foodtech companies, in partnership with chefs and food experts, are crafting recipes that fuse traditional Indian ingredients with modern culinary technology. The outcome? A symphony of flavors that captivates both young and old palates.

Tech Revolutionizes Safety and Preservation

Food technology's impact isn't confined to taste alone. It's bolstered food safety and preservation techniques, extending the shelf life of our meals and minimizing spoilage risks. From pasteurization to vacuum sealing, these advances ensure that our meals stay safe and appetizing, even across long distances.

Health is a driving force in culinary evolution, and food technology plays a pivotal role. Scientific research and technological prowess have created techniques that enhance nutritional profiles and create healthier alternatives. Fortified staple foods combat nutrient deficiencies, while plant-based meat substitutes cater to conscious consumers.

Cooking with Innovation

Advanced kitchen appliances like sous vide machines and combi-ovens have redefined cooking techniques. Precision, even cooking, and heightened flavors are now attainable, thanks to technology. The marriage of science and culinary arts has led to visually striking dishes through molecular gastronomy techniques.

Personalization on the Plate

Customization reigns supreme in the culinary realm, empowered by food technology. From tailored meal kits to personalized nutrition plans, technology grants greater control over diets. Mobile apps offer recipes, dietary information, and suggest meals aligned with individual preferences and restrictions.

Vantage view

The marriage of food and technology is a potent recipe for change. With smart vending machines redefining culinary accessibility, foodtech companies crafting fusion masterpieces, and technology influencing everything from preservation to presentation, we stand on the cusp of a flavorful future.

However, as food technology continues to flourish, it's essential to strike a balance between tradition and innovation. While the culinary landscape evolves, preserving cultural heritage is paramount. Culinary evolution should reflect both our diverse cultural tapestry and our ever-evolving palates. In this endeavour, let's ensure that every bite is a harmonious blend of tradition and innovation, a journey that enriches our taste buds and honors our culinary heritage.

 

Delhi, known for its bustling restaurant scene and vibrant nightlife, has been grappling with a major crisis in recent times. The liquor issues in the city have cast a dark cloud over the once-thriving restaurant industry, causing significant losses to businesses and pushing customers to seek alternatives in neighboring cities like Noida and Gurgaon.

Nearly a year ago, the Delhi government took a controversial step by scrapping its existing excise policy, leaving the restaurant owners and customers in a state of uncertainty. Unfortunately, the business landscape is yet to recover fully from the aftermath of this decision. Restaurateurs are facing a dual challenge of limited availability of popular liquor brands and a mass exodus of patrons to nearby areas where the situation is more favorable.

The scarcity of well-loved brands such as Johnnie Walker's Black and Red Label, Bombay Sapphire and Samsara gin, Grey Goose vodka, Glenlivet, Jack Daniel's, and Monkey Shoulder whiskey, along with Jagermeister, has been a cause for concern among restaurant owners. Patrons who frequent these establishments have expressed their frustration at the inability to enjoy their favorite drinks, resulting in a dip in customer footfall and overall revenue.

Vinod Giri, the director-general of CIABC, mentioned, “Delhi is facing a shortage of premium alcoholic brands which will stick out more and more the peak season for drinks draws in. This is due to a variety of reasons arising out of the mid-year switch back to the old excise policy. Well-known brands of many companies are yet to re-register in Delhi. Some are held back at the government’s end for lack of approval, and some voluntarily by companies since they find the demand of paying full-year brand registration fee though there is only half the year left unreasonable and commercially unworkable.”

The severity of the issue has intensified during the peak summer season when beer consumption typically soars. Liquor vends and retail shops have been grappling with beer shortages, leading to further revenue losses for the hospitality industry. Restaurant chains, bars, and retailers are grappling with a widening demand-supply gap, making it challenging for them to meet the expectations of their customers.

One of the prominent restaurant groups, Lite Bite Foods, which operates popular chains like Punjab Grill and YouMee, expressed grave concerns about the ongoing situation. Rohit Aggarwal, the director of Lite Bite Foods, stressed that the months from April to June are usually the peak season for beer consumption at their restaurants. However, the unavailability of certain brands has hampered their ability to cater to customer demands, resulting in potential revenue losses.

Following the introduction of the new liquor policy, the lack of availability of alcohol in numerous restaurants, bars, and cafes has resulted in significant losses ranging from 20 percent to 40 percent. As a consequence, customers who prefer specific brands are now opting to patronize establishments in Gurgaon or Noida to enjoy their preferred drinks.

One such establishment, Cafe Tonino, situated in Connaught Place and popular among young crowds, is experiencing a decline in revenue by approximately 25 percent to 30 percent due to the unavailability of beers and wines. At present, around 50 percent to 60 percent of beer brands, including Erdinger, Hoegaarden, and Budweiser, are not accessible.

Similarly, another Italian restaurant, Diggin, is facing a loss of around 25 percent in business due to the absence of Tequila brands like Don Angel and Viva Mojo, Greater Than Gin, and Sparkling Wine. Additionally, beer brands such as Kingfisher, Heineken, and Budweiser are also unavailable. An official, speaking on the condition of anonymity, revealed that numerous brands are currently unavailable. However, some relief came when Teacher's (Whisky) became available a few days ago, although the official refrained from providing further information on the number of brands still unavailable.

A renowned dining destination in India, Lord of the Drinks, is unfortunately experiencing a substantial loss of approximately 30 percent to 40 percent in its contemporary drink menu. The official, who chose to remain anonymous, expressed the significant impact of brand unavailability on their business. The lack of specific brands has particularly disappointed their brand-specific customers, including youngsters, leading to a decline in customer patronage.

The unavailability of various liquor brands has become a common concern for restaurants and bars in Delhi, affecting their revenue and customer loyalty. With discerning patrons seeking alternatives in neighboring cities, it has become imperative for establishments to address the supply constraints and regain the trust of their clientele to thrive in the highly competitive hospitality landscape.

In addition to the financial implications, restaurateurs are also facing the embarrassment of having to explain to diners why high-quality liquor options are not available. This has negatively impacted the reputation of these establishments and raised questions about the government's handling of the excise policy and the liquor supply chain.

The government's decision to increase the number of liquor stores in Delhi was expected to alleviate the supply constraints and improve the buyer's experience. The goal was to double the number of stores from 350 to 700. However, this target is yet to be met, as only 584 stores have been opened as of the latest update. This sluggish progress has contributed to the prevailing liquor scarcity, leaving consumers dissatisfied and restaurant owners worried about their businesses' future.

The repercussions of the liquor issues have reached such a critical stage that customers are now seeking alternatives in neighboring cities like Noida and Gurgaon. Many patrons who were once regular visitors to Delhi's vibrant restaurants are now making the journey to these nearby areas to indulge in their preferred drinks without facing the limitations experienced in the capital city.

Delhi's loss has become Noida and Gurgaon's gain, as restaurants in these regions have seen a surge in footfall. Patrons who are unable to find their favorite brands in Delhi are now flocking to restaurants and bars in Noida and Gurgaon, where they can enjoy a more diverse selection of liquors. This shift in consumer behavior has had a significant impact on the revenue streams of Delhi-based restaurants, further exacerbating their financial woes.

To add to the complexity of the situation, French spirits company Pernod Ricard, a major player in the global liquor industry, has faced regulatory issues in Delhi. The rejection of Pernod Ricard's license application, along with those of Indospirits and Brindco, has resulted in the unavailability of many premium liquor brands that were once a staple in Delhi's dining establishments. This has not only disappointed loyal customers but also impacted Pernod Ricard's market share and revenues.

The dire situation calls for immediate action from the Delhi government and concerned authorities. Resolving the liquor issues and streamlining the excise policy is crucial to reviving the restaurant industry in the capital. Addressing the supply constraints, ensuring the availability of popular brands, and meeting the target of opening 700 liquor stores must be a top priority to win back customers and restore Delhi's status as a vibrant culinary and nightlife destination.

The fate of Delhi's restaurant industry hangs in the balance, and timely intervention is the need of the hour. By restoring confidence in the liquor supply chain and creating a favorable environment for businesses, the city can once again reclaim its position as a gastronomic haven, where patrons can indulge in their favorite libations without any hindrance. Only then can Delhi hope to stem the tide of business losses and woo back its wandering clientele from the neighboring cities of Noida and Gurgaon.

The impact of liquor issues in Delhi extends beyond just the financial losses faced by restaurant owners. It has also taken a toll on the city's reputation as a thriving hub for food and beverage experiences. Delhi, known for its vibrant social life and diverse culinary offerings, has always been a go-to destination for locals and tourists alike. However, with the current constraints on alcohol availability, the city's image is at risk of being tarnished.

Tourists who visit Delhi for its rich cultural heritage and culinary delights now find themselves disappointed with the limited options for alcoholic beverages. This dissatisfaction may lead them to explore other cities with more relaxed liquor policies and a broader selection of brands. Consequently, Delhi's hospitality industry is not only losing its loyal customer base but also potential new visitors, which can have long-term implications on the city's overall economy and tourism sector.

For the restaurant owners who have invested their time, efforts, and resources into creating unique dining experiences, the current liquor crisis is a major setback. Many establishments are facing an existential threat, with some even considering downsizing or shutting down altogether. The uncertainty surrounding the liquor supply has made it difficult for them to plan for the future and attract investors, further exacerbating their financial woes.

As patrons flock to Noida and Gurgaon for their liquor fix, the competition among restaurants and bars in these neighboring cities intensifies. These areas are now witnessing an influx of Delhi-based customers, resulting in increased revenues for the hospitality businesses there. The success of Noida and Gurgaon's restaurant industry is, in part, at the expense of Delhi's own.

As the situation unfolds, the Delhi government must also take lessons from other cities and states that have successfully navigated liquor-related challenges. Learning from best practices and adopting policies that have yielded positive results elsewhere can go a long way in reviving Delhi's restaurant industry.

 

The restaurant industry contributes about 3% of India's GDP and employs 7.3 million people. It is a key component of the country's service sector as per reports by NRAI. But the pandemic shrank the restaurant industry by 53% in 2021. Yet, the pandemic also led to emergence of four new trends in restaurant space:

Contactless Services: You must have seen QR code-based ordering in places like Taco Bell and McDonalds. The rise of social distancing and health consciousness led to mass adoption of such contactless services. Now 1/3rd of Indian eateries use QR codes. Customers can enjoy a fine-dining experience by accessing digital menus and placing orders with minimal interaction.

Delivery Apps: The pandemic brought a shift in food consumption habits with online food delivery taking center stage. A Statista survey revealed 51% of respondents aged 16-24 and 72% over 55 plan to continue using delivery apps post-pandemic. This rising demand has led high-end restaurants (which previously offered only dine-in) to embrace online delivery and make their food offerings more available to more people.

Cloud Kitchens: The extra demand for online food delivery boosted the growth of cloud kitchens too. This model of restaurants has become an low-cost opportunity for entrepreneurs looking to enter the restaurant space.

Expanding Spaces: Shifting consumer demands for limited interaction and contact have encouraged restaurants to expand or create additional outdoor areas. As a result, many establishments have moved to external or rooftop spaces, building city-view terraces, open-sky dinners and open experiences. These changes provide customers with more breathing room and an improved dining experience.

While the pandemic posed significant challenges for the restaurant industry, it also served as a catalyst for game-changing innovations. As technology continues to develop, the restaurant industry will adapt and make more improve customer experiences further. Can you think of one more trend shaping the Indian restaurant industry?

 

When we talk about internet and people connection we have seen a large disruption happening across sector; from Amazon, Netflix, Iphone and Airbnb disrupting their own sectors to food industry being closer to the disruption with the cloud-kitchen and internet restaurant model.

According to a report published by restaurantindia.in and FranCorp, India’s cloud kitchen market is anticipated to grow with approximately 15.5% to 17.5% CAGR value during the forecast years 2024-2028. Demands for online food delivery and pre-cooked meals are the major factors driving the growth of the Indian cloud kitchen market in the upcoming five years.

In the process of disruption

“We never started to build a disruptive model but to start a QSR chain that was called Faasos. The idea was to build a McDonald’s from India. What happened in the last 12 years was to completely survive as we never tried to build a tech disruptive business,” shared Kallol Banerjee, Co-Founder at Rebel Foods that runs some of the largest cloud-kitchen brands like Faasos, Behrouz Biryani and others.  

Food needs to be present digitally

Internet and social media presence has become huge in India in last 3-4 years. The increased usage of social media marketing is expected to create a lucrative potential for the cloud kitchen market to grow and expand its consumers. According to Forbes, Facebook mobile ads make for 87 percent of ad income, which was USD 9.16 billion at the beginning of 2018. Also, there’s a certain behavioural change where new age customers wants to see and are loyal to brands that are digitally present.

Real-estate is the biggest issue

“When we were doing Faasos and we wanted to expand, we feel that we have the money but we still couldn’t fasten enough. If we look at restaurant business in India per capita, there are three chains that have more than 500 outlets for a population of 1.5 billion that number is 75 in the US, 25 in China. What is the one reason that we don’t have multi-city big chains is simply the real-estate,” he pointed as India still lack enough organised real-estate and with whatever the supply is there the entire focus of the retail is the same places. And, all thanks to the rental fees which is the highest as compared to other developing countries.

Convenience is driving the game

We have seen approx. 75 % recovery in the food delivery market post pandemic. The food delivery company is becoming increasingly dominant for big brands like McDonald’s, Wendy’s where key focus is on convenience channels like delivery. “People are leaving places for work and there’s apartment now a days made with only microwave, small little fridge because people are eating all 3 meals from outside or they are picking something from outside that they can microwave and that’s their food. Cooked food, food cooked with love is luxury as people don’t have time,” added Banerjee by pointing that people don’t want human interaction and they want to order food even if it is 100 meter away from them. Hence, we can say that if delivery is going to become extremely important and that’s going to be the new normal then restaurants have to introduce those experience digitally.

Food is driven by occasion

For a customer a food is very often about occasion and not cuisine. If you think about coffee, there are different types of coffee…its difference of occasion. “There is no multi-cuisine restaurant as a world leader. In the customer head, there is expert for every occasion,” he pointed by adding that customer choose food and restaurant as per the occasion.  

Hence, there is always a positive and negative aspect of a business. Cloud-kitchen obviously doesn’t involve a large real estate cost, no overhead cost, provide expansion opportunities, higher profit margins, easy trend adaptions but it definitely has lack of consumer interaction, issue with time management, dependency on D2C channels and maintaining hygiene standards.

 

Vicky Ratnani is one of the most celebrated chefs in the country. Having been worked with top brands in many countries, he has got the best hands on ingredients, flavours and trends. He recently joined hands with his old-time friend and car guru Alberto Bestonso and model-actress Kashishh Rajput to open Speak Burgers that is a take on gourmet and fine-line of burgers. As we see burgers have become one of the top food product when eating at a restaurant or getting it delivered at home. As per research, it has become one of the top food items ordered online and that’s pushing the growth of the segment inviting new players, chefs to capture the larger share of the market. At Speak Burgers Chef Vicky Ratnani uses only the freshest ingredients possible which includes 100% hormone and antibiotic free meats, fish, shellfish and vegetables. Excerpts from the interview:

How it all began

The whole idea to launch Speak Burgers was obviously it has a large space in the market, people are looking to eat good, gourmet foods and I have always done good burgers at restaurants and why don’t I create something new, affordable and unique. I also wanted to create burgers that is more on the creative side as more and more people have starting loving burger. Speak Burger is a global kind of influences on my burgers.

What’s pushing the growth?

It’s the people who are willing to see different things than the ordinary also it’s the gut feeling of the chef/restaurant owners who want to create a benchmark, wantto do something different, disruption in the whole trend. It’s a mix of both- people as well as the providers. All thanks to more travel happening, social media, youtube that is keeping people informed about the trend.

Playing with flavours

At Speak Burgers I have designed menu- there is green revolutions that is the line of my vegetarian burgers each one has the character of the burger. My burgers are based on my global travel and each burger has a story. We make everything in-house- our pickles, sauces, ketchup, kettle chips etc.

From where do you source the ingredients?

Ingredients are locally sourced. We make everything in the house. We buy vegetables from local vendors and try that it is as fresh as possible, meat is halal from very reliable sources. Few sauces, Korean pastes etc. are imported.

Any competition?

Competitions are healthy but there is space for any good food in the market and I am very confident about my brand.

High on expansion

We are already on our second location. We are at Bandra West, Andheri West and we plan to take this brand around the country and would like to franchise these brands as well. We are also looking at a small burger cafe kind of model. We are working on different designs, people who will help us scale this brand. And, we want to establish our self in Mumbai before we enter other cities. But I can see Pune, Delhi, Bengaluru, Hyderabad happening soon as it is a scalable model and we want to disrupt the market.

Why cloud-kitchen?

The cloud-kitchen has great potential, scope. You save on high flying rents, good stepping point for a brand to test their products, delivery as people like to eat at home. Cloud kitchen are more economical than full blown restaurant and I think it’s a good way to test your product before you take a plunge.

 

At the point when time is the richest thing in the existence of twenty to thirty-year-olds, imparting a few quality minutes to the family is the best present for them. Obviously, great food brings individuals closer, and that too at the world's most comfortable spot—Home. Along these lines, rather than investing energy in replacement and standing by long for an empty table, individuals lean toward partaking in the food of their cherished cafes' at home, rather than killing their valuable time in feasting out. This change in outlook as far as individuals can tell alongside quick headways in business kitchens and simple web openness on cell phones turns into a crucial impetus to the runaway achievement of online food aggregators like Zomato, Swiggy, Faasos, and numerous such players, however, this problematic progress was inconceivable without a clever idea, i.e., Cloud Kitchen, which is the distinct advantage in the ceaseless development of food startup aggregators.

Riding on the expanded by power and developing interest for non-home prepared food, the Indian internet-based food conveyance market (aggregators and cloud kitchen) is relied upon to be a more than $5 billion open door before the year's over 2023. The cloud kitchens projected market size in India is believed to touch $1.05 billion by 2023.

According to information referenced in that report, there were over 400 cloud kitchens by December 2018 worked by central parts like Faasos, Box8, FreshMenu, Biryani by Kilo, Sushiya, and Innerchef. The current numbers for which have expanded considerably. Ascribing to the ascent in several cloud kitchens, the food conveyance administration market in India has additionally developed a wide margin.

Each savvy business visionary not just imagines his business to use the current open doors, yet in addition plans for future developments. Being exceptionally adaptable, profoundly effective, and savvy types of gear control these cloud kitchens that not just help in dealing with the rising number of requests easily, yet additionally guarantee consistency in quality across the kitchens. Such apparatuses can be utilized for doing diverse undertakings, for example, a brilliant combi-stove plays out an assortment of assignments like barbecuing, broiling, baking, steaming, stewing and so on inside a space of not exactly around 1 m², with the assistance of right embellishments.

The mixture of cloud kitchens with food aggregators has totally re-imagined the F&B market in India

Food aggregators have worked really hard in the past in fostering a decent nexus between apparition kitchens and set up eateries or orders of things in the metros. The collaboration of cloud kitchens with food outlets has reclassified the F&B market in our country.

With an observable shift of buyers to the web-based food requesting stages, the market has seen new players too attempting to solidify their position. Future Group, which runs India's greatest corporate store, Big Bazar is ready to begin its cloud kitchen vertical. The gathering is hoping to convey reasonable dinners at the doorsteps of buyers under the haze kitchen idea. Likewise, then again, the worldwide online business behemoth, Amazon isn't a long way behind in foraying into cloud kitchens. According to the market reports, Amazon has additionally picked Bangalore for its lady kitchen.

Today, a cell phone is not a more specialized gadget, the instrument changes over a need into an open door and a thought into a business. Online food conveyance commercial centers are ideal guides to it. Right from giving fast conveyance of food to millennial clients, to offering fundamental elements of accomplishment to eateries and cloud kitchens via client expansion and maintenance, online conveyance accomplices are giving the fundamental push to this area and there is an incredible future ahead for them.

 

Looking at the potential that the cloud-kitchen segment holds, the Delhi government had announced a ‘Cloud Kitchen’ policy in its 2022 budget. In a step towards this, the Dialogue and Development Commission (DDC), in collaboration with the industries department, is going to hold a consultation with stakeholders on April 26 to discuss easing land and licence regulations.

“Cloud kitchens are emerging as a strong part of the restaurant industry and are growing at a rate of more than 20 per cent every year and cloud kitchens provide direct and indirect employment to many people,” shared Hanish Suri, COO, Wok on Fire by adding that considering the immense potential for growth and in order to maximize the potential of this industry, it is good initiative taken by the government to structure everything to ease out the overall process as planned to provide land to cloud kitchens with plug and play facilities and ease the number of licenses and regulations etc.

The DDC and the industries department will deliberate on the provision of land and other incentives to cloud kitchens, easing of licence regulations for such units, and setting up cloud kitchen clusters with plug and play features across different land parcels.

“It is the first time that a state government has recognised cloud kitchens as significant contributors to the food and beverage industry. They have a huge potential to attract investments, increase the market size of the food and beverage sector, and generate large-scale direct and indirect jobs,” pointed Jasmine Shah, Chairman, DDC.

Commenting on the Govt’s decision, Ravi Tokas, Chef Owner at Parat and Me-awww that has emerged as one of the most loved cloud-kitchen brand in NCR said, “Food delivery or cloud kitchen industry will boom in next few years till the time we are not getting the remedy of this pandemic. Now, people are more aware and health conscious while eating food from outside and they are comfortable in enjoying their food of their homes with their loved ones.” He also pointed that when the employees were unemployed in 2020, the cloud kitchens and deliveries started growing and gave them the opportunity to work due to which they had earned their daily bread and butter.

“The easing of getting permissions and licences to set up a cloud kitchen in Delhi will be very helpful for the people who wants to start a new business or enter in to this field. Again, lots of people will be employed in the activity of growing industry of dark/ delivery kitchens,” Tokas further added.

As per the Govt data, cloud kitchens are set to be a 2-billion-dollar industry in India by 2024, up from 400 million dollars in 2019. As cloud kitchens prepare and deliver food at the customer’s doorstep by taking orders via food aggregators or online platforms, they can operate from a fraction of a space that is usually needed for a restaurant.

“Govt is further facilitating the growth of this strongly emerging segment by encouraging setting up of shared commercial kitchen spaces across Delhi,” added Shah.

The official were also of the opinion that this segment got a boom during the pandemic, with many restaurants pivoting to focus on cloud kitchen setups that are based on deliveries rather than dining in. As per DDC, there are around 20,000 cloud kitchens functioning across the city which provide direct employment to around 2 lakh people and indirect employment to at least 50,000.

“The cloud kitchen space is still in its early days and works in a highly differentiated manner compared to existing traditional concepts of the food industry. Thus, particular nuances such as location, technology & facility planning should be taken into account before undertaking big investments or policy decisions and I’m hopeful that the government will take all stakeholders on board for the same. But no doubt a positive step in the right direction by the government,” concluded Mohit Dang, Co- founder and Director at Currynama by Seven Seas.

 

The Corona Virus outbreak which led to a complete lockdown in March 2020 had severe financial consequences. Millions of people were stuck in their homes, without any means to go outside. With restaurants closed, takeout dinner was the only option which drastically accelerated the adoption of cloud/ virtual/ ghost kitchens in the F&B industry. A thing which started as a trend is now a reality.

Cloud kitchen does not have high-traffic locations, but a huge number of online customers with big delivery radius. The ever-growing technology and increased optionality, transparency, affordability, and convenience that the people experience with cloud kitchen model gives it a further edge over traditional brick-and-mortar restaurant kitchen. Predictions by RedSeer Management Consulting reveals that the cloud kitchens are set to be a $2 billion industry in India by 2024, up from $400 million in 2019. Also the market value of cloud kitchens is estimated to reach $1.05 billion by the end of 2023. With such high numbers and scope of development, food aggregators are extensively moving towards cloud kitchen to cash in.

Here are a few reasons why cloud kitchens are the future of the food industry.

Experiment with low risk: Launching a traditional restaurant requires a strong market capital, it’s a time-consuming process which involves high risk venture. But with cloud kitchens, which are not tied to a physical location, you get an advantage of cutting down unnecessary overhead costs which increases your profit margins. As compared to an expensive brick-and-mortar business model, Cloud kitchens can easily take advantage of on-demand labor and inexpensive location. As long as you can draw people on your website, there is no need to rent a space for dining or pay high rent for a prime location. No need to spend money on interior-exterior, decor, furniture, silverware or plates. With a cloud kitchen you only need to focus on the quality and safety of food delivery.

Increased visibility with less marketing spends: Cloud Kitchens can gain quick exposure through delivery apps, rather than having to market themselves.  At Cloud Kitchens, each one comes equipped with the proprietary software to launch new menus & promotion featuring discounted menu. Also, with a digital model it’s easier to make changes and experiment with the menu since the entire menu is always online, you can launch an item or remove one depending on its demand.

Quick and efficient service: One big advantage of running delivery out of traditional brick-and-mortar restaurant is that high customer demand can be handled easily. With online delivery solution, you can centrally manage customer orders onto one single tablet. The more accurate your ETA with delivery, means more happy customers leaving better online ratings. Moreover, through online ordering system, it is easier to gather valuable information about your customers’ choices, preferences, and habits. With digital business model operating on apps, you can understand the pulse of your customers and save crucial data insights that helps you to determine your future courses of action and innovate new ways of attracting new clientele.  

Managing your restaurant has become accessible even in tough times. Cloud kitchen certainly gives you an opportunity to build a successful restaurant concept with little capital. Looking further forward, with millennials & iGen demanding digital, mobile-friendly solutions, cloud kitchens will always have an edge over storefront restaurants. 

 

A lot is being spoken about the cloud kitchen industry ever since the start of the lockdown. However, it is interesting to note that the food delivery business was poised at a much more aggressive growth in comparison to the dine-in industry even before the COVID-19 crisis struck. It’s safe to say that a sound business model was considered a safe bet prior to the pandemic but what has happened is that with most restaurants shut and delivery aggregators reporting up to a significant decline in order volume, a pivot to a cloud kitchen model has been championed by some as a panacea to the industry’s current woes. Here are top women into the cloud-kitchen business that has grown to a new heights in the 2 years.

Lakshmi Dasaka, Co-Founder, Slay Coffee

 

“Coffee isn’t just a beverage. It takes skill and craftsmanship to grow, to roast, to grind, to brew and to pour. Coffee is both social and personal. Coffee is a way of life,” shared a statement from Slay Coffee that was started by couple-duo Lakshmi Dasaka and Chaitanya Chitta who missed New York’s coffee culture, this Bangalore-based cloud-kitchen delivery startup has grown 3X amid the pandemic.

Before starting DropKaffe Food & Beverages, Lakshmi was the co-founder of her husband’s education learning solution enterprise, Smarton Learning Solutions. She is a Cornell University Graduate.

Donne Biryani- Shweta and Ramya Ravi

 

Started by sister-duo Ramya and Shweta Ravi, RNR Donne Biryani is a staple of Karnataka’s culinary culture and is not popularly known among other varieties of biryani. Started as a 200 sqft cloud-kitchen venture in November 2022 with an investment of Rs 5 lakh, a single cook and a couple of assistants.

“Covid has not vandalised the market. People still want to try new cuisines & avenues of growth with minimised risk is the could kitchen format,” shared Shweta by adding that one needs to keep up with the trend before they get outdated.

Chiquita Gulati- Call Chotu, Yours Truly Butter Chicken, Spice Market

“We started our first kitchen in early 2019, as our restaurant had gone into renovation and we had a decent sized delivery and catering vertical that we did not want to hamper while we took a break. Eventually when the restaurant was ready for operations we never went back from the cloud kitchen model due to the efficiency and ease of doing operations,” shared Gulati who has also added 2 new kitchen to their existing operations and plan to expand more in the next few months.

Chiquita Gulati is a chef by profession and is also the co-founder of Spice Market along with her husband Sumit Gulati.  She started cooking alongside her mother and grandmother from a very young age. Luckily for her, she was always encouraged and supported in everything she wanted to try and experiment.

Chef Seefah Ketchaiyo, Seefah Bakery

Seefah Ketchaiyo is one of India's top emerging chefs and possibly Mumbai's very favourite Asian food wiz. Chef Seefah and her husband Karan Bane has taken the Asian cuisine to a new height with their restaurant in Mumbai. And. it was during the lockdown when restaurant business came to a halt, she also thought of entering into the delivery business with her bakery delivery brand Seefah Bakery.

She started her journey with Four Seasons as their Thai chef, and started a restaurant called The Blue with her husband that was never short of waiting queues. And, today she has made a mark among the culinary heroes.

Ishita Sudha Yashvi, Co-founder, Cross Border Kitchens

“Our kitchens are typically geared to dish out thousands of orders a day. Therefore, managing any increase in demand is never a problem. However, the rise in CBK portfolio is not due to people staying in and ordering more. The F&B industry continues to face a demand failure,” said Yashvi in one of her earlier interview with Restaurant India.

Cross Border Kitchen is a multi-brand cloud-kitchen based in Delhi that has tested the success during the pandemic.

 

The restaurant industry has always focused on innovation and readily accepted new ideas. And one area that has greatly benefited from this drive towards the future is the kitchens. A glance into this space can reveal the use of hi-tech appliances and equipment, helping the staff cut down on cooking time and increasing production. 

 

Although the human factor has always been present, the Covid-19 pandemic has changed this and forced the industry to adapt to more significant kitchen automation. According to new survey data, the overwhelming majority of restaurants in India have invested or are in the process of investing in new automation technology. Restaurant consultants in India believe it is a matter of time before food establishments in India follow suit. 

 

The new reality of lives during and post the pandemic has led much of the restaurant industry to re-imagine how they can conduct business. Dine-in has significantly reduced, while the trend for takeaways and deliveries, which was already rising due to the widespread use of delivery applications, has increased exponentially. Therefore, the establishments need to have a high level of production that could meet the rising demand. Whale automated kitchens are mostly associated with cloud kitchens, it has been observed lately that fine-dining set-ups too are looking to adapt this change.

 

Time is money: Having an automated kitchen saves on prep time and cooking time. While some restaurants are fast food or quick service, others provide fine dining. In any of these scenarios, the automated process will churn out the dishes quicker. Some restaurant consultants project that in the future, the entire kitchen can be automated. However, at present, in most places, one can see automation being used in specific ways, such as flipping burgers, assembling pizzas or nachos. While this does not remove the need for employees, it does reduce labour costs, cleanliness, and human error.  

 

Reduces labor cost: While it may seem like automation in the kitchen would be more expensive, they ultimately may not be for some restaurants. Why? The automated kitchen is cheaper because the cost is incurred only once. It is cheaper to employee robots than it is to employ humans. The robot doesn’t cost to operate it, and one don’t have a monthly salary to pay. In addition, since they are virtually mistake-free, one can save time in overages and costly human error.

 

“I was a chef of multiple outlets, and use a lot of technology and had few experienced staff in my kitchen to increase efficiency. I am introducing Kitchen Display System in my all restaurants. These systems help in improving communication between the front-end and the back-end teams. Digital receipts of orders appear immediately on monitors/tablets installed in kitchen and also helps in improving cooking time,” Rahul Khare, Corporate Executive Chef, Finch Mumbai informed.

 

Additionally, at Finch Mumbai, Khare is using Smart Combi Oven in the kitchen, that is a three-in-one oven that can cook using convected heat, steam, or a combination of both. It adds another layer of technology to the appliance by offering the ability for remote control and monitoring. Benefits are as follows, it saves money and takes up less kitchen space and Increases food safety.

 

Highly consistent: Many companies who offers kitchen automation has seen increase in queries, specially post Covid. Bengaluru-based Mukunda Foods manufactures machines that make various foods without any human intervention. Its machines - DosaMatic, Eco Fryer, RiCo and Wokie, are all manufactured in-house, and used to make dosas, rice, noodles, and curries in a contactless format. 

 

Today, Mukunda Foods counts several well-known names among its B2B clients including ITC, Rebel Foods, Wow Momos, Chaayos, The Bowl Company, etc. More than 3000 machines have been installed in India and in countries like the UK, the US, Australia and Singapore so far. In the pre-pandemic times, they were able to sell more than 150 machines quarterly, and this number has now gone up to more than 500.

 

Ghost Kitchens, a cloud kitchen company, has invested in a series of automated products that has transformed the kitchen into a semi-automatic workspace. An automatic cooking station, and not human chefs, call the culinary shots.

 

Higher profits: Increasing table turns isn’t the only the way the use of technology can increase profits. During lunch time service, or when customers have limited time to eat, speeding up service times gives them the opportunity to spend more by ordering additional courses, such as dessert. 

 

“A well-organized kitchen is one of the most important prerequisites for running a restaurant. A diverse menu requires different segments in the kitchen for different types of cuisines like a different segment for Asian, Indian, continental and desert. In order to function smoothly the chefs are supported with  equipment ranging from traditional fryers, mincers, grills to innovative machines like  sous vide cooker, siphon gun, steamers and more. Efficient kitchens are the backbone of a successful restaurant and future-ready restaurants must be able to adapt to modern innovation and changes, given the dynamism in the F&B space,” 

Shreevardhan Asopa, Co-owner, LMNO_Q commented.

 

By using kitchen automation restaurants have also gained higher profits simply because they’ve received fewer complaints. Usually when restaurants receive a complaint they offer complimentary food or drinks or even an overall discount. A reduced number of complaints reduces the money lost from these complimentary items.

 

“Our products ensure that our clients achieve ROI between one to a maximum of six months. To put it in context, the major cost heads in any F&B business are Manpower, Training, electricity & oil consumption, and wastage. These automations are aimed at reducing and minimizing each of these header costs,” Eshwar K Vikas, Co-founder and CEO, Mukunda Foods had commented.

 

Guest experience: A customers’ experience can be enriched by technology in a handful of ways. For guests seated near an open kitchen their dining experience can easily be ruined by the noise and disorder coming from chefs, because automation organises the cooking process this creates a calmer kitchen and as a result the surrounding dining area is quieter. The quality and accuracy of meals is also improved; automation software ensures an entire tables order is completed at the same time so every member of the group receives their food at the optimum temperature. The software also highlights when there changes to an order like extra cheese or no olives so that any variations are not forgotten.

 

Reduce waste: Wasted food means wasted money, not simply in physical form but in time as well. For quick service or single item restaurants cooking the right amount of food while minimising wastage is crucial. With the bin management component of automation software operators are able to automate the hot hold process, allowing food to be hot held but for the least amount of time possible, ensuring items are not discarded for being held for too long. Using historical sales data, a bin management solution predicts how much product will be sold in 15 minute intervals during service and can be adjusted by operators to adapt calculations based on busy days or service requirements.

 

More restaurants seeking opportunity: Shaurya Malwa, co-founder of Origin Restaurants (owns Nho Saigon and The Canary) informs that the company would like to explore new innovations and techniques in order to make the experience seamless and ease job of employees. 

 

“In restaurant kitchens, technology is the one way to propel forward. The one technology that we have put in use is Automated Ordering System. This basically means that we have installed digital sensors in our refrigerators and other storage areas that automatically replenishes inventory in a busy restaurant, such as ours,” Malwa stated.

 

Furthermore, the team have installed automatic climate control systems which changes the room's temperature and humidity levels. This helps to create a better environments for the chefs to work in. “We would like to explore more such innovations to improve our kitchens,” he further added.

 

Remotely controlled kitchen: The Internet of Things (also known as IoT) is a network of physical appliances and devices that use a digital connection to communicate with each other. Implemented in a commercial kitchen setting, Internet of Things technology can be used to create a smart, remotely controlled kitchen.

 

In an Internet of Things commercial kitchen, the refrigerator could track and reorder inventory on your behalf. But really, this is just one example of the endless applications and possibilities of an IoT kitchen. Here are some benefits to an IoT remotely controlled kitchen like

 

Lowering the labor costs. With a smart kitchen that can automate repetitive tasks such as monitoring appliances and tracking inventory, one can accomplish more with a smaller team.

 

With remote monitoring through the Internet of Things, one can also keep track of the restaurant kitchen in a remote scenario. A remotely controlled kitchen is not a pre-made product but a bespoke network. IoT providers can design and install an Internet of Things kitchen that’s right for the restaurant.

 

While state-of-the-art restaurant technologies may cost more than their traditional counterparts at the outset, these tools quickly pay for themselves with the value they add to your restaurant. Some food service equipment trends come and go as quickly as the cronut, while others, like remote controlled smart appliances and digital kitchen display systems, are here to stay. This new technology in the food service industry can set you and your restaurant up for success for years to come.

 

In March 2020, when the pandemic brought about complete lockdown, no one realized that it would lead to repercussions to financial implications. One of the industries that were seriously hit was Food and Beverage, which led to the rise of a viable concept which helped masses enjoy restaurant-like food at home and made it less-stressful for foodpreneurs. Pandemic has taught us that we can survive in minimalism. Having said that, the urge to savour the "restaurant food" couldn't be satisfied with home cooked meals leading to recreating the restaurant style food at home and yet be craving for what the food industry offers in terms of taste, service and experience. An, that’s where we saw a new segment grow.

Also Read: Why Cloud kitchen over restaurant

“The perception that “healthy is boring'' is what we want to break. We promote clean eating with ingredients like hydroponic and Himalayan cheese, but on the same side we provide lip-smacking recipes. Tokarii is even using innovative ways of reducing their carbon footprint by soilless farming,” shared Jatin Katyal and Aditya Kapoor, Co-Founders at Gurgaon-based cloud-kitchen brand Tokarii that has adopted hydroponic farming methods to grow different types of lettuce, red and yellow Swiss chard and microgreens, reducing 95% of our water usage.

This brand practices ethical practices and sustainability as their key very fabric—whether it is the sourcing of ingredients, the storytelling packaging, or their unique concept of educating consumers about the importance of eliminating plastic in packaging process by following the zero plastic use initiative.

Similarly, for chef Amit Puri who left the corporate world to start his own venture, he want to offer premium restaurant quality food at affordable prices at his cloud-kitchen venture.

“Our topmost priority is the standard of ingredients we use. Our menu is well-balanced and we cater to families with large portion sizes and also the independent diner who wishes to opt for a single meal or a wrap,’ added Puri whose menu comprises of comfort and popular Indian food.

Local is the new ‘Buzzword’

Homegrown, Locally Sourced, and Freshly Prepared is what has been catching customer’s attention. A brand that has a seasonal menu with an entirely unique approach towards sustainability has seen a rapid growth.  “We are inclined towards catering modern recipes using natural ingredients and showcasing them with a flavorful punch,” added founder at Tokarii that sources microgreens and vegetables through Hydroponic farming, which is popularly known as soilless farming and is highly productive than conventional farming.

Similarly, Mumbai-based cloud-kitchen brand The Blue Tiffin has tied up with local vendors who procure and supply high quality ingredients from various sources.

“Our menu is meticulously created incorporating current food trends wherever practical. Since The Blue Tiffin concept is associated with comfort royal cuisines of India, we have researched about the regional and seasonal preps that not only have distinct flavours but would also be commercially accepted, retaining the true essence of the original preparation,” pointed chef Puri by adding that the pandemic has got people to take keen interest and digging deep into such local vendors. It has also seen the growth of talented home chefs, promoting and selling their regional cuisines.  “We as professional chefs are thriving to meet the need of consumers, by innovating and presenting such local and regional cuisine in a contemporary manner. Grains, seeds, leaves that were used in ancient times, have now gained popularity and are making way into commercial menus in a whole different way,” he concluded.

May Interest: “Ingredients that are Fresh and Locally available are Favored”

Meanwhile, Tokarii as a brand aims to create a warm connection between scrumptious meals and cultured millennials. “It’s been in our culture to consume freshly made products as we are an agricultural economy and food technology innovations have recently been explored in our country’. We believe we all will resort to our traditional food habits in the coming year,” the team Tokarii pointed.

Though, there is no denying that dining will remain popular as humans need to socialise and share their emotions with others, and food is the best catalyst to achieve the same. Cloud kitchen will be an alternate source, but they will not overpower the existing restaurant infrastructure around the world. There will be innovations in reducing human contact in food preparation, and overall hygiene measures will become more stringent.

 

India continues to be the fastest growing economy in the world with some of the factors like young population, increasing disposable income, demographic changes which actually turns right the consumption and also offer restaurants and hospitality business a considerable opportunity to grow. Despite all the right ingredients we still do not see much of VC and private equity investment in the brick and mortar restaurant business. And, we can say that 2021 was the year of tech-led investments where investors have showered their blessings on delivery, cloud kitchen, tech-enabled restaurants looking at the growth this segment holds.

Also Read: What Excite Investors to Pour Money in Your Restaurant

Also, there is a sudden shift in the venture capital business. In the last two three years a lot of venture capitalist have invested in the food technology or the restaurant space. Majorly there were two things happening- the large ticket venture capitalists, people who were able to invest about $60 MN or VCs who are back investing traditionally into the core technology products and hence, food and food service at large doesn’t feature as an area of interest to them.

From brands like Zomato, Swiggy that has become the market leader in delivery to home grown cloud-kitchen brand Rebel Foods that entered the unicorn club with the latest round of funding; each one of them received great appreciation from the investment circle.

“The food-tech space has evolved towards better personalization, innovation, and complete transparency which Rebel Foods continues to pioneer. With this round of funding, we will continue to serve newer customer food missions powered by technology and automation,” said Ravi Golani, Chief Strategy Officer, Rebel Foods recently during its announcement that it has raised USD 175 million in a Series F round led by Qatar Investment Authority (“QIA”).

According to a report, the Indian food service delivery market is expected to more than double to $13 billion (Rs 93,600 crore) by fiscal 2023 from $5.2 billion (Rs 37,440 crore) in fiscal 2020. With no physical presence, less commercial involvement and working as an internet restaurant wherein you can get the food delivered at the comfort of your home, cloud-kitchen segment is projected to become a $2 billion industry in India by 2024, as per a report by RedSeer Management Consulting.

Also, if we look at current market trend, more and more restaurants are happy sitting at home and binging on their favourite food. This has also led tech-led businesses to get investors attention.

“There is a huge opportunity in the cloud kitchen model because it allows a lot of aggregation and local food. I think at the end of the day, food is still local,” shared Shanti Mohan, Founder, LetsVenture by adding that this concept is a combination of asset light versus somebody managing the infrastructure.

May Interest: Ahmedabad-based Bigspoon bags Rs 15 Cr in pre-Series A round from NB Ventures, others

Commenting on the same Neelesh Bhatnagar, MD, NB Ventures, “We are excited to partner with Bigspoon, who are transforming the cloud kitchen landscape in Tier-II and III cities, with fresh-pier food and tech-led disruption in the F&B space. Our expertise in the Food-tech sector and their focus on a full-stack solution has great synergy.

NB Ventures recently invested Rs 15 crore in Ahmedabad-based multi-brand cloud-kitchen BigSpoon .

 

 

Cloud kitchen, dark-kitchen, ghost kitchen or we call it a delivery-only restaurant, is the new go-to model in food and restaurant sector. Not just in India, this is a global trend wherein more and more players are entering into the segment.  With only a kitchen where food is prepared for the delivery-only meals, it has seen a huge attraction from top investors globally. From angel investors to venture capitalists, all are taking a bite into this segment. All thanks to the never ending home dining trend due to the pandemic.

Also Read: 

कैसे क्लाउड- किचन ब्रांड की योजना को बना रहे है?

With no or limited store front or seating availability, the rent to sale ratio as compared to restaurants where it is 15-20% in restaurants, it is only 3 per cent in cloud kitchen. The cloud kitchen format gives the flexibility to launch more than one brand using the same kitchen infrastructure and resources. Hence, giving customers and entrepreneurs an opportunity to serve multi-cuisine from a single kitchen. And, as per experts, cloud kitchens are the future of the food industry, with top customer access, low cost of set-up and operations, and high profitability.

As per a report by Goldstein Research, the global cloud kitchen market was valued at USD 700 Million in 2018 and is expected to grow at a CAGR of 17.25% through the forecast period (2017-2030). But running a multi-brand kitchen is not everyone’s cup of tea. You need to have a right mix of brands, categories, cuisine to target the right set of customers in a area where you have pre-identified clientele. Here are top reasons according to experts on how you should choose brand, categories for a multi-brand cloud-kitchen set up.

The right-mix of customers: “We serve various missions which are influenced by customers,” shared Karan Singla of Rebel Foods by adding that this is what drives us to create brand. This is the advantage of multi-brands as we can touch the customer from various brands depending on his mood and need. Today, Rebel Foods operated across multi-cuisine from serving best biryanis, pizza to coffee all under one roof.

What’s the need: Brands are also created on the need of a customer. Whether he is eating with family wherein different people have different preferences, ordering food as a team wherein people want to gauge on a multi-cuisine menu, to friends who just want to do binge watching. And, in last one year we have seen so many multi-brand kitchen opening doors across India.

Single/ Double serve: Driven by the need of serving, cloud-kitchen brands plan new categories and offerings. For example we have seen brands like Lunchbox and Faasos serving meal options for one person, two people and for a complete family. That ways it is driven by the number of serving.

Regular Meals: Many a times you just don’t want to cook food at home and want to order something healthy, regular from outside. From a simple rajma bowl to a plate of aloo paratha with curd, that’ where these kind of brand enter into the whole game.

Indulgent/Occasional meals: These days celebrating a birthday, anniversary or just wanting to have a fine-dine experience does not require you to visit a luxury dining destination. It can be created at home. There are brands in the market that are delivering luxury and 5-star like experience at home.

Hence, we all know by this time that cloud-kitchen brands offers multiple profits, benefits as compared to a traditional brick and mortar business.

 

“The Indian food service delivery market is expected to more than double to $13 billion (Rs 93,600 crore) by fiscal 2023 from $5.2 billion (Rs 37,440 crore) in fiscal 2020,” shared a report by.

And, with more and more people staying at home and dining-in becoming the new dining-out, cloud-kitchen or the delivery business in India is estimated to grow five times bigger in next five years.

With no physical presence, less commercial involvement and working as an internet restaurant wherein you can get the food delivered at the comfort of your home, cloud-kitchen segment is projected to become a $2 billion industry in India by 2024, as per a report by RedSeer Management Consulting. Not only this, as per survey, 21% of the respondents said they were more likely to increase their online ordering of takeaway food after the lockdown, while just 9% said they were more likely to visit restaurants more often.

Looking at this opportunity, investors are pouring their money in the fastest growing segment during such a pandemic.

Ahmedabad-based cloud-kitchen startup Rolling Plates that offers ‘Ahmedabadi Biryani’, has raised USD 150K in its Pre-seed fund round from US-based investment firm EXL Investment LLC.

With this Pre-seed fund raise it is planning to expand in the tier two cities with its 'Delivery-Only' business model, focusing on west Indian market before venturing into the other territories.

“Being a food-tech startup our priority is to build a strong and sound technology that can enhance our online ordering experience and logistics capabilities. Going forward we would create a robust data analytics framework that can improve the way we work and the kind of food that we serve to our customers,” shared Shihab Sheikh, Co-founder, Rolling Plates.

In the next phase after strengthening the foothold in India, Rolling Plates plans to venture into The United States as its first global market. Rolling Plates is also in talks for a JV with a Tanzania based food delivery and logistics startup to expand in the African Market. Apart from its flagship brand 'Ahmedabadi Biryani' that offers authentic local taste of biryani, the startup also operates two other virtual restaurant brands - The Mughal Treat (A main course Indian, Mughlai & BBQ delivery brand) and Brunch'O' (Snacks & Breakfast delivery brand).

“The startup not only has the potential to grow in India and but also mark overseas due to the unique taste of ‘Ahmedabad Biryani’. It has high potential to grow in The United States, where there is a large chunk of Indian and Asian diaspora,” said Sadaf Mansuri Founder of EXL Investment LLC.

Founded in 2018, by husband-wife duo, Shihab Sheikh and Falaknaz Sheikh consciously chose to curate the authentic traditional ‘Ahmedabadi Biryani’ recipe with the sole purpose to propagate the unique taste of local sumptuous biryani found only within the walled city of Ahmedabad, still prepared by the Mughal era’s old-fashioned traditional cooks called ‘Bhatiyaras (cooks)’.

Similarly, Nino Foods earlier Francesco’s Pizzeria has raised $125,000 from Silicon Valley-based startup accelerator Y Combinator. Started by Nishant Jhaveri and Pranav Mehra a year ago by converting it to a delivery-only venture, today they also run a burger brand under Nino Burger.

The brand is also planning to launch their third brand in a few weeks.

As per Nino Foods that is focusing on the premium segment where average order value accounts for Rs 400 and above.

“We built our second brand, Nino burgers, to prove to ourselves that we could create a food brand that people love. We used data for some decisions and went with our gut on others. Being outsiders to the food industry but lifelong food lovers, we were able to take a more customer-centric approach. We experiment often, iterate quickly, and want to build a category-defining company with global impact," said Nishant Jhaveri, Co-Founder, Nino Foods.

They are also aiming to enter three cities by next year.

Also, as we have seen home dining trend rising with more and more people eating at home. End to end kitchen aide ChefKart that plans, shops and cooks for you in your home kitchen by providing trained and verified home cooks who create perfectly hygienic meals suited best to your taste, at the comfort of your palms.

The Gurgaon-based startup has bagged $300,000 in Pre-Seed Funding from Titan Capital, Pravega Ventures, Lead Angels and others.

ChefKart has served over 500 customers even during COVID times and managed to grow 50 per cent m-o-m. Since its inception, the brand has on-boarded 2200 service professionals covering almost the entire Gurugram.

“People see COVID as an opportunity loss but it has proved to be a blessing in disguise for us as people have realized the importance of home-cooked food. I believe we have the right set of investors who betted on the right set of people to solve the daily problem of managing a kitchen," said Vaibhav Gupta, CEO and Co-founder, ChefKart.

It is planning to use the funds to develop a product that can help users manage end-to-end kitchen needs, upskilling and training of cooks to make them more professionals, acquiring more customers and chefs on the platform, and scaling up the business in Noida.

 

Started as a QSR concept by Jaydeep Barman and Kallol Banerjee in 2011 serving wraps and rolls, Rebel Foods formerly known as Faasos wanted to create an Indian global QSR by creating something that we Indian’s love. “Over the years, we have been chasing lots of food missions as we developed this company by realizing that this is the new opportunity and we should explore that,” shared Karan Singla of Rebel Foods that has moved from a QSR model to delivery only cloud-kitchen and the company consider it yet another innovation which happened to the brand in 2015. With present across seven countries, it has become world’s largest internet restaurant company with presence in 45 cities with 350 multi brand dark kitchen/cloud kitchen or ghost kitchen whatever you may call it. The brand operate 3500 internet restaurant that mean it has presence only on internet and you can’t visit the restaurant for dine-in. “We have been operating 20 brands all lead by technology and data,” added Singla.

Also Read: How to market your cloud kitchen business

Looking at the growth rate of globally top brand like Rebel, here are few things that we should consider when operating a dark kitchen brand:

The new wave

2020 has given birth to many new cloud kitchen or delivery only brands. As per reports, Indian food service delivery market is estimated at INR 37,440 crore (US$ 5.2 billion) in GMV in 2019-20. Growing at a CAGR of  33 per cent over the last three years, it is expected to reach 93,600 crore  (US $13 billion) by 2022-23.

As per industry experts, the concept of multi-brand or QSR is not new. “We have seen one high street restaurant operating multiple QSR as in Yum operating KFC, Pizza Hut and taco Bell from a single location. But they are still a traditional restaurant which operates individually. Whereas Rebel Foods has one premise to run multiple brands,” pointed Singla.

Significant Capital/ Location risk:  When it comes to operating a restaurant one need to pour in a lot of money on location. If we look at example, Dunkin Donuts that entered Indian market with a lot of bang, closed its 30 per cent of the restaurant in India in less than 18 months and over 80 per cent in about 60 months. But, if we look at data, we have hardly seen any cloud-kitchen shutting their shop in last one year. With focus on technology and data, the cloud kitchen brands have been able to know their catchment location based on the data provided by aggregators.  “We are mainly open at a place from where we can serve customer within 15 min-30 min delivery time and this makes dark kitchen profitable within months as compared to restaurants that takes 5 years or more to be profitable,” pointed Singla.

Cost vs Profit: “A Same store sale is a term in restaurant business. In a traditional FnB model while your cost starts from day 1your sales pick slowly and your payback is very late,” pointed Singla for whom in a dark kitchen model though the cost go up but since the sales comes very quickly against those cost and they go very well augmenting those sales by adding more brands on same cost. So, this helps in getting your kitchen profitable much more early.

Must Read: How Rebel Foods is focusing on building ‘customer-first’ approach brand

Faster payback and Breakeven: There’s no denying that cloud kitchen/ dark kitchen model involves low cost and faster profits as compared to a traditional F&B model which has 3-5 years of time for breakeven or return whereas a dark kitchen breakeven time is less than 12 months.

 

For generations, brands building a national presence relied solely on a brick-and-mortar strategy and made significant investments over decades. Brick-and-mortar brands often end up spending maximum revenue on rent and operation costs and face various challenges while scaling up across geographies. India also has a high rent-to-sales ratio and even before the pandemic, the business model was not always profitable. With the onset of the pandemic and lockdown, many restaurants were forced to shut down as they could not possibly cover their overhead costs with just delivery. That is where cloud kitchens became the game-changers. “Cloud kitchens are now a reality, and here to stay for a variety of reasons such as ease of scaling up and lower operation costs,” shared Ankur Sharma, CBO, Rebel Foods who believed that as an industry, cloud kitchens have been performing well even in the pre-covid era, while the pandemic has given the concept the much-needed push. This has also been successful since brands nationally and internationally realize that cloud kitchens are a great way to scale up a brand at an optimum cost and multiply the speed of growth. Excerpts from the interview:

Must Read: How Rebel Foods has Built the Largest Dark-Kitchen Business in India

Being the leader in the segment

Our focus on the ‘customer first’ approach has been our key ingredient while building Rebel Foods, its brands, and partner brands. Today, we are the world’s largest chain of internet restaurants building on the principle of placing our customers before us and business. Our Rebel operating model is built to scale brands and their growth in a meaningful manner. While building brands, our first step is to understand the market gap in the customer's want. Once that has been defined, we build and scale brands across the regions. However, our customer journey does not end here. We continue focusing on customer feedback and introduce and modify our offerings on our platform. The customer delight teams constantly work with brands to ensure that customer’s feedback is not only heard but also considered and implemented wherever possible. Our journey of putting ‘customer first’ continues with our promise of serving the best quality of ingredients, 100% transparency, 200+ quality checks, and no artificial flavour or colouring.

You recently partnered with Wendy’s, Naturals, MOD to name a few to open their cloud-kitchen. How does it work? Is there a royalty fee?

Rebel Launcher is where we welcome great restaurant brands to utilize our cloud kitchen to scale pan-India and even abroad. From finalizing a location, infrastructure, getting the kitchens running, getting legal and compliance in place, to setting up a supply chain, there are constant challenges to overcome while setting up a restaurant. Not forgetting, the latest challenge Covid-19. The pandemic has heavily impacted dine-in sales and given further impetus to the pre-existing food delivery business. This is where the Rebel Operating System comes in.

The Rebel Operating System comprises three things:

1.     A full-stack technology from inventory and kitchen management all the way to demand management and fulfillment. 

2.     Supply chain capabilities for sourcing, warehousing, and moving input materials safely in any shape and form.

3.     Culinary expertise and capabilities to break down menus into small SOP-driven steps that don’t require any additional skill.

 

These elements are available across all 350+ kitchens across 45+ cities. Brands as a part of Rebel Launcher can integrate instantly with all distribution channels and cost efficiency with shared resources. We partner with brands who reflect our promise of placing customers first and extend our expertise and scale them towards becoming a national brand on delivery. Our journey with Natural Ice Cream, Mad Over Donuts, Baskin Robbins India, SLAY Coffee, The Belgian Waffle Company, and other brands which now operate as a part of the Rebel Launcher program was smooth and successful. These brands started operating on the Rebel Operating model and scale up easily rather than create awareness by building offline stores which would be much more time-consuming and capital intensive. The Rebel Operating System simply enabled these brands to plug and play while using our world-class kitchen infrastructure. We further achieved a milestone in 2020 through our partnership with Wendy’s. In the coming months, we will scale Wendy’s presence pan-India across locations and aim to make America’s leading burger brand a household name in India.

Also Read: Wendy’s partners with Rebel Foods, to open 250 cloud-kitchens

Building a ‘Customer’ first approach

There are significant mutual benefits in partnering with brands as a part of Rebel Launcher. Over the years, we have launched some of the most loved, category-leading brands in India such as Behrouz Biryani, Ovenstory Pizza, Faasos, etc. This has allowed us to build a system that is easy to onboard and scale brands. With Rebel Launcher, we are allowing brands to access world-class distribution networks across 45+ cities and giving them visibility for the business. Partner brands also allow us to appeal and address various food missions of our customers and strengthen our offerings. As an organization, we want to continue powering brands that create products with the same thinking - customer first.

Tell us something about your existing brands. Which has been the customer and your favourite?

We have created some of the category-leading brands which have received customer love in its existing markets. Our brands currently appeal to various food missions such as single meal orders with Faasos to royal indulgence with Behrouz Biryani. Ovenstory has also seen a popular demand for its USPs such as different cheese offerings, thinner crust, etc. We are also looking forward to expanding Mandarin Oak, Sweet Truth, Lunch Box, etc. across locations.

While each of the brands we have a special story, Behrouz Biryani and its inception remain closest to my heart. The brand within one year of its launch was scaled pan-India which showcases the trust and love it has received. Behrouz Biryani has by far exceeded our expectations and helped us realize the potential of serving customers in different geographies.

What is the timeline on the scale-up for brands such as Wendy's, MOD, and naturals?

With Rebel Launcher, we take as less as 15 days to onboard brands, which starts from initial discussions to the date of the first sale from Rebel kitchens. Brands like Natural Ice Creams and Mad Over Donuts now operate at 40+ locations across India within 6 months of being a part of the Rebel Launcher family. We have scaled up Wendy’s in 30+ locations in the last four months and will reach 100 locations by the end of this year.

High on Expansion

We have opened kitchens in 15 new Tier-2 cities in India in addition to our international expansion which is underway. We have noticed that during the lockdown, a lot of people went back to their native cities or hometowns. Our consumers are shifting from one market to another, but this has further helped us in our expansion plan. We are now present in newer markets such as Amritsar, Jalandhar, Rohtak, Guntur, Trichy, Mangalore, Ranchi, Agra, Madurai, Kanpur, Dehradun. We are optimistic and committed to our growth in India and internationally

Food Trend

The pandemic has increased focus on food safety and cooking procedures which we believed will only gain prominence this year. Adhering to health and well-being while preparing food will be the focus while putting the control back into the hands of the customers. Apart from food safety, another important trend will be the use of Artificial Intelligence (AI) across the food industry. For instance, voice-command features for ordering food are expected to hit the scene soon. The power of AI can be used in multiple ways due to its intuitive nature and recommending customers as per their tastes and likes on various dishes while ordering.

 

With the pandemic, eating out as a group and celebration with family and friends has drastically reduced. And, hence brands have introduced various home dining experiences, not just bringing meals at the comfort of home but they have also come with accompaniments which provide the ambience of going out and celebrating, while staying at the comfort and safety of homes. According to a recent report by Adobe, “where technology is a gap, brands are taking a broader look at personalisation, evaluating all of the building blocks that support a better experience: data, content, decisioning and delivery. The pandemic has helped teams to understand where they have struggled to bring the experience together.”

“Delivery is no longer a retro-fitted business. The business has evolved so much and you have specialist needs to this category,” shared Joseph Cherian, India Head, Kitchen Plus who started a cloud-kitchen brand himself 5-6 years ago before partnering with Swiggy.

Also Read: How Cloud Kitchen has Emerged as a New Online Vertical

It’s no more about MORE is good: Today the ecosystem in the food delivery is far more evolved in comparison to few years back. These days’ brands just need to focus on quality. “In dark kitchen you can spend your money on operations, efficiency, people, detail understanding and flexibility of the menu etc. But in an offline world if you have to change the menu the cost is huge, you have to change a lot of collateral, communications. It’s much easier in terms of quickly change in dark-kitchen and delivery space,” added Cherian by pointing that data is available wherein you have an understanding of the consumer. So, how do you leverage all of that and quickly adapt and make these changes is easier at the delivery front.

Getting the right transaction: The emergence of ‘delivery-only restaurants’ has been expedited because of the current crisis. The global cloud kitchen market size was valued at $43.1 billion in 2019, and is estimated to reach $71.4 billion by 2027 with a CAGR of 12.0% from 2021 to 2027, as per reports. People may be very selective in terms of which restaurants and crowded places they visit in years to come but delivery is definitely going to change the whole gamut of dining-in trend. “Delivery and dark kitchen business looks very appealing as everyone knows that it is low capex, quick on return business. We at Wendy’s took almost 2 years to decide on it. It may look fun initially but it’s all about the mass and getting the volume,” shared Jasper Reid, Founder, IMM that runs Wendy’s, Jamie’s India by adding that the bottom line is about getting the transactions.

It’s all about optimisation: With delivery model soaring, an entirely new model as we may call it dark kitchen/ cloud-kitchen has emerged. In comparison to the delivery business, dark kitchen is much optimized business. “Earlier for most of the dine-in centric outlet delivery was only 3-5 per cent of the business. So, you didn’t optimize. People need to understand that delivery is one of the core business today and as restaurant sale has increase to 60-65 per cent from an average 5% per cent today is all because your optimisation has moved to such pace,” said Rakesh Ranjan, Chief Sales Officer, Zomato.

The right menu engineering: “The biggest mistake that a restaurant do when they enter into delivery or a cloud-kitchen business is that they put in the same fine-dining menu that they have online. Restaurants need to think here differently because the same customer might behave very differently when he comes online verses when he visits a restaurant for a dine-in experience. Hence, a nuance approach in menu engineering is very helpful,” pointed Renjith Prahladan of UrbanPiper as online business is all about making yourself visible to the right customer. And, with more restaurants and start-ups looking at online availability and visibility, aggregators are also trying to fix on how they would give space to each of these restaurants.

Must Read: Covid-19 has made most restaurant kitchen a dark kitchen, Is Brand Trust Next

The better ‘For You’ space: The consumption pattern has change in last 2-3 years wherein people are looking at healthy options that has both health and entertainment attached to it. We see that calorie counting foods, chef-driven menus, immunity booster ingredients are also high on demand in all these years. “Based on our internal data 35% per cent of our customers that are on subscription basis, half of which would have a goal attached to it whether it is weight loss, diabetes, heart conditions etc. I think that number continues to hold as we look at completely new kind of customers seeking more entertainment. I think the whole concept and awareness about health has gone few notches up and it’s now about goal-based approach. Health food is important and it will complete to improve in years to come," concluded Ankit Nagorio of Eatfit who has completely changed the health food spectrum in the country.

 

No one would have ever thought that the concept that would get started as a small budget option would be a global trend in few year. Today, cloud-kitchen or ghost kitchen/ dark kitchen what we may call the model, is projected to become a $2 billion industry in India by 2024, according to RedSeer Management Consulting.

 

In the last five years, we have seen brands like Freshmenu, Rebel Foods, Box8, Biryani by Kilo, Cross Border Kitchens, Goila Butter Chicken, InnerChef and many more disrupting the space like never before. In fact, restaurant brands like Speciality Restaurant Group, Lite Bite Foods, Azure Hospitality, Foodlink that has lured the diners for more than a decade now have ventured into the cloud-kitchen space to take a bite of the already flourishing segment and also to overcome the coronavirus losses. With restaurants almost shut for 8-9 months, cloud-kitchen model came as a savior for many food businesses.

Also Read: How Rebel Foods has Built the Largest Dark-Kitchen Business in India

Cloud kitchens have disrupted the food industry the same way Netflix did forhome entertainmentor what Uber did to the traditional taxi industry. “Traditionally, the food industry has seen large QSR chains opening huge restaurants where customers would come and dine-in. For a food business, this model is high on overheads and not very profitable, especially in countries such as India which have very high rent-to-sales ratio. This is where cloud kitchens disrupt the market of food services,” shared Karan Singla, Head of Operations, India.

 

Cloud kitchens enable to save a lot in terms of revenue, but they also enable multiple brands to operate within a centralised system. The pandemic saw a lot of the brick-and-mortar restaurant brands shut down, and pave way for the cloud kitchen brands. With multiple restaurants entering the delivery space, a completely new universe of option opened for the consumers to choose from, giving them an all-new experience, at the comfort of their home.

“With the trend of “ordering out” we realized that delivery was slowly becoming the real king. Considering the same we started to convert some of our ‘dine in’ kitchens to ‘delivery kitchens’, said Anjan Chatterjee who launched 3 cloud-kitchens during the pandemic with plans to add 26 more in coming months.

Low on capex, high on returns

2020 has been a year of surprises and the era of new trends being born. One of them is the introduction of cloud kitchens which is definitely here to stay. Another form of it that already existed was home deliveries from restaurants. The best part about cloud kitchens is that it has given the small players a chance to enter and test the market. The cloud kitchen model has various pros that work best in the industry's favour. For example, Swiggy and Zomato didn't play a big role earlier in the hospitality industry but have now become significant platforms for the growth and visibility of cloud kitchens. Cloud kitchens have lower operations costs along with saving a lot of money as you don't invest in large premises which is definitely profitable than a restaurant. In a nutshell, because of their low-cost maintenance and broader reach via online visibility, they are far profitable than restaurants.

“In terms of driving factors, I believe that cloud kitchens have lesser break-even time and fewer inventories. Although, the exposure to your clientele is almost the same as factors like social media, delivery portals, etc. help in reaching out to your customers and be visible. Not only it is a smaller and easier approach but is also a lucrative business strategy compared to starting a restaurant that takes up to 4-5 years to break-even,” pointed Rahul Bajaj, Director and Conceptualizer at One Tight Wrap.

 

May Interest: 7 Reasons Why Cloud Kitchen

Packaging is the new storefront

“Packaging is becoming the new storefront. People love visiting new restaurants and share their opinions on the interiors, ambience, and customer experience. With social distancing, in-store experiences have taken a backseat and food packaging becomes the new customer touch-point,” added Singla who believed that people will take note of great packaging experience, share it on social media making it a good conversation starter.

Also, it’s not just about packaging, a safe packaging is also a major concern for people these days.  The Masala Story from the house of Punjabi by Nature uses packaging that serves as a sustainable approach to the environment. Catering to hygiene and safety guidelines, The Masala Story didn’t fold and had to sacrifice some of the energy and character that had defined them in order to operate safely during the ongoing pandemic. The delivery kitchen adds additional sanitary and social distancing requirements like checking temperature, sanitising the kitchen etc.  similarly, Rebel Foods has introduced – ‘UV sure bag’. Food which is ordered on any of the Rebel Foods brands will be put in an outer bag, which is run through a UV chamber, deployed at all partner kitchens, before being handed over to the delivery person. The UV chamber disinfects both the outer and inner surfaces of the bags making sure that it’s completely safe.

It’s a global boom

“In many countries, take out or delivery for restaurants has converted from 5-20% of their business, to now, 80-100% of their business. And hot food delivery has, in the last 6 months, increased user penetration from 20% to 80% of the population. When you factor in generational demographics, this sort of user shift would normally have taken 10-20 years to occur. Handling that level of demand increase in such a short amount of time is not an easy feat, especially for restaurants not designed for the significant reversal of demand and distribution channel, from dine-in to take-out / delivery,” shared Kent Wu, COO of Taiwan-based JustKitchen that has grown to 40 per cent month-on-month in just ten months of starting its business.

Backed by the customer support, the segment heavily relies and works on internal feedbacks, loops and interactions as it believed that customer feedback plays a huge part in the success and accomplishing product market fit.

“We're proud to state that 30% of our customers provide feedback and 99.5% of it is positive. We have huge customer loyalty and ultimately, they make us the success we are today,” added Wu of JustKitchen that has decided to go public on TSX Venture Exchange.

 

Similarly, Dubai-based Kitopi that is currently present in the UAE, Saudi Arabia and Kuwait markets, is now operating more than 60 satellite kitchens with more than 1,200 partner restaurants. Also, to cater to the growing online needs, Kitopi launched an e-grocery business by launching ‘Shop Kitopi’ in Dubai last March.

It has also partnered with Kuwait-based KLC Virtual Restaurants for expanding KLC in GCC region last week.

“Our mission is to satisfy the world’s appetite, and partnering with KLC brings us one step closer to achieving that mission,” said Mohamad Ballout, CEO and co-founder of Kitopi by adding that  they achieve this by taking care of the operations – such as sourcing of ingredients, cooking, packaging – and also delivery by partnering with third-party aggregators.

Hence, we can say that with all the numbers and attentions that the cloud kitchens have lately garnered, as consumers have been forced to turn to online for food delivery due to the pandemic-induced lockdowns and movement restrictions, it is surely going to rule the food sector for quite some time.

Looking at the trend, we at Restaurant India are doing the first-ever dark kitchen and delivery summit and awards on 20th May 2021. The virtual-conference will gather top players from India and global markets discussing and debating about the segment and its growth story, demand, consumer trend and why it's important for brands to look into delivery not just as an option but as a necessity today. For more details please visit: www.restaurantindia.in

 

“Creativity is intelligence having fun.” – Albert Einstein

Cloud kitchens are popularly known as “Dark Kitchen” or “Ghost Kitchen”, as they are not visible to customers. So far, they have been playing second fiddle to the Dine-in Restaurants. But with the pandemic, their prospects have changed for a brighter one. With this in mind, many are stepping into this business segment.

For those who are venturing into the cloud kitchen business, it is important to note that like all other businesses, cloud kitchen has its challenges. The main challenge faced by cloud kitchen is reaching customers, securing a place in their mind. Here are few steps to promote your cloud kitchen & make it a success.

Also Read: How to make your cloud-kitchen business operation efficient

Built your website: Whoever starts cloud kitchen, starts with the option of enlisting them with the various food aggregators available. Here I would like to add that apart from enlisting with the food aggregators, have your own presence online. Start with creating an online ordering website. Many platforms help you build your website in no time and with absolute ease. While designing your website make sure that the customer order & checkout process should be very smooth. Also, it is good to keep your menu crisp & easy to understand and have enticing food photographs.

Create Social Media Page: "You can't sell anything if you can't tell anything.” Keeping in mind the above saying, once your website is ready, create your brand’s social presence with Facebook & Instagram pages. Start posting about your brand, your products, your products benefit / USPs consistently. Use good food shots in the post so that your customers get enticed by seeing them. Social media can help you to grab customer eyeballs. You can also use them as a revenue generation channel by running Ads on Facebook & Instagram and get the order through them.

Customer Relationship Management: Next is to have an automated CRM program in place. One of the secrets for a successful business is that majority of sales should come from old/ present customers. Using the CRM program, you build a relationship with your customers & always remain connected with them.

Run various campaigns to engage with your customers. These will help you to be in the recall mind of your customers.

Content Marketing: We generally get hooked to any narration, when conveyed in story format as it establishes an emotional connection with us. In the same way, if you can convey to your customers, your brand purpose, brand journey, product USPs in a story format, you will be able to establish a connection with your customers. The story can be in form of a blog post, videos, podcasts, memes that will connect to your customers emotionally.

Enlisting with Google My Business: There is a tool by Google to bring your brand more visibility. Using this tool, Google My Business, to enlist your brand with the right description, content, food images, videos and

information. Google My Business is a free tool that allows you to promote your business profile and business website on Google search and Map.

May Interest: Dealing with New Trends of Social Media Marketing

Social Media Influencer: Another great way to promote your cloud kitchen business is by tying up with social media influencers in your area of operation /service. When their followers see that influencer speaking about your brand, it builds social trust and increases your brand recall value. According to the Digital Marketing Institute, 49% of consumers depend on influencer recommendations that could lead to sales.

Sponsoring Events: Sponsoring events is another way of spreading brand awareness among your target customers. This approach is quite an old one, but effective if used strategically. You increase your brand awareness by being present in front of the attendees there. To generate curiosity about your brand, you can use social media to post about the event on your page & also on your brand page. By participating you get the database of the attendees, which can be used for future engagement. You can also sample your products to your target customers, and follow up with further engagement.

Sampling Kiosk: If your cloud kitchen is in the residential locality or a corporate area, showcase & sample your product to the RWA and/ or the corporates. Doing so will create your brand visibility & brand awareness. You can initially offer some special discounts/ offers to convert your target customers to your loyal customers. Here too, you can get the database of the members of the RWA or the corporate, which can be used for further engagement.

Also Read: How Kiosk Model is Turning Big in India

Your Loyal Customer – Your spokesperson: Lastly, always use your loyal customers to act as your brand's brand ambassador/ spokesperson to spread words about your brand, your brand's offerings. You can have a referral system for your loyal customers. This will help you to minimise your customer acquisition cost too.

These are some of the ways to promote your cloud kitchen. But strategies are not just limited to these ways only. There can be many more innovative ways that you can use to draw the attention of your target customers.

 

World is getting techsavvy so why don’t  your food!

Virtual kitchen, ghost kitchen, the dark kitchen is all the synonym of cloud kitchen. Restaurants are turning online, the facility of ordering and delivering food through food aggregator apps or through the restaurant’s own app.

Concept of Cloud Kitchen

“Technology is best when it brings people together.”

It creates a rainbow when it brings food to people similar rainbow is created by a cloud kitchen.The idea of a cloud kitchen emerges with the arms spread of technology in our modern life of the techy world. Travis Kalanick invented the cloud kitchen. It allows customers as well as restaurateurs to fulfill their wishes by swiping a single key. Customers can place their orders over the internet through their choice of the portal and the food is instantly prepared and gets delivered at their place at your customized or comfortable time.

Time is unstoppable but cloud kitchen is a massive help to walk with time, in time, and beforetime. In the busy world, we want everything at our pace and time. The cloud-based technology system gives us a sigh relief by fulfilling our wish like genie. It is simply one stop to pamper your hunger with scrumptious delicacies in no time.

7 Reasons Why Cloud Kitchen?

It reduces expenses and need not spend on establishments; it can work efficiently in minimal infrastructure with low starts-up costs. It prevents petrol-high rental payment hassles. From age-old restaurants to naïve restaurateurs are welcoming cloud kitchen with smiles to add techy stars with their quality and services.

1.     Towering OPs- It inflates the Operating Profits (OPs), by opening the doors which minimize the set-up worries, unlike traditional restaurants. Plus, it opens the window of extra profit by saving overhead costs such as administrative costs and maintenance utilities. 

2.     Savings in Capital Expenditure- It reduces the fever of rental issues and the only thing about which the one should concern is that your modest, hygienic kitchen is established near to consumers. 

3.     Less time consuming- Through this tech advancement, customer demand can be handled easily and restaurateurs have more diversification, options, manners, services to pamper their customers.

4.     Quality Service- It helps in maintaining quality with quantity. It not only helps in making customers happy but also satisfied. 

5.     Dive in choices- It helps in analyzing the preference, taste and pulse of customers to innovate and improve services.

6.     Just a swipe away- It took as much time as we took in blinking eyes, super easy to explore, experiment, and customized menu online according to your tongue. 

7.     Standardized Delivery Procedure- The standardized delivery procedure makes it more trustworthy and convenient.

 

Predictions – Cloud Kitchen soon at zenith

Cloud Kitchen is not only trendy but also the convenient and time saving.

1.     On decrease in setup costs, cloud kitchen will evolve faster and better.

2.     Full kitchens in some arena will become a thing of past.

3.     The focus of restaurateurs is going to face positive shift in terms of efficiency and experience.

4.     Cloud kitchen franchises will be a cupcake treat to start up.

Cloud Kitchen: Business Model

1.     Classic Model- This model focuses on consumers comfort at low cost. No tangible dining space or seating establishments.

2.     Kitchen Umbrella Model- This model contains multiple brands under one mother kitchen umbrella. Consumers will have multiple cuisine at one stop.

3.     All in One Model- As the name suggest it is a mix of both the afore- mentioned models. It includes multiple brands under one roof and customers will have numerous cuisine choices.

4.     Garnish Model- This model consist of restaurants can rent the space and rest of the thing will be done by online delivery platform. This model ensures quality food.

Conclusion

Cloud Kitchen does have lesser hassles and provides quality, quantity and customized scheme to customers as per their tongue and pockets.

 

One of the emerging sectors of business in 2021 is Cloud Kitchen Business. Cloud kitchen business has been on the roll for the past few years and with Covid-19 affecting the sector at large, it has seen an exponential growth. Before going further it is important to understand what is a Cloud kitchen Business? It is an online restaurant with no physical storefront and that runs mainly on online delivery system.

The entry barrier for cloud kitchen business is quite low and so the competition is very high. In order to succeed in cloud kitchen business, it is very important to make the business operation, very efficient.

Also Read: Do's and Dont's of Cloud Kitchen Business

Here are few ideas to make your cloud kitchen business operation efficient:

Max/ Optimum utilization of Space: One of the key elements of the success of cloud kitchen is, optimum utilization of space by having immaculate kitchen design, keeping in mind the smooth work flow from production to packaging. When kitchen space is optimized, you will have to pay fewer rentals and that has a direct effect on your profitability.

Implementing system & process: Every function in the cloud kitchen operation should have a process that has to be followed to the toe. Have SOPs (Standard Operating System) for each of the operation processes like procurement, production, inventory management, recipe management in place. And each of these processes should be integrated with the technology. Install Recipe management system software to automate your food preparation process which will help you to get consistency in the quality and quantity of the food prepared and get an edge in the competitive market. Also automate your procurement & Inventory management system with Supply chain Management tool to understand your wastage, Food Cost & Stock of Material. The attrition rate in F & B is very high so, it is almost essential for a cloud kitchen business to have a system that is integrated with technology, to remove human error and have consistency in quality.

Customer ordering system: Having an efficient customer ordering system is also one of the key elements of success for a cloud kitchen business. One needs to have a POS (Point of sale) installed in the cloud kitchen through which all online orders land up. This will help you to smoothen the customer order management. Time being essence in cloud kitchen operation, POS is a saviour. Various food aggregators like Zomato & Swiggy also can be integrated with the POS and thus, help to streamline all orders at one place. Another advantage of having a POS is being able to get analytics on customer buying behaviour that will help you to know the pulse of the customers. These helps to have an efficient CRM, which leads to happy customers and that result in happy cloud kitchen owners.

May Interest: The Masala Story by Punjabi By Nature to open three cloud kitchen outlets

Efficient delivery Process: Tying up with food aggregators has a lot of advantages. One of them is being the prompt presence of delivery person for the orders. Delivering orders efficiently in the stipulated time is one of the key elements of cloud kitchen business operation.

Efficient Packaging Process: Although packaging process is part of the cloud kitchen operation process, but thought to mention this separately because of its importance in the cloud kitchen business operation.  At the very beginning, I have mentioned having an excellent kitchen design as it is important to have an efficient flow of prepared food from the preparation point to the packaging point for onward delivery. Next important thing is the packaging that is being used. It is utmost important to have packaging that is tamper proof & leak proof so that customers can have food in its right temperature.

Effective Delegation: To manage your cloud kitchen operation efficiently, you have to bring in skilled manpower, train them and delegate the urgent & important work. As a business owner, it is very important for you to concentrate on the most important task that is increasing revenue generation. With delegation, you can do so.

Manpower planning & training: Spend time with your team; train them not only to perform their work efficiently but also to motivate them with the brands vision & purpose. These help to have a strong work culture within the organization. With the increase operation efficiency, your cloud kitchen business will be able to give a WOW experience to your customers. By gaining happy customers, your revenue will increase. With increase in sale, your unit fixed cost will decrease and you will get better economy of scale. This economy of scale, in turn will help you to have increase profitability & better ROI.

About the Author

Mahua Ghosh is the Founder of “The Filling Station”, a Food E-comm Brand & Food Startup Coach. She started her entrepreneur journey in 2010. “The Filling Station” started as a QSR brand in 2013 and presently they have completely migrated to E-Comm. With her entrepreneur experience, she help aspiring entrepreneurs to start their entrepreneur journey in cloud kitchen business, one of the hottest sector of 2021.

 

The coronavirus has pulled the rug from beneath for any industries including the food and beverage sector. Once considered as plan B for the sector, Cloud-kitchen has acted as a saviour, game changer for the restaurant and food business at the time of the pandemic. According to a report by Allied Market Research, the global cloud kitchen market is estimated to reach NT$2,103 billion (US$71.4 billion) by 2027, almost doubling the amount in 2019. Taiwan-based JustKitchen is one of that startup that rides on the cloud-kitchen boom. Started in February 2020, it currently has 14 kitchens in the country. Excerpts from the interview:

How Cloud-kitchen model is changing the food service game globally?

 

This is a great question and very pertinent in current times due to COVID. In many countries, take out or delivery for restaurants has converted from 5-20% of their business, to now, 80-100% of their business. And hot food delivery has, in the last 6 months, increased user penetration from 20% to 80% of the population. When you factor in generational demographics, this sort of user shift would normally have taken 10-20 years to occur. Handling that level of demand increase in such a short amount of time is not an easy feat, especially for restaurants not designed for the significant reversal of demand and distribution channel, from dine-in to take-out / delivery. What was once an optional consideration for the consumer is now exclusively the only choice. And even post-COVID, this new modality will be part of the landscape; just as fast food (QSR) became part of the F&B space.

Also Read: Cloud-kitchen will be the next big trend post covid
 
Tell us something about JustKitchen and its journey.

With only 10 months of history, we currently have 14 Spoke Kitchens (smaller kitchens where final meal preparation and packaging before delivery takes place) and one large Hub Kitchen (larger commercial kitchen where earlier stage food preparation takes place), and we have already achieved best-in-industry customer loyalty of 75%. We're very fortunate to be at the right place at the right time, and have gained significant traction, even without COVID being a significant part of daily life in Taiwan. As we expand internationally into other countries, where habits and everyday life have been more impacted, we expect to see even greater traction and momentum. 

Riding on expectation

We've created a new standard for hot food delivery, just as fast casual restaurants like Panera, Corner Bakery, and Chipotle have done for casual dining. We are able to offer the experience of fast casual dining, built for delivery. Another aspect of our business that sets us apart is our online grocery delivery platform, JustMarket. The global online grocery market is already estimated to be worth around $200 billion, and it is only gaining strength due to the pandemic. We’re also offering pre-packaged, ready-to-cook food items from our proprietary food brands that appeal to certain demographics, such as our “Nutritionist Guided” range, which offers a variety of healthy cook-at-home meals and food items.

It is mentioned that you are getting 40% month on month growth. What are the driving factors?

Yes, that's true. We are very fortunate to be in this position. Part of it is timing, as I mentioned earlier. But with any opportunity, being at the right time and place only allows you to be positioned for the opportunity. It does not allow you to seize the opportunity. We have improved on Mark Zuckerberg’s mantra in the early days of FaceBook: "Move Fast, Break Things", and we have added in "Improve", resulting in "Move Fast, Break Things, Improve". As methodical as we try to be in our creative cycles, we realize that until we go to market, we'll never know what's going to work or not. 

Who do you target as your customer?

We have a wide target demographic, mainly because of the new normal that the world is experiencing. Prior to COVID we targeted the main user groups of food delivery, people aged 18-45 who are digitally inclined. However, with COVID, the addressable market has expanded to include the 45-65 year old demographic. Currently we segment our customer base by age, eating preference, and lifestyle, and variations of them all; totaling 9 different customer segments. We have product verticals that are targeted for each segment,resulting in 11 of our own proprietary food brands, plus 5 partnerships with existing established brands such as TGI Friday’s, that together appeal to all segments with a little overlap. 

How does Hub and Spoke model work in delivery?

Fundamentally, this model allows for 85% of the food preparation to be completed at economies of scale in the Hub, then distributed to the spokes for final prep, assembly, and delivery. With this model, our preparation time per meal can be as low as 45 seconds. The thesis behind this model is the last-mile delivery for hot foods is the difficult leg of the logistics arm. So we need to get our kitchens deeper into the communities to service those geographies, which is where the Spoke kitchens come into play. We're able to accomplish better economies of scale and get greater breadth of reach because our Spokes are located inside high-density neighborhoods and communities. Currently the Hub is 60% virtual and we've distributed the workload of our Hub to other contracted facilities.

Packaging it right

This is a big part of our focus during menu creation. Each menu item needs to be able to be packaged well, withstand the delivery process, AND unpackage beautifully. But in reality, this is only part of the equation. The food has to be good, then the food has to withstand being in a box for 20 minutes, and finally it has to retain the flavor, temperature, and aesthetic appeal that we intended for it to have when the customer receives, opens, and experiences the food. Potentially this is where other players in this sector have failed, over emphasizing a specific aspect of this entire supply chain, when in reality, it's a total solution.  For example, we would never do french fries, unless we've mastered all components of this supply chain from sourcing of potatoes, cutting and preparing, frying, then packaging it correctly to stay crunchy, and to not be damaged by the driver / carrier. There have been restaurants who have figured this out, but it's not an easy task. 

May Interest: How cloud-based POS is helping the food business grow during the pandemic
 
How much do you work on customer surveys and data? How does it help enhance the service?

This is a huge part of our culture and belief system. As much as we work on internal feedback loops and interactions, customer feedback is a huge part of success and accomplishing product market fit. We're proud to state that 30% of our customers provide feedback and 99.5% of it is positive. We have huge customer loyalty and ultimately, they make us the success we are today. In addition, we send out surveys to all customers quarterly to check in and ask for feedback: what do they want to see or eat, how can we make their experience better, to some extent, we crowd source our innovation.

We are also working on incorporating a customer loyalty rewards program into our platform, similar to the way Expedia, Uber and other online platforms have – which will offer our customers promotions and rewards for ordering meals and groceries from us, and help keep them in the JustKitchen “ecosystem”.

You are planning to expand your business not just in Taiwan but other countries. Any plans entering India?

Yes, we have very ambitious expansion plans. We currently have total of15 locations in Taiwan, one Hub kitchen and 14 Spoke kitchens, and plan on having 35 Spokes and two Hubs in Taiwan by the end of 2021. Simultaneously we expect to launch in Hong Kong and Singapore in Q1 of 2021. These two locations are "low hanging" fruit for us to expand into, both because of user behavior, eating preferences, and digital adaption. We have other plans for South East Asia, Asia, and North America. We expect that India will be part of our roll out in Asia, but not until 2022. By the end of 2022 we are aiming to have 80 self-operated locations and 200 licensed locations. 

 

Globally, the coronavirus pandemic made everyone sitting at home and with more and more people getting stuck at home, the food delivery business has seen a surge in demand. Since customers were unable to move out and dine at their favourite dine-in locations, they turned to delivery to treat themselves during the days of social-distancing. Many delivery services such as Zomato, Swiggy and cloud-kitchen brands like Rebel Foods and FresgMenu responded to the crisis by introducing contactless delivery options to eliminate the risk of spreading the virus between the customer and driver. Many establishments also ventured into the cloud-kitchen space as this was the only option to bring the business back on the platform.

Also Read: “Cloud kitchen brands fit perfectly well in this situation,” says Ishita Yashvi of Cross Border Kitchens

“Burger Singh was always a delivery focused brand. Even before the pandemic our 75% of the sales used to come through home delivery. Post pandemic we see that the dine-in concepts have been taken out of the picture completely. Even after the lockdown is uplifted people are not really willing to go out at shares places, air-conditioned environment. We have moved from 75 to 80-85 % of the delivery revenue,” shared Kabirjeet Singh, Foounder & CEO, Burger Singh that has also seen a 10% uptake in the takeaway business. “Our takeaway number was 5% previously but it has risen to 15% during the pandemic. So, that also tells us that people do want to get out of the house but eat inside their car, either get it ordered from the store or get somebody to deliver at their car,” he added.

Another factor driving demand for food delivery services is the increased number of restaurants offering home delivery. Since social-distancing measures forced restaurants and bars to close, many have switched to delivery to stay afloat during the pandemic. And, even after the lockdown is lifted, delivery is seen as a savior for many.

“We recently started our first cloud-kitchen in Sant nagar, East of Kailash wherein we are serving multi-cuisine under one roof. Today people don’t want to go out with fear of the pandemic. Hence, we started the cloud-kitchen model to serve our regular as well as young and affluent customers,” said Deepak Panwar, Brand Head, Lite Bite Foods

Rising on demand

“With young tech-savvy, working women and young crowd people wanting to try too many options under one roof considering the current situation, cloud-kitchen is one of the best model to cater to the customer these days and it is here to stay as we see that this the future and every player is going to have a cloud-kitchen model in near future,” added Panwar.

May Interest: Do's and Dont's of Cloud Kitchen Business

Commenting on the same Singh shared, “The consumer behavior has obviously changed and it will be like this for a year or 18 months. Similarly, I believe that delivery is going to get a boost. On the biz side we are at 65% of the pre-covid time. Now that the festive season is starting, we are aiming at 75% and I don’t think that more than 75% recovery in the food space is going to happen anytime soon. I think cloud-kitchen format suits really well because rental is lower, staff cost is minimal and people are delivering more.”

Franchising in cloud-kitchen

The problem with cloud-kitchen in franchising is the operational cost and being able to hand-hold the franchisee partner to be able to do a good job at it so that your system and processes has to be really good and your backbone or the management team needs to be really strong to be able to support the franchise. “Running a cloud-kitchen business is not easy because you have to manage the little cost to get the maximum efficiency from the same asset, manpower and workplace. Helping them market, help them in PNL. Also, I feel that a cloud-kitchen format is not phenomenally profitable until and unless you have got two or three brands being rolled out at the same place,” Singh further added.

 

How the consumers' online order trends are revolving around during and after the lockdown was implemented.

Before the lockdown, we were operational for longer hours so the number of orders was almost up to 250 a day. Once the lockdown was announced we observed that there was a significant drop in non-veg food orders and people’s preference for vegetarian food increased. It lasted for almost 2-3 months until July. Thankfully, our Chinese brand Sichuan Pepper House and Lyfe kitchen (Continental) were doing better at the time. We saw our order patterns going back to the Pre-COVID time once the state declared unlocking.

What changes have you witnessed in consumer consumption pattern when it comes to online ordering?

Currently, we have seen a spike in lunch orders and we are delivering close to 200 orders with fewer operational hours. The stigma attached to outside food is diminishing. People are more comfortable with eating from a restaurant as compared to earlier.

What are some trends that are on rise?

I wouldn’t call it a trend per se but now consumers really want to know where the food is coming from and the level of sanitisation and hygiene maintained in the kitchen.  This is a fair ask considering how the pandemic has shaped up. We have even noticed that when we put out pictures of our staff and team on our social media pages people were more responsive and there was a rise in number of orders.

Also Read: How Lending Platforms are Helping Cloud Kitchen Biz Grow

Who all are regular customers or age groups who are constantly placing online orders?

Our consumers are between the age of 21-40 years.

What is the most preferred time and cuisine of the online order placed?

North Indian tandoor dinner from Jaspal Di Bhatti is very popular and interestingly we have sold 2000 portions of butter chicken post COVID.

How have you changed yourself to handle the rise in demand?

We are trying to make operations smoother by removing dishes from the menu that relatively aren’t fast moving. We have hired managers to ensure that the orders are dispatched on time.

Why cloud-kitchen model is a success during this time?

It’s a success because operationally it’s more viable and overheads are much lesser. The government has categorized cloud kitchens under an essential service which has made it even more successful.

May Interest: Berco's to launch three new cloud kitchen brands

How can a delivery kitchen reduce operational cost without compromising on the quality?

There are 3 mantras we follow at 4aces i.e ensuring minimum wastage, efficient stock-keeping and management, and lastly use the strategy of competitive pricing. 

 

Faasos App, the one stop shop for all brand under the Rebel Foods umbrella, has now been rebranded as EatSure.

The rebranding has been done with the purpose to showcase complete hygiene practices across the entire supply chain at Rebel Foods.

This comes at a time when people are avoiding meals from outside home.

Also Read: How Rebel Foods has Built the Largest Dark-Kitchen Business in India

With this change, the company is emphasising on surety about process, ingredient, and packaging to eliminate any doubts around hygiene.

At this time, Rebel Foods is raising the bar even more and making sure all the brands come with the “Eat.Sure” promise, defined by:

•        People: Daily temperature logged and medically certified to handle food

•        Process: 200 + Checkpoints for quality, hygiene, and safety

•        Ingredients: Highest quality ingredients — no artificial color or flavour

•        Packaging: Contactless / double sealed packaging and delivery

The logo rebranding has been updated on Play Store, App Store as well as on online ordering platforms Swiggy and Zomato.

May Interest: Rebel Foods bags $50 mn from US hedge fund Coatue Management

Under their banner, Rebel Foods runs a dozen brands such as Behrouz Biryani, Mandarin Oak, Oven Story Pizza, The Good Bowl, SLAY coffee, Firangi Bake and Lunch Box.

However, Faasos is one of its most popular brands delivering lip smacking rolls and wraps across India.

Earlier in April, Rebel Foods has raised $50 million from existing investor, US-based hedge fund Coatue Management, according to its filings with the Registrar of Companies. In February, it had closed a $4.91 million venture debt round from Alteria Capital, according to data collated by Tracxn.

Started by INSEAD alumnus Jaydeep Barman and Kallol Banerjee in 2010, It operates over 2,100 internet restaurants and an estimated 300 cloud kitchens across three countries.

 

What changes has the Pandemic brought to the Restaurant biz?

The pandemic has made us relook at the business model by way of size, structure, venue and pricing. As we are re-open, we are looking at the bottom line very strongly, keeping in mind that there will be lot of stress on the compliance in the future. So, where ever we are opening, we are working on a new business model, so that in case we face such kind of situations in the future we would be able to settle in better. Further to this in the last six months the stress on the bottom line can also be recovered    in quick succession.

What are some of the changes happening at Speciality?

Some of the points that we have factored in our model is the size of the restaurant, the liability of rent, the staff cost and infrastructure costs have been relooked at with the help of the landowners and industry experts. Also, we are working on re designing the kitchen and the backend operations so that we can minimize our personal costs.

We see more and more Restaurant brands are entering into the cloud kitchen biz. Why so?

The pandemic has created a huge opportunity for deliveries & take-away(s). Since, people were stuck at home preparing food on a daily basis without any house help (which we are so used to), they started ordering from various restaurants as soon as the Government permitted    restaurants to operate via a delivery and take-away model. We find that this trend will continue as it has now become the ‘new normal’ or would say has given birth to an ‘ordering out culture’. The other reason has been the pricing and convenience of ordering food at home is incomparable to     go to a restaurant or find people to party in the first place.

Moreover, with the malls and multiplexes being shut, the younger generations have all got hooked to the OTT platforms and with this model ordering has become a child’s play for them. In other words, the  delivery and take-away has now become a growing marketing for sure. Going forward we also feel that the young generation will not bother too much going to do their daily grocery shopping or even be averse to cooking in the future. Also, house help may slowly become low and hence expensive. They would also be looking for variety in their ordering options; hence having multiple brands or rather cuisines is a must keeping in mind the portion size and the menu.

You also ventured into it and plan to open a number of cloud     kitchen brands. How much money have you invested?

The chain plans to set up 26 cloud kitchens across the country. While 14 have been commissioned, most of which are at existing captive restaurants, Speciality plans to add a dozen more independent plug-and-play kitchen formats where it does not have a presence, within 6-12 months. With very low capex, this format would also be cost efficient requiring less manpower, centralised raw material purchase, and reduced fuel consumption.

Do you think this is going to be the future of dining in India and in     the world in general?

Well, I would not put forth a generalized statement. Like, I said the trends show that the Cloud/Delivery Kitchen model is going to be a strong   contender in such times. It is also going to take a bigger chunk of the   F&B business and I find no rhyme or reason as to why it should not grow     and sustain itself in the long term.

 

Shared kitchen is a biggest hit concept globally, but in India no one has actually heard of it or has experimented with it till we were all stuck at home during the covid-19 pandemic. Shared kitchen or co-kitchen as we may call it is generally spread across 1200-1800 Sqft with multiple restaurant brands delivering your orders from same kitchen.

With the hospitality industry hit hard by the pandemic, the industry is facing a nightmare. Even with the government applied unlocks, it is seen that the restaurant industry is still facing losses in sales and capital. With consumer demand for home-delivered meals booming, venturing into the cloud kitchen business struck three friends, Charul Sehra, Inderdeep Singh & Loveneet Singh - the smart thing to do, and thus they launched Outlet Buddy, a co-working or a shared kitchen you may call. Excerpts from the interview:

Working as a partner

The biggest loss for any business is for it not being able to operate. During lockdown- many restaurants were closed and moreover people stopped ordering from outside. We help restaurants by becoming their backend partner, from whom you can order your entire dishes- 60-90% done. Hence, the Merchant (restaurant owner) does not need expensive equipment, at his end. Furthermore, reducing the need for expensive human resources, and unnecessary storage. Also, our models help restaurants maintain their Cash flows better by ordering the required amount of Inventory only according to their sales analytics/forecast.

Also Read: How Cloud Kitchen is changing the Dine-In Scenario in India

How does it work?

We imagine Outlet Buddy as a "Buddy" who does all the kitchen mise-en-place for the restaurant- before he/she enters the kitchen and does the final plating for the guest.  We call our relationship with our merchants as an "Infinity Circle" and we hope to work hard to stay a part of that circle. Outlet Buddy is your online kitchen- which works according to your business- all you have to do is get on board by choosing out the following three options :-

- Getting the Dishes from us

- Sharing our existing Cloud kitchen

- FOCO (Franchise owned Company operated) model

It can do the following for you:

●        Reduce Cost ( Real estate cost, Human Resource Cost, Equipment Cost and Holding Cost)

●        Scale on Demand ( minimalistic cloud kitchen set-up)

●        Saves Time ( One Stop Ordering for all Inventory,  24hrs Delivery, Shorter BEP Cycle)

●        Bespoke Dishes

●        Shared Cloud Kitchen Offering

Shared cloud kitchen is already a major hit in the global market. What is your view on its response in India?

Shared cloud kitchen as a concept has taken flight from sometime in the global market, cloud kitchen in itself came around to reduce running operational costs for the kitchen, and also a parallel revenue arm for any restaurant- but the concept of cloud kitchen, with state of the art-best practice solution for cooking being used in the commissary and Order taking and last mile delivery technologies running in the cloud kitchen- is a tough concept to master with very high operating cost, customer acquisition cost and delivery cost. The same concept when put under the shared cloud kitchen scenario reduces all of the above cost and thus helps any merchant reduce the BEP (Break even Point) cycle.

Who are some of your restaurant partners? What is the profit sharing model?

Some of the brands we work with are SuperNaan, Pay per bowl, Khalnayak Biryani and ADDA126, in Noida. All brand owners/merchants pay a monthly fee to us for running their brand and also economical % on all sales.

May Interest: Kolkata-based Chowman enters Bengaluru, opens first cloud kitchen

Franchising for growth

We work on a revenue sharing model under the FOCO model in which we enable restaurant owners to own the franchise of our home grown brands, so for that location we not only run their brand, we also give them a pool of brands to choose from, as a franchise-out of our home grown brands. During this pandemic, a full-fledged kitchen is a liability for any restaurant owner; this liability can quickly turn into an asset, as the Outlet buddy team will take over the kitchen, and start running a cloud kitchen from that location. The % of revenue promised to the restaurant owner is evaluated depending upon the location and the size of the Restaurant/cloud kitchen.

Focusing on innovation

Outlet buddy is tying up with best in Industry AI and IOT solution providers, we feel that after the consistent ability of producing good food, the most important factor that will separate the front runners would be their ability to deploy technologies in the cloud kitchens & Restaurant. We are seeing restaurants gradually shifting from mammoth Aggregators to Self owned websites, Whatsapp and Facebook ordering. For Packaging- we are only using Reusable and Biodegradable material, notified by Food Safety and Security Authority India. 

What’s your plan going forward?

We believe the most important aspect of our business is consistent good quality food. With cloud kitchens coming to the fore-front, the next 2-3 years would see a massive inflow of  new and innovative technologies that would define new ways of customer acquisition. Outlet buddy aims to be an Online kitchen to small and big restaurants both, hence we plan to invest in two pronged strategy that would include -investing more in best practices equipment in both commissaries and cloud kitchen and also investing in AI for ordering and IOT for logistics & Inventory management.

 

 

How the consumers' online order trends are revolving around during the pandemic?

The demand has been pretty dynamic from the start of the coronavirus pandemic to now, when the first lockdown was initiated, demand went up as restaurants were shut and all the load for food consumption was shifting to food delivery, however with rising cases and stricter lockdown, stress on healthcare systems, orders started declining rapidly as fear had set in consumer’s mind. With cases now going down in Delhi we are again seeing a rise in orders and deliveries and we expect the uptick trend to continue further. The other interesting thing was during lockdown average order values had shot up as people were ordering in bulk which has been on a decline now.

 

What changes have you witnessed in consumer consumption pattern when it comes to online ordering?

During lockdown we had seen increase in Bulk orders, the other findings were that late night orders had gone down and had reduced in unit value as people were ordering for themselves and weren’t partying with friends, so group orders post 11pm was on a decline. Lunch time orders have been severely affected due to shutdowns in offices and that slot still has to go up with offices being opened across in a gradual process. Even weekend had lost their charm as consumers were abstaining from partying and meeting their friends.

 

Who all are regular customers or age group who are constantly placing online orders?

We have a huge base of repeat customers and they are the ones who have been constantly ordering even during these times, they would constitute of working professionals who don’t live with their family, students, and people in the age group of 15-45.

Also Read: Covid-19 has made most restaurant kitchen a dark kitchen, Is Brand Trust Next

What is the most preferred time and cuisine of the online order placed?

The bulk of our business has been concentrated between 7pm-11pm on all days, earlier lunch hour (12pm- 3pm) was a big slot for us along with the late-night(12am- 3am) slot. Customers are cuisine agnostic however Italian, burgers and biryani are top most preferred cuisines across.

 

Why cloud-kitchen model is a success during this time?

Cloud kitchens is the business for the present and the future and we are lucky to be a part of it for the past few years and even during COVID we are super bullish on the theme of cloud kitchens and its potential in the future. According to reports, Cloud kitchens could create a 1$ trillion global opportunity by 2030. Diners are becoming more comfortable with food delivery.

Must Read: What works and what not for dark kitchens

Restaurant closures, in the wake of the coronavirus pandemic, will drive a change in how physical restaurant formats are being used, especially as shuttered businesses leave empty real estate behind. One of the main drivers of growth of the cloud kitchen market is the changing cost structures of the foodservice environment.

 

Cloud-kitchen business or dark-kitchen business has not grown by itself. It goes beyond the lines on how customers’ are evolving and their consumption pattern is changing. And, how do you imagine the next session of the food business. Sagar Kochhar, CMO, Rebel Foods that owns some of the most recalled brands like Faasos and Behrouz Biryani in the segment talks about building a dark kitchen business whose revenue increased to 108% to Rs 310 crore in FY19. Excerpts from his speech:

Imagining the Future: There’s no denying that businesses are built on a thorough innovation. All top brands of the world understood well in advance that where is the customer headed. They understood the value of time value and convenience and that’s how they brought in the disruption in their own space. Now, when it comes to food the largest sale that you would think of will be McDonald’s of the world. That’s how few years back we thought that we need to imagine this vary part of the business. The customer’s lifestyle was undergoing a change, their consumption pattern were changing that’s what we imagined at Rebel foods. Like any other restaurant business we started 8 years back by coming up with an Indian side of the menu by doing Wraps and Rolls throughout the country. We will not build a 2000 sqft restaurant very heavy on capex, higher payback period and high rentals. We rented 200-300sqft area across the country. After, few years doing 40-50 stores we realised that being across space doesn’t make you to the food space. That’s how when we looked back seeing how consumer needs are doing a change. We looked at few data points and almost above 67 per cent of business was happening through delivery, 73 per cent of our customers have not even seen the store frontal yet they were ordering from our brand. That’s where we thought that if consumers are consuming us in this format why do we just constraint with the fact that we had to do the physical store. That’s when we started doing the dark kitchen model and in just one and half years we were at 150 locations setting 150 kitchens and that’s when we stumbled upon the big realization, going back to the same that we want to be the largest in the food space. So, to be the largest in food space you do not need just the footprints but you need to have an answer to every other craving that the customer has. You have to be present on each of those occasions when the consumer wants to order some food. We wanted to be the largest by creating unique memorable delightful experiences for every other occasion in the life of a user and with that as the core of it, as a mission statement came our next turning point.

Cuisine and Brand is Co-Related: If we as an organization wanted to cater to every other need in the life of a user let’s try and understand from their lens. How would a user consume food- on a regular day verses some special days? People move during these occasions. The fact that when it comes to food it always start with cuisine first. And, when you start thinking of the cuisine then you think of the very place i.e the brand. Basically, the category and the brand have a very special co-relation. Every time you order for your favourite cuisine you think what new can I try. Brand loyalty exists but people are bound to try new recipes.

Growth of Multi-brand: When we look at single serve brands we have Faasos, Lunch Box, for regular meals. For special occasions we have brands like Mandarin Oak serving speciality Chinese, Behrouz serving royal biryani and Oven Story Pizza serving the best pizzas. And, the motto still remain how do we create unique, memorable experiences.

Build a Brand and not just Labels: As a brand you need to have co-relation of what does a brand stand for? You need to have a brand story that consumer would recall every time they order food from you.

Hence, we can say that cloud-kitchen as a model is built on the fact that he has a recall value. With no capital risk, quick payback period of less than 12 months, 3-5% rent to sales ratio, it surely is an infinite game of relentless execution.

 

A new and exciting concept has hit the restaurant industry which is known as dark or cloud kitchen. What exactly is a dark kitchen? It involves operations where there is no customer seating but just delivery. Don Boroian, Chairman, Francorp Inc. points out the salient aspects of this new trend

 

The ‘dark kitchen’ has two iterations. First, there is a model which only picks up and delivers the order from several restaurants in an area. It has no real production capabilities, just delivery. The second version is one in which the dark kitchen actually occupies a space, either in a former restaurant or in a low rent or industrial park area, equips it with standard, new or used restaurant equipment, and produces and delivers the products directly to customers with no seating arrangements.

 

This can be done with a single concept, such as fried chicken or pizza or by offering a variety of products, including pizza, chicken, fish, burgers, and even breakfast items as well as seasonal items such as turkey. In terms of the ‘lasting power’ of the dark kitchen, it may fit even better for long-term potential. There is no threat about McDonalds opening up across the street and hurting your business. The food service industry and the public are already well-committed and accustomed to delivery of food items.

 

The Success Mantras

The key to success for a dark kitchen is its menu, offering an appealing selection of products, appropriately priced, and that will have good ‘holding time’ in order to maintain product integrity through an extended time for delivery. Next is marketing, which helps in developing the customer base. Finally, how well are your operations? That is, are you well-organised and have consistent productivity? This means a well-defined process from concept to customer begins with recipes, food ordering processes, food handling, food production, packaging, pricing, and finally the delivery.

 

In the early stages, the focus should be on the delivery aspect and not on the price and menu. We have seen this in the pizza industry. From the beginning, the fine pizzerias did not deliver. However, the growth in the pizza industry, at the consumer level, was fuelled by operators such as Domino’s, where convenience and price was the driving force. Now, not only the upscale pizzerias, but many restaurants utilise outside delivery services, such as Uber to deliver their products to their customers, typically at an additional charge.

 

In order to be successful, a food service operator who wants to cash in on the home delivery market potential will need to focus on the higher margin menu items. This is important in order to accommodate the increased costs of marketing and delivery. It will be difficult to pass on all these costs to the consumer, especially as the concept of home delivery becomes more competitive. For this reason, a broad menu offering, featuring low food cost items as well as those with a minimum of higher raw goods costs will be important.

 

Favourable Aspects

The biggest advantages the dark kitchen concepts have are occupancy cost with low rents, minimal leasehold improvements, minimal furnishings and fixtures, and, of course, the convenience of delivery. There are no decor costs, signage costs or the customer-friendly interior costs and the expensive seating components. Without the necessity of a wait staff, the dark kitchen eliminates the constant battle with being able to recruit, hire, train and retain waiters, waitresses and busboys. Dark kitchens will also have the added benefit and capacity to do more catering, school lunch programs and special events, which often are a problem for restaurants that try to accommodate these kinds of applications during busy lunch and dinner times in their restaurants. They can also extend their geographical and demographic reach to areas, in some cases, as much as an hour away.

 

Opportunities and Requirements

Finally, dark kitchens offer a tremendous opportunity for franchising. By eliminating the investment of buying land, building a prototype building, lease deposits on high rent locations, expensive build-outs, high working capital requirements and heavy debt loads, franchising can be accelerated. The biggest financial requirement for a dark kitchen will be the initial franchise fee, equipment, start-up costs, working capital and the initial marketing costs. Since customers will not be driven by and be attracted by a beautiful location or signage, it will be incumbent upon the dark kitchen operators to develop and fund effective marketing strategies which are provided by the franchiser.

 

This would include, especially, utilising social media, direct mail, door-hangers, email blasts, etc. The franchiser will also be required to have programs for ongoing marketing and advertising support. There should be a high percentage of repeat business, if the delivery and product quality and pricing are good. There is also no question that the dark kitchen concept, particularly, which lends itself to franchising has all the components for success like increasing market for delivery of prepared foods, low cost of entry, simple food preparation technology, flexibility and adjustability of menu.

 

It would also typically include low operating and labour costs, ready and available financing for franchise buyers, and the training, assistance and backup of an experienced food service franchiser. Experienced food service people can easily obtain the financing to establish a dark kitchen operation. It will be incumbent upon the franchiser to provide them with the complete roadmap and assistance to establish, develop, and sustain a successful operation. In my view, the dark kitchen concept is the most exciting and opportune potential strategy we have seen in years and the early adaptors will, if done right, cherry-pick what is a market strategy waiting to explode.

 

Read more articles on Cloud Kitchens

 

https://www.restaurantindia.in/article/for-cloud-kitchens-the-sky-is-the-limit.13475

 

https://www.restaurantindia.in/article/a-lot-of-disruption-will-come-from-cloud-kitchens.13473

 

https://www.restaurantindia.in/article/dark-kitchens-have-the-ability-to-manipulate-demands.13469

 

 

Are you interested in starting a cloud kitchen? join us for India's first ever Cloud Kitchen Conference in Bangalore https://www.restaurantindia.in/south/

 

At the sidelines of the launch of three cloud kitchen brands, Rajat Sahni, the co-founder and Chief Operating Officer at Big Bros, talked to Restaurant India about the untapped opportunities in the cloud kitchen space and how the centralised cooking cloud-based model is different from having a single cloud kitchen base

 

Excerpts from the interview:

 

What is your opinion about the disruption that cloud kitchens are creating in India?

I feel that we have not yet explored the full potential of cloud kitchens, even in major metro cities. The internet penetration is increasing day by day. Ordering various things online has already become very common. Therefore, there surely will be growth in time to come. The advantage in favour of cloud kitchens is that they provide us convenience and variety. You can sit in one place and explore 5,000 restaurants around you – this is similar to what you can order from Amazon. The cloud kitchen model is here to stay but it has just started and there is a huge market that is still untapped. This model will work for players who are consistent.

 

I am looking to establish a brand that can be replicated with how KFC or McDonalds are in the cloud kitchen space, where the taste of a McDonalds’ burger in Delhi would be the same as in Mumbai. That is the kind of standardisation that I am aiming for. As and when cloud kitchens are able to attain that level, the model will turn into a huge success. Looking forward, I think you will be able to offer multiple cuisines from cloud kitchens, catering to specific consumer needs as per price, taste and genres, including specific cuisine not otherwise ingenious to India.

 

FreshMenu, which is thriving in Delhi, doesn’t operate on a centralised cooking model. They have different kitchen outlets. So how is your model different from theirs?

The centralised cooking model requires multiple chefs and setups. However, in our case you invest in one base kitchen but the delivery outlets don’t require much investment. The things which act as major differentiators between what FreshMenu is doing versus what we are doing is are all about investment, staff recruitment and maintaining a particular level. Also, unlike the centralised cooking cloud-based model, there are a lot of difficulties in changing or extending the menu in a model which has multiple kitchen outlets. It requires a lot of staff training and the capability to be consistent.

 

In the coming years, when your cloud kitchen brands will eventually start earning more, will you open more kitchen outlets?

No, because the concept we have requires reduced skills-set at the outlet level. Therefore, the skills of cooking remain at the base kitchen and there are minimum skills required at the outlet level. For example, when it comes to our packaging we have set it in a manner that leaves minimal possibility for human errors. Right now we have three brands; tomorrow we might have 30 brands. When there are more outlets there are more chances for mistakes.

 

What is your funding strategy for expansion?

We are open to funding; we are already in talks with a few investors. There is no doubt that we would need external funding to expand. Our expansion would completely depend upon on how well we do here. That will help us decide on our spread and outreach over the next one year, which in turn will dictate our funding needs.

 

 

 

 

Related articles

 

https://www.restaurantindia.in/article/a-lot-of-disruption-will-come-from-cloud-kitchens.13473

 

https://www.restaurantindia.in/article/dark-kitchens-have-the-ability-to-manipulate-demands.13469

 

 

Are you interested in starting a cloud kitchen? join us for India's first ever Cloud Kitchen Conference in Bangalore https://www.restaurantindia.in/south/

 

 

At the sidelines of the launch of cloud kitchen brands MeatMe, BhookHara and Chaatoreez in Gurgaon, Chef Harpal Singh, who was present to endorse these outlets, talked to Restaurant India about the disruption that is being created by cloud or dark kitchens and whether this can pose a threat to conventional restaurants as also why this model is a great platform for home chefs

 

What do you have to say about the disruption that cloud kitchens are creating in India?

I think cloud kitchens are only going to increase as the eating habits of people in India are changing in major metro cities. There is a lot of disruption we will see in times to come. I still remember how we used to take food to our homes in the small town we lived in when there was no delivery mechanism. It was more of a family dining experience than understanding the economics behind it. To put it another way, the economics were not understood well; it was more of a get-together for us. However, now people will soon get to order from their homes even in Tier II, III and IV cities through this model. If I talk about restaurants, they feel their food is more about passion unlike these cloud kitchens and they believe that people will eventually come to them to have the experience of dining outside.

 

In your opinion, do you think this model is a threat for restaurants?

An experience centre will still be an experience centre. We can have six varieties of chutney and unlimited sambhar in a South Indian restaurant. However, this is not possible when you are ordering. If a person feels like having his meal at home and does not want to go out and get stuck in the traffic, he will order from a cloud kitchen. On the other hand, if people want to experience the food at a restaurant with their family and friends, they will go to brick-and-mortar restaurants. I think there will be some impact on the business because of the differences in their price points. 

 

What are the culinary trends you see?

Nationally, people are exploring and looking to taste different varieties of food. But what I have started to observe is that people are interested in exploring more of Indian than international food. At the end of the day I have realised that all Indians are looking at something which they are comfortable with. Even if it is simple ‘khichdi’, people will look at it seriously if it is being served in a different style without compromising on the taste. Many chefs for that matter are also experimenting on their own; they are just not searching the recipes online but are actually going out and looking at what’s happening at the local level and then coming back and doing the same recipes in their own formats.

 

For instance, when I went to Chhattisgarh I wanted to have the regional food there but I couldn’t get it as Chhattisgarhi food was not being served in the mainstream restaurants. Then I got a chance to have the regional food from a lady who was managing a traditional restaurant; she was cooking Chhattisgarhi food at home and bringing it there. It was wonderful. In order to showcase India’s regional cuisines, I have started helping home chefs. We started presenting Bihari cuisine in a general format and the reaction I got from people was that Bihar is not only about Bihari food; there are other cuisines as well. So, now we try to incorporate as many regional cuisines as possible, whether it is Bihari, Bengali or Kashmiri, Assamese, etc.

  

Do you think cloud kitchen is a good platform for home chefs?

Yes, that is something I am planning. We will try and bring them into cloud kitchens. When I meet home chefs, their first complaint is that they have been doing this for so many years and still there is no recognition. So I bring them on the YouTube channel. Thus, slowly we are bringing people on our network.  The aim is to give them a platform where they can present their food and earn some recognition from it.

 

In a telephonic interview with Restaurant India, Aditya Somani, private equity investment professional and advisor to Freshmenu, which is the first company to conceptualise and execute the ‘dark kitchen’ strategy at scale in the world, spoke about the success points of running such an operation in India, the challenges behind it, and how this model requires a lot of investment to make it scalable for franchising

 

What do you think are the pros and cons of running a dark kitchen model?

The success points of the dark kitchens are that their return on investment is attractive and they have the capability to try and test much more than physical restaurants. For instance, when a person walks into a South Indian restaurant, he or she expects idli and dosa and you really can’t offer Mexican. But in a digital restaurant, customers always have a choice to choose the dishes. This is the advantage that dark kitchens have.

 

Another unsaid and less understood aspect is the ability to manipulate demand. When it comes to physical restaurants, 100 people may walk in on Thursday and 250 people on Sunday, which means you cannot really control the footfalls. However, in digital platforms, you can manipulate demand. Physical restaurants can’t do this and will keep inventory for the next day. It works another way around also. For example, if something is selling well you can raise the price and maximise the profits. People usually only talk about economics but I am talking about how to create a much more rigorous business.

 

Therefore, in a dark kitchen, the ability to get feedback and act on it is a thousand times more than a physical restaurant. In a dark kitchen, every dish can be individually rated along with different time durations and locations. The kind of data and analysis that a dark kitchen sits on, a restaurant can’t even imagine. This kind of customer responsiveness and obsession are impossible in a physical restaurant. With physical restaurants, there are human biases, but here there are numbers, there are kitchen and dish ratings, and you can cut them in any manner you want. And now that every dark kitchen sits on huge volumes, nobody can hide under mistakes and excuses. These are numbers that represent reasonably large volumes. So they have statistical validity. The challenge I feel is that when you are running a dark kitchen model your chances of getting thrashings and complaints are higher on social media for every little mistake because giving feedback is much easier on this platform.

 

How are the operations of dark kitchens managed?

 

The fundamental operations are similar except that the bookings can be in much more volume. So, in a physical restaurant, typically, they have a widespread menu. You have some 20 types of paneer gravy, whereas here in dark kitchens, there are five types of chicken and so the order volume for a single dish can be much higher. The delivery operations are standardised. The only other thing where the operation is different is the technology backing in a dark kitchen, which magnifies the ability to handle order volume and that has its pros and cons. The good thing is you can track everything sitting in the kitchen. So, you track everything insanely to squeeze and get the product at the right time to the customer.

 

Is franchising in dark kitchens a scalable method?

 

What we have learnt is that the quality of food is paramount. We Indians can stand and eat anywhere, irrespective of our status, provided the food is good. When you go to the franchise model, the first question is if the franchise is expected to do full cooking or let’s say I set up a franchise model where I have 20 kitchens and 60-70% of the thing is done through a central kitchen model. If full cooking is not expected then I think a franchise model can be possible because if you are giving your menu and recipes to a franchisee, you can standardise the ingredients, supply chain, recipes and menu but even after you do it humans will be humans and there will be some variations.

 

So, only when a franchise is supposed to do a little bit of work, you can still think of franchise operations. Running a dark kitchen in a franchise model is, in my opinion, difficult. Also, it will require much more investment; you will have to train employees. The consistency level in cooking can only come when you are investing a lot in training. Nobody has done that kind of investment in India except for five-star restaurants. The franchise operations in likes of biryani are doing okay today because most such products are engaging in central kitchen cooking and much less work is being done in the delivery kitchen or franchisee kitchen. Many of them claim to be fresh, but the fact is that they are not at all fresh, the way you , me and our parents define fresh.

 

Is it better run by small entrepreneurs or better as corporate operations?

 

I think corporate is better suited because what stands out is marketing and branding efforts that can come only at a scale. People don’t come to you because you are at a great location or because your ambiance is nice. You have to consistently focus on the quality of the product and that will depend on the training, supply chain, and cost control, which is much more difficult in a small entrepreneurial setup. Also, you don’t have the resources to build the brand. There is also less scope of innovation there. However, in dark kitchens, people expect a lot of variety and this can only happen when you have a centralised kitchen operation and have consistency in operations. The reason behind people expecting a lot from dark kitchens is because they are spoilt by their experience in e-commerce. They want a lot of choices at 50% price of that of a physical restaurant.

 

Do we have enough talent for dark kitchens in India?

I don’t think we have any dearth of cooking talent. Since 90-95% of the industry is unorganised, there is no concept of training and certain professional behaviour in traditional F&B industry. Thus, while a person may cook well he may not know how to handle a team or how to behave in a team environment. The cultural challenges are the bigger challenges than a talent thing.

 

 

Food tech will continue to ‘organise the unorganised’, driving increased focus on consumers, food innovation and efficiency. The entry of food tech start-ups has led to a massive transformation of the operations of the Indian food industry.

According to a report, In 2017, two predominant models—restaurant marketplaces and cloud kitchens—evolved following the upheaval. The recovery was led by a reduction in delivery costs and increased penetration in existing markets. Not only this, the space saw investment worth US $370 million in 2017–18, up from US $70 million in 2016–17, which is more than 400% growth.

With more than 900 food delivery start-ups in the country, the focus now is on expansion and introducing food and experience innovations. Brands such as Zomato, FreshMenu and Swiggy are trying to drive consumer engagement by creating new products and experiences such as membership clubs or loyalty programmes. Some of the food tech start-ups are also working with restaurants to improve and expand kitchens and restaurants are also opening their own cloud kitchen or dark kitchen formats. For instance, Zomato, in its push towards a cloud-based kitchen, has now committed to investing US$15 million in Bengaluru-based Loyal Hospitality. Similarly, one of the largest restaurant group, Lite Bite Foods has also opened its dark kitchen models to serve customers in a better way. And, as the customers are poised for convenience now and are delivering much more than in last few years’ restaurants also feel cloud-kitchen model profitable and can’t ignore the trend going forward.

Why Cloud- Kitchen?

The main reason to start or enter into any business is its cost effectiveness. And, going by the trend most restaurant owners now want to open a cloud kitchen business. According to a recent survey conducted by LimeTray, 67 Per cent of the restaurant owners would want to open a cloud kitchen as their next outlet. With all the ease that this model provide- the order is placed, meals are cooked, packed and then whisked immediately by the delivery partners at their assigned locations or address.

Low on Operational Cost: Being a takeaway outlet only, it is cutting your cost to a large extent. There is no operational cost involved in front-house operations as the fleeting is done through a third-party service.

Real Estate Cost is Removed: Since, this a takeaway model, you don’t have to get worried about setting up a dining space. It’s just a kitchen and a takeaway counter that would suffice the need. Also, you need not worry on setting up a kitchen at a location which has high visibility or is accessible to all. Kitchen can be setup at a low cost location where your customer exists.

High on Expansion: Cloud kitchen model comes with low investment cost. Thus, you can expand it to as much locations as possible by opening just small. Once the brand has got enough customers, expanding to new locations becomes easy. For eg: Biryani by Kilo has now 20 operational cloud kitchen in around four cities with heavy revenue. Similarly, Rebel Foods or Faasos which is the pioneer in the segment  is running more than 160+ kitchens and 4 brands including Faasos, Behrouz Biryani, Oven Story and Firangi Bake.

Saving on overhead costs: With a cloud kitchen, one can save hugely on overhead costs. You don’t need client-facing staff, decoration or space entrance, parking area etc. Even if you have lower-priced menu items, your profit margins are likely to be better.

 

High real estate costs have already kick-started concepts like coworking and coliving in the office and residential spaces. It was just a matter of time before the F&B sector came up with its own real estate cost-saving recipe.

Real estate rentals have risen significantly in major cities like MMR on the back of the increasing shortage of quality supply. This factor alone often leads to thousands of restaurants across Indian metros shutting shop each year. Rentals in some prime locations in Mumbai can 'consume' 25-30% of a restauranteur’s total monthly revenue.

This profit-devouring range is significant if we consider the average global trend of 15-20%. It holds true for many non-prime areas of cities like Mumbai as well.

 

However, prime locations are obviously the lodestone of success for F&B, especially when it comes to full-fledged restaurants. Even a small food counter drawing much lower rentals can do good business as long as the brand and its offering is right for the location and its clientele.

 

Because they can afford the high rentals, many organised domestic and global F&B brands survive while smaller, unorganised players often have to pull out. Besides cutting down on profit margins, high rental costs also limit F&B players' business scalability, since renting the right space requires high working capital and upfront deposits.

 

Cloud Kitchens to the Rescue

Given these challenges, the new concept of 'cloud kitchens' - which involve low operating costs and high profit margins - is gaining increasing traction among F&B players.

A cloud kitchen - usually situated in a remote (read cost-effective) area - is essentially space where food is prepared for delivery only and has no dine-in or takeaway facilities. In many cases, small eateries come together to share a kitchen facility from where deliveries can be made easily.

Cloud kitchens reduce real estate costs as they do not require prime locations. Also, because of the fact that kitchen space is shared by many players and the production costs are much lower, the opportunity to scale up remains high.

 

Aggregators Bet on Cloud Kitchens

 

According to the Statista Online Food Delivery report for India, revenue in the online food delivery segment is likely to cross $7 bn in 2019. Food delivery majors such as Swiggy and Zomato are constantly looking to scale up, and cloud kitchens provide the ideal opportunity to do just that.

 

Leveraging their core strength in technology, delivery and discount distribution, these food aggregators provide the requisite infrastructure and logistics to local F&B enterprises by way of cloud kitchens.

 

For example, Swiggy Access helps restaurants to set up kitchen spaces along with full infrastructure and logistics assistance, to serve food in the areas where they lack presence.

 

The trend of cloud kitchens does not benefit only food delivery aggregators. Restaurant owners and caterers are now also getting on this bandwagon, with cloud kitchen models varying from company to company.

 

• Fresh Menu has a single-brand kitchen with an online ordering system in place. Spread over 1,200-2,000 sq. ft. area, there is a single/centralised kitchen where chefs from partner restaurants come together to use the facility
• Faasos, which caters to brands like Behrouz, Oven Story, Kettle & Keg, has a centralised kitchen for these multiple brands sprawling over 1,500 - 5,000 sq. ft. area
• Swiggy Access also has centralised plug-and-play kitchens for 5-6 brands owned by the aggregator, with nearly 100-500 sq. ft. area for each brand.

 

Significant Cost Advantages

 

Cloud kitchens offer a substantial cost advantage over traditional restaurants - they require much less space and only basic interiors, and can operate out of low-visibility areas. Given this model’s inherent benefits, many F&B brands have seen their revenues soar over the years, while losses and cash burns have dipped significantly.

 

For instance, Faasos forecast its net revenue to rise to INR 300 crore in FY 2019 (from INR 147 crore in FY2018) while its losses were almost halved in FY18. With nine in-house brands under its umbrella, Faasos currently operates out of nearly 175 cloud kitchens across 12 cities and targets to cross the 200 mark by 2020.

 

Cloud kitchens have proved to be a gamechanger for many such brands,  saving them from the tyranny of high rentals in prime locations. The cost of setting up a restaurant in a major city starts at a minimum of Rs 10 lakh to hundreds of crores, depending on size and exact location and considering that a traditional restaurant must also offer adequate parking to be viable. 25-30% of this outlay goes towards rentals alone.

 

In comparison, a cloud kitchen can be set up with a basic cost of Rs 2 lakh and comparatively lower rentals.

 

Average Restaurant Rentals vs Cloud Kitchen Rentals

Cities	Avg. Monthly Rentals in Restaurant (INR/sq. ft.)	Avg. Monthly Rentals in Restaurant (INR/sq. ft.)
Bengaluru	50-125	<75
Pune	45-120	<70
Gurgaon	70-150	<70
Noida	50-110	<60
Delhi	60-200	<80
Mumbai	100-250	<120

Source: ANAROCK Research

 

The above rental comparison includes only those restaurants located in relatively cost-effective localities. If we consider fine-dining spaces across high streets of major metros, the rental difference is much wider.

 

Rentals have been rising inexorably over the last five years, and many restaurants find them very difficult - if not impossible - to accommodate them. For instance, the popular high street markets in MMR and NCR have exorbitant monthly rentals which have risen as high as 94% in a span of five years, even though the overall business generated there may not have seen a consummate increase.

 

MMR
Micro Market	Avg. Rentals INR/ sq. ft. (Q1 2014)	Avg. Rentals INR / sq. ft. (Q1 2019)	% Change
Fun Republic- Andheri West	155	300	94%
Saki Naka	190	320	68%
Pali Hills	250	350	40%
Bandra West	300	400	33%
Kala Ghoda	310	480	55%
BKC	300	500	67%
Kamala Mills	230	350	52%

Source: ANAROCK Research

 

Delhi-NCR
Micro Market	Avg. Rentals INR/ Sq. ft. (2014)	Avg. Rentals INR / Sqft (Q1 2019)	% Change
Sector 18- Noida	170	265	56%
Kaushambi- Ghaziabad	90	160	78%
South Ex- Delhi	450	800	78%
MG Road- Gurgaon	170	280	65%
Greater Kailash- Delhi	290	450	55%
Khan Market- Delhi	700	1300	86%
Hauz Khas- Delhi	500	750	50%
Connaught Place	600	1000	67%

Source: ANAROCK Research

 

Unsurprisingly, F&B brands are betting big on the new cloud kitchen format, and are looking to use it to expand across cities. Realising its potential, other businesses such as cab aggregator Ola have entered this space. Ola currently has over 20 cloud kitchens across top cities. Similarly, hospitality major Oyo is also looking to venture into this space under an independent brand, with plans to open nearly 100 cloud kitchens over the next five years.

 

The Future of Cloud Kitchens – Piping Hot

 

Going by the growing number of cloud kitchens in cities such as Bengaluru, NCR, MMR and Pune, this trend is certainly more than a flash in the pan. In fact, some cloud kitchens have also leased distressed properties that could not find takers because of their location.

 

Quick service restaurant (QSR) brands such as KFC are opting for no-frills delivery kitchens known as 'dark kitchens' to cater to high-service areas. Even as restaurant rentals continue to stay high in major cities, restaurant owners are opting for the revenue-sharing or equity sharing model with developers or landlords, similar to other retail formats.

 

Statista Online Food Delivery's India report pegs India, the country's online food delivery industry is expected to grow at a CAGR of 9.9% with a projected market volume of $ 10.3 billion by 2023. Thus, despite the cons of less brand visibility and zero consumer interaction, cloud kitchens offer a profitable way to service this burgeoning demand by means of a shared economy where single kitchens house multiple restaurant brands - essentially functioning like coworking spaces.