Cloud kitchens are among the hundreds of things that the pandemic popularised. At present, India has over 3,500 cloud kitchens and by 2024 it is touted to be a $2 billion industry in India, according to a report by RedSeer Management Consulting.
Cloud Kitchens Explained
For the people oblivious to the term cloud kitchens, these are the new-age online restaurants that offer no dine-in facility and have no physical space or a take-away option. In other words, these are restaurant kitchens accepting orders for delivery only. They are unlike the quintessential restaurants where you can sit and enjoy your meals. In fact, these are fully functional kitchens/production units that prepare food. These are also sometimes referred to as ghost kitchens, dark kitchens, or virtual kitchens
The spurt of cloud kitchens across India is proof of the changing dynamics within the food industry and its customers which have led to a sharp increase in online orders kickstarted during the pandemic. With lockdowns in place, people found it convenient to order food online. As a result, cloud kitchens saw everything from home-cooked meals to luxe diners perform equally well. Thus, more and more cloud kitchens surfaced and encashed the opportunity. Ever since food tech aggregators like Swiggy and Zomato are gaining new deliver-only cloud kitchen clients each month.
Facing exponential losses and finding it hard to stay open, the trend also led many restaurants to switch their business models to cloud kitchens. Moreover, aspiring restaurateurs acknowledged that however glamorous the ambition of a restaurant may appear, true profits were coming in from cloud kitchen services. They learned that not only were they easier to launch, manage and operate but also low on manpower, maintenance, rent, and overall investment costs. Cloud kitchens just have to focus entirely on gathering the right resources who could produce quality food, procure raw materials and keep the prices highly competitive. Additionally, geography doesn’t hold any importance with cloud kitchens as long as they are easily accessed by the delivery guys.
During the pandemic, traditional dine-in restaurants fared well as compared to the takeaway joints. Restaurants sales went down as low as 90%, according to CRISIL Research. Thankfully, restaurants have finally begun to pick up sales again. Experts believe that dine-in restaurants will never wipe off as people will always be attracted to the idea of eating out at places that exude luxury.
Brand-owned Cloud Kitchens
These kitchens are very simple in their approach and function; they essentially perform through a single location, brand, and kitchen. The original cloud kitchen models were the single-cuisine ghost kitchens having delivery-only operations, with zero takeaway and dine-in options. These proved to be great for avoiding high rents and mitigating real estate costs as restaurant owners could use just a part of their house to run them. The concept became popular with the surge in online food orders and the rising demand for online deliveries.
Cloud Kitchen Aggregators
A cloud kitchen aggregator model or a multi-brand cloud kitchen either owns or operates multiple brands under one parent firm. It is important to note that cloud kitchen aggregators don’t essentially own these brands; mostly these are in the form of brand partnerships. Thus, one kitchen space accommodates all the brands under one roof. Each cuisine-specific brand functions in a manner that seamlessly caters to its varied customer requirements. There are diverse cloud kitchen aggregator examples including co-working kitchen spaces, cloud kitchen operators as well as siloed kitchens.
Cloud kitchen aggregators have to be technologically sound and updated to carry out efficient and flawless deliveries in a systematic and methodical manner. The versatile business requires firms to have their individual presence across websites, applications, and online food aggregator platforms. Facing tough competition, they are always on the lookout to enhance delivery experiences for their customers while ensuring a quality food supply.
Difference between Restaurants, Cloud Kitchen Aggregators, and Brand Cloud Kitchens
Having a profound understanding of their customers, restaurateurs are able to develop their offerings over a period of time. On the other hand, cloud kitchen marketing is data-driven, intensive, and straightforward. Restaurants maintain customer relations based on their consumption of food/cuisine needs, behaviors, and preferences. And since cloud kitchen aggregators aren’t restricted to just one cuisine, they guarantee a larger audience base.
For example, if a cloud kitchen brand renowned for its Indian menu switches to a multicuisine one, it might end up losing customers. Conversely, introducing the multicuisine menu under a new brand name would possibly work like magic. Additionally, collaborating with an established brand would ensure better business. While cloud kitchen aggregators attract a diverse set of customers to a platform, customers are less likely to make the same choice in their order very often. Besides, a single brand struggles to transform fresh customers into loyal ones while cloud kitchen aggregators can meet various requirements of the customers. For instance, all the three brands under a cloud kitchen that serves breakfast, lunch, and dinner/dessert will attract a larger customer base as they can cater to all three different meals of the day. Therefore, cloud kitchen brands have a lot of potentials to make the business lucrative through enhanced services including quality food and exceptional delivery services.
Today’s cloud kitchen owners have realized that brand recall value, brand building, and delivery are of utmost importance and it is critical to have a high demand. They are aware that reaching a customer’s doorstep within 30 minutes of receiving an order is significant to running the business seamlessly. It is exactly why they are ensuring trusted collaborations with food tech aggregators such as Swiggy, Zomato, Food Panda, etc. that are irreplaceable. Therefore, cloud kitchen entrepreneurs must only target maintaining quality food and leave the rest to food tech aggregators who have the necessary infrastructure to take care of the rest at a nominal charge.
(The author is the founder of Kitchens@ )