2020 may not have been your first brush with the concept of cloud kitchens, but it surely was the year where most of us, sick and tired of our own cooking, missing our house helps, sat up and took notice of how conveniently the cloud kitchen delivery model has allowed us to gorge on food at home because eating out became a thing of the past. From the occasional Faasos rolls or a Behrouz biryani to having gourmet burgers and full-blown Asian fare, everything now comes home.
Simply put, a cloud kitchen or ghost kitchen is a cooking space with no dine-in option. The model relies on orders placed through food tech platforms, online aggregators, or their own websites. For a while, everyone in the F&B industry, including five-star hotels, went the cloud kitchen way. In 2020, not only did numerous individual, localised cloud kitchens open up, but also the established hospitality chains saw the opportunity to tap into the market, and are continuing to do so. As the uncertainty prevails, more cloud kitchens continue to open.
BOSS burgers is one such example. Launched as a cloud kitchen in February 2021, BOSS burgers is currently being prepared and dispatched from the kitchens of Riyaz Amlani’s SOCIAL across cities, and are soon launching their individual cloud kitchens. Using freshly made burger patties, baking their buns in house as well as making their own sauce, the idea is to provide non-gourmet restaurant-style burgers to people in the comfort of their homes. In fact, Amlani has also launched his first Asian cloud kitchen brand, Hung-Li, this month.
F&B retail company LiteBite Foods, which houses critically acclaimed brands like Punjab Grill, Zambar, etc. is said to be rolling out 36 cloud kitchens across five cities in the next three years. Rohit Aggarwal, director of LiteBite, explains that while most of their outlets have been delivering food through self-delivery and aggregators, they have decided to set up some multi-brand delivery-only kitchens to increase their market penetration.
Aggarwal also adds that the cloud kitchen industry is the sixth-largest in the world, where retail startups contribute about 70 per cent to the total sales, while food processing companies account for the balance of 30 per cent of the country’s overall food market.
Jaydeep Mukherjee, head-Cloud kitchens, Impresario Handmade Restaurant, explains that for the past few months, they started doubling cloud kitchen brands at Impresario to increase their share of our delivery business. “The reason for the major shift is that cloud kitchens are the only way to reach out to customers across geographies and popularise our offerings,” he says.
Vaishali Sanghvi and Vishal Karia started Colossal Kitchens, a five-brands-under-one-roof vegetarian kitchen, in 2019. During the lockdown, they compiled the power of the many kitchens they have, and did a Colossal Spread — a brunch box to host your Sunday brunch at home, which was quite a delight to devour. Sanghvi and Karia believe their kitchen gained more ground during the lockdown, which was an opportunity for them to provide gourmet meals at home.
Ameeth Jadhav and Chef Amit Chaudhary, founders of Mumbai Food Works Hospitality LLP, started Spice Zest and Chilli Berry in December 2020, and they create multiple brands from one cloud kitchen. Spice Zest does some flavourful Indian dishes (their mutton is out of the world), while Chilli Berry takes on the American and European options. “The high demand visible in the market for restaurant-quality food at home is why we decided to launch the kitchen,” the duo say.
Vegetarian gourmet food delivery company, Ignite Foods started in 2019 but launched their cloud kitchen, Cinque, in December 2020. The brand has kitchens at Worli and Andheri in Mumbai. Biryani By Kilo, which already has six outlets in Mumbai, recently opened one more in Lower Parel, and the delivery is perfectly on point. In fact, the brand plans to grow to 200+ outlets pan India in the next two to three years and expand to some international destinations as well. The fact that no one does the biryani handi as freshly as them (no change of vessel, reheat in handi, a smooth process) will only accelerate their growth.
Many people somehow believe that cloud kitchens are easier, but the challenges that come with setting up one are aplenty. Lodha says, “Gaining the trust of the customer is the biggest challenge a cloud kitchen faces as it has no direct connection with the customer. Hence, it requires strong product packaging and marketing along, with a great food quality for people to be comfortable enough to trust the brand and order.”
Aggarwal agrees. “Trust and loyalty are essential to the growth and sustenance of any brand, and cloud kitchens need to adopt innovative strategies in order to attract a dedicated customer base. A cloud kitchen is also heavily reliant on technology. Cloud kitchens are mostly dependent on online delivery platforms or aggregators. The listing fees or marketplace commissions currently are extremely high which need regulation/rework. The operator also spends on delivery charges and visibility which squares off the savings made on occupancy cost.”
Cloud kitchens have majorly impacted the way we eat, especially since going to a restaurant means stepping out, which a lot of people may not be comfortable with, even when things are partially open. Mukherjee explains that cloud kitchens have served as an avenue for a lot of innovation and experimentation for brands. “Earlier, home delivery meant somehow getting restaurant food delivered to the customer but due to cloud kitchens, the entire definition of home delivery has changed immensely. Brands are paying a lot of attention to packaging, and we can see beautiful and smart packaging that brands are now adopting so that the food can travel well. Cloud kitchens have allowed chefs to do with delivery what they would only be able to do within restaurants so that they can deliver the same kind of food via delivery as well,” he adds. Jadhav and Chaudhary believe that as cloud kitchens have taken a big bite into the market share, there will be a new market mix after the pandemic.
Swiggy has always been a large supporter of the concept of cloud kitchens, while of course, having every big restaurant listed with them too. “Over three years ago, Swiggy pioneered the growth of cloud kitchens for restaurant partners to expand their business and bring quality food closer to consumers through Swiggy Access. This creates a win-win proposition, where restaurants reach new consumers and grow their businesses with minimum investment, and consumers get a larger and better selection of restaurants to choose from,” a Swiggy spokesperson says.
Karan Tanna is the founder and CEO of Ghost kitchens India, which is India’s first and fast growing bootstrap cloud kitchen company. Ghost Kitchens runs multiple cuisines at the same kitchen, and have multiple brands under each cuisine. Tanna strongly believes that the growth of cloud kitchens are already disrupting the food ecosystem of the country. “The recent pandemic has accelerated the growth of cloud kitchens and high street restaurants are also depending on food delivery as a major revenue. The future is eating at home,” he says.
But the biggest question remains — Why are cloud kitchens still sprouting, even though restaurants have been open since October now? Especially in cities other than Mumbai. Mukherjee explains that cloud kitchens fulfil very different needs, which are why they are sprouting even though restaurants are open for dining in. “While restaurants cater to dine in with a different level of hospitality, cloud kitchens cater to having a great meal at home. Though the same customer base, both are two different businesses altogether,” he adds.
Lodha says that even though restaurants opened up in October, there were many restrictions with respect to timings and capacity. “Secondly, customers are not yet comfortable dining in, with Covid cases rising again. Here is where the cloud kitchens are helping customers enjoy the same quality food at the comfort of home with safety and hygiene taken care of,” he says.
Swiggy spokesperson adds that while many restaurants have now opened up, consumer sentiment to dining out might take some more time to get back to pre-COVID levels. However, with food delivery (and by extension cloud kitchens) reaching near pre-Covid levels, they are filling the void by catering to occasions when consumers might have otherwise gone out. “These future-ready models have become immediately relevant to the restaurant industry with the pandemic causing a significant number of restaurants to either shut down or curtail operations,” the Swiggy spokesperson added.
Tanna says it’s the pandemic that has given more exposure to the business cloud kitchens. “Lots of operators who opened food delivery business in a small way, maybe from their home and achieved early success, assume that the business is going to be successful even when they open a professional kitchen and hence, a lot of them are opening kitchens. As the capital cost is low and it sounds simple to list on aggregators and start selling, there is an assumption that the entry barrier for doing business and sustaining is very low,” he says.
So does that mean that cloud kitchens can pose a threat to the dining in/restaurant industry? Mukherjee says, “I wouldn’t say cloud kitchens are a threat to dine-in restaurants. Both are two different business platforms, and are completely different business entities. One is a pure delivery model while the other is a sit in experience. When an individual wants an overall experience with friends and family they will visit a restaurant to experience the hospitality, warmth and food. Both are equally important with each of them having its own markets and targets.”
Lodha adds that cloud kitchens definitely are giving a stiff competition to dining in, but will not completely replace restaurants as customers will go out to dine in for social and celebratory occasions. Tanna chips in, “Food delivery as a whole is increasing exponentially month on month. As people are getting busier and as the choices of food delivered at home are increasing and evolving, people will have very lesser reasons to go out and eat. The evolvement of entertainment at home (OTT etc.), will only encourage customers to spend more time at home. Dine out will only be limited to convenience and experiential eating in future. Definitely, food delivery will own a much larger pie of the entire foodservice industry in times to come.”
All the food giants unanimously agree that the cloud kitchen industry is not going anywhere, and given that I’m biting into a gourmet burger from a new cloud kitchen, as I write this, I can’t help but nod along. Where are you ordering from, next?