India’s slow cooking cloud kitchen industry saw a massive boost as COVID-19 pandemic led restrictions encouraged home deliveries.
Cloud kitchens are businesses without a dine-out outfit and only accept online orders for delivery. They often collaborate with food aggregating delivery companies, such as Swiggy and Zomato, to garner the visibility of their brand.
According to RedSeer Management Consulting, by 2024, these ghost cooking facilities are projected to become a $2 billion industry in India.
After the onslaught of the COVID-19 pandemic, the cloud kitchen industry picked up pace in terms of growth and orders as people banked on online deliveries more than restaurant outings.
Chef Team at FreshMenu
Rashmi Daga, Founder and CEO, FreshMenu, says people were hesitant to order online last year as they were afraid to contract the virus at the time of order delivery.
In a panel discussion with YourStory’s Daily Dispatch, she says, “Cloud kitchens have become a big part of the FnB industry. Everybody acknowledges that delivery food is a more sustainable business solution, and consumers are looking for food to be delivered at their doorstep more than going out.”
In the last two years, restaurant footfalls have hit a massive low as COVID-19 led restrictions are not allowing restaurants to operate in full capacity.
In fact, before the vaccine, there has been a crippling fear among people of contracting the virus. As most people moved to a work-from-home model, the number of online orders increased for both cloud kitchens and restaurants that have an online presence.
Chai Point, a beverage company with retail outlets, ventured more aggressively into the online deliveries space. The work-from-home model furthered the orders for ‘chai’ and other snacks provided by the retail chain.
Commenting on the scope of physical stores and online deliveries, Shashikanth KS, COO, Chai Point, says they will both co-exist in the right proportions.
“Retail stores are extremely important because they create the right visibility for the customers. It is also important customers touch and feel the store and experience the store because when they go back, they are ordering keeping in mind the store,” he says.
Technology is at the heart of cloud kitchens
Ankur Sharma, Co-founder, Rebel Foods, adds the company has reached its pre-COVID levels in terms of business and continues to grow month on month.
Commenting on the scope of leveraging technology for cloud kitchens, he says online food ordering requires technology at every step of the customer journey.
In view of increased concern over safety for customers, he says, “We are trying a few experiments like live streaming of our kitchens so customers can see how their order is being made.”
He also dwells on the ambit of technology that helps cloud kitchens with analytics to understand customer preferences and buying patterns. Echoing the same thought, Rashmi adds the possibilities of IoT devices, smart kitchens, and automation in the kitchens after the rollout of 5G.
The panel agrees that technology is the backbone for their cloud kitchen businesses. In the near future, Shashikanth summarises that the safety of customers and ensuring delivery of fresh items will be the focus areas for technology advancements and adoption.
Roadmap for the future
Freshmenu has a presence in Delhi, Mumbai, and Bengaluru, and will look at expanding into another city in the next 12 months. The company is experimenting with new ranges of menus and accounting for the “post-COVID weight loss state of mind” the customers are experiencing.
Geographical expansion is also on the cards for Rebel Foods as it plans to reach 50 more cities in the next six months. It is also trying to go deeper into its existing cities and onboard partner brands.
Concluding the panel, Shashikanth talks about Chai Point’s new range of ‘peppy’ food items introduced to provide customers with a wholesome ‘chai+snacks’ experience. He says that expansion in terms of geography is expected for both Chai Point’s retail stores and online delivery segments.
The majority of online orders are placed by the young population, and India boasts of a huge population, of which 50 percent fall under the age of 25.
Coupling young India’s appetite, technology advancement, and growing acceptance of home deliveries, the cloud kitchen industry is projected to expedite into a competitive industry.