BUSINESS
Cloud Kitchens Riding On Cloud Nine Pandemic has caused a paradigm shift in consumer ordering behavior. It has made the diners hesitate not only in mingling among themselves, but also in the food that they partake. The meal must not only be healthy but also cooked hygienically. To avoid crowding, the diners are keen to order from home. This has given rise to cloud kitchens. But for the cloud kitchens to succeed they have to understand their customers as well as the unit economics of the partnership with the delivery apps and the cost of procurement of menu items. 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. Ashok Malkani examines various aspects of cloud kitchens and tries to fathom whether – and how – they can make a success of themselves
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opular folklore states that farmers in the yesteryears believed that food came from heaven. Well, they could said to be not very far from the truth as food these days comes from the ‘cloud’. One may thus say that the concept is, perhaps, as monumental as the discovery of fire. Over the past two years, since the arrival of Covid-19, digitization has become a norm, particularly in the F&B industry. The pandemic forced several dine-in restaurants to shut shop. Over the last couple of years the way we eat from restaurants has undergone a sea-change. While in the pre-pandemic days most restaurants witnessed only a small
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part of their business coming from delivery, today most of the established restaurants are seeing an increasingly higher share – in some cases a majority of the share – coming from customers ordering home delivery. In the new norm, according to a report by Motilal Oswal Financial Services, the Indian food service delivery market is expected to grow at over 30 per cent CAGR between 2021 and 2026 and be worth $ 13 billion by 2025, growing much faster than the overall industry, including dine-in. According to a report by RedSeer Management Consulting the ‘cloud kitchens’ in India are expected to be worth $2 billion by
Hammer Food & Beverage Business Review
2024, up from $400 million in 2019. The food ordering market of India is expanding at a CAGR of 16% to reach $17 billion by 2023 as per DataLabs by Inc42. It is no wonder that with one foot firmly in the food delivery business, food aggregators are aggressively moving towards cloud kitchens to cash in on the frenzy.
So what exactly are cloud kitchens and how did the term originate? It may be mentioned that these days we store our photos, stream our movies, and even run our businesses in the cloud. This concept has developed in the food business too.
Apr-May ’22
