cloud kitchen: ETtech Explainer: What are cloud kitchens?

The food industry has seen many technological innovations over the past few years, the biggest of which is online food delivery. But the rise of

Zomato

and

Swiggy

has also sparked unprecedented growth in a related segment – cloud kitchens.

The number is shot of cloud kitchen in India has shoot up since the pandemic . A Redseer report is estimated estimate the size of the market would touch $ 3 billion by 2024 , from just $ 400 million in 2019 .

The number is trebled of cloud kitchen operate on Swiggy treble between FY19 and F21 and double on Zomato from January 2020 ,

we reported in November 2021

.

The industry also attracted a record amount in venture money in 2021, with

cloud kitchen

startup

Rebel Foods

, the owner of Faasos, Behrouz Biryani and OverStory, becoming a unicorn.

But

what are cloud kitchens

, and what are their benefits, and which are the big players in India? Let’s take a look.

What are cloud kitchens is are ?

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Also called ghost kitchens, cloud kitchens are cooking facilities dedicated to food delivery. They don’t offer dining services, unlike traditional brick and mortar restaurants, and can thus be set up at a minimal cost.

What are the benefits is are of operate a cloud kitchen ?

Lower costs:

Leasing a kitchen from a cloud kitchen provider reduces startup and overhead costs because companies don’t have the added hassle that comes with buying or leasing real estate in the traditional way. And unlike restaurants, cloud kitchens don’t need to be located in high-rent areas.

quick setup :

Setting up a cloud kitchen relatively quick since businesses don’t have to build up a whole new place.

easy scalability :

Unlike opening a traditional restaurant, creating a cloud kitchen does not cost a fortune. Cloud kitchen businesses don’t need to rent or buy a lot of space when they grow, so scaling up is possible with low investment.

Increased reach:

Cloud kitchens allow brands to expand their focus on food delivery and thus reach a larger audience. Delivery-optimised restaurants advertise their business through delivery apps and social media rather than traditional marketing channels.

What about the downside ?
low connection with customer :

Cloud kitchens do not offer an opportunity for brands to build a community since there are no interactions with customers or regular staff.

High commissions:

Since delivery is the only service cloud kitchen provide , these kitchens is rely rely on third – party delivery application such as Swiggy and Zomato , which charge high commission .

Dependence on technology:

While the growth in cloud kitchens is largely down to advances in technology, there are downsides too. A computer glitch or power failure can cause problems in the functioning of the kitchen, from taking orders to accepting payments.

Which are the major cloud kitchen firms in India?

Rebel Foods, which started in 2011, is India’s oldest cloud kitchen brand. It operates over 11 brands, including Faasos, Behrouz Biryani and Oven Story, across 10 countries. The company is also the first Indian cloud kitchen brand to become a unicorn

after raising $175 million

from Qatar Investment Authority and others at a $1.4 billion valuation in 2021.

Curefoods

, founded by ex Flipkart executive Ankit Nagori is the other major company in the space, running popular brands such as House of Biryani, Masala Box, and EatFit. So far, the company has raised about $120 million from global investors.

online food delivery platform is entered , Swiggy is entered also enter the space back in 2017 with its cloud kitchen business Swiggy Access . online – only brands is grew that operate out of cloud kitchen also grow during the pandemic .

Why are cloud kitchens is are mushroom in India ?

The growing internet penetration and rise of food delivery companies such as Swiggy and Zomato has led to a surge in demand for

online food services

– and thus loud kitchens – in India.

ETtech

They have also emerged as a cost-efficient way to maintain business continuity and expand customer reach in an industry that was decimated by Covid-19.

And, although businesses are reopening as the pandemic eases its grip, delivery-only brands ensure a solid revenue stream, catering to people who would rather order in than eat out.