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Future and scope of the Cloud kitchen industry in India
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Friday, 01 April, 2022, 15 : 00 PM [IST]
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Vishal Sinha
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Technology has impacted all businesses - be it education, infra, hospitality, travel or any other. The restaurant business is no different. And so, it’s imperative that one looks at every business not just with renewed interest but also with a new twist. Primarily to survive, sustain and compete.
Cloud Kitchen is one such innovation. Cloud Kitchens, also known as ghost kitchens globally, are emerging as a strong backup allowing restaurant operators to streamline operations and become more efficient.
A Cloud Kitchen is a restaurant that focuses exclusively on takeaways. These restaurants do not offer dine-in facilities. The orders are only received online. Hence, the term ‘Cloud Kitchen' is used. The food is then sent to the customer in the form of a takeaway.
The Cloud Kitchen model also reduces the cost of starting up a food brand, and many first-time restaurateurs have embraced the model. While the concept was gaining popularity even before the pandemic struck, Cloud Kitchens have become more lucrative now, primarily due to two reasons. Firstly, they allow restaurants to deliver straight to customers at home. Secondly, they operate in a fraction of traditional restaurant space, utilising resources more efficiently through optimised kitchen workflows.
According to a report by RedSeer Management Consulting, Cloud Kitchens are set to be a $2 billion industry in India by 2024, up from $400 million in 2019.
Understanding the unit economics of the partnership with the delivery apps and the cost of procurement of menu items is critical for success of a Cloud Kitchen business.
Restaurant operators need to be aware of what customers like and don't like, and anticipate what items they are likely to order during different times. The extent to which such a business is technologically driven, the quicker or better the ROI would be. Though revenues in restaurants are returning quicker than expected, online delivery continues to be a significant part of the revenue for operators.
The emergence of the fast-casual category is an excellent example of this strategy; they offer quick service with a casual restaurant, combining speed, and convenience with the experience of dine-in and managed delivery.
The Cloud Kitchen setup has given opportunities to many entrepreneurs to run virtual restaurants using shared commercial kitchen spaces on revenue sharing basis. Cloud kitchen is booming across the country, making it extremely competitive. Apart from getting loyal patrons by providing quality food, technology plays the most important role in its success.
With the advent of cloud technology, facilitating online ordering, and the ongoing Covid outbreak, cloud kitchens suddenly seem like the only logical thing to do to manage high rentals and reduced margins. According to statistics, the Global Cloud Kitchen Market size is estimated to reach $71.4 Billion by 2027, with a CAGR of 12.0% from 2021 to 2027. This shows the immense potential this wonder format holds.
Dine-in formats are going to stay, but Cloud Kitchen will transform the way we dine. The monetary constraints can easily be dealt with as the demand for the digital platform lowers the operational cost. The conventional method of dining is always going to remain there but Cloud Kitchen will be the first preference of the consumer as they prefer to order online rather than visit a restaurant.
It is safe to say that the pandemic has accelerated the pace of change and technology adoption in the hospitality and restaurant industry. This shift will make the industry more resilient than ever before and we will see the emergence of new-age and improved dining concepts, brands and service standards.
(The author is founder and director at We the Chefs)
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