Cloud Kitchens: The New Restaurants
29th, January 2018 - Food tech
There has never been a better time to be lazy and a foodie. Entrepreneurs are making a beeline for this business plans that involve no dine-in facilities and no-take out option. So much so that Swiggy and Zomato have added it as a new vertical to their existing business.
The restaurant industry is undergoing a transformation of the digital kind. Businesses are shutting shop to venture into cloud kitchen and delivery services to cut losses and increase margins. The market share of delivery restaurants increased from 15% in 2013 to 35% in 2016, a testament to the changing trends in India. People are preferring to order more often than before leading to many cloud kitchens cropping up, majorly small-scale startups with limited geographical exposure. However, there are companies like Freshmenu and HolaChef that are case in point for large-scale cloud kitchen and delivery services.
What are cloud kitchens? They are small kitchens sans the dining or take-out area, an operational kitchen that doles out food for home delivery. The business framework for a cloud kitchen is divided into 3 parts: 1. The online ordering platform that displays the menu, price and enables payment; 2. The kitchen that prepares the food; and 3. The logistical arm that delivers food to the customer. This set up eliminates the costs involved in renting out a premium space for fine dine, salaries of wait staff and utility bills. Typically, the menu for these kitchens changes as per customer preferences. They do away with recipes that are not selling well based on the sales and add newer dishes. The liabilities here are less and the spread of the menu is varied depending on the choices of the customers.
One of the earliest adopters of this business model was Freshmenu, an Ahmedabad-based startup founded by an IIMA alumnus. Quite recently, Freshmenu joined the top five in the food tech industry alongside Zomato, Swiggy and the like. It is not an aggregator or a marketplace, but simply a cloud kitchen that delivers multi-cuisine, healthy food right to the doorstep. With investments pouring in, Freshmenu has grabbed eyeballs and is being celebrated for not only staying afloat but also for setting a profit-making trajectory by FY2018 post the meltdown in the funding scene from the later part of 2015. It follows the full stack model – setting up its own kitchen and delivery staff.
While the food tech industry keeps growing, the avenues are open for various permutations and combinations. Cloud Kitchens are available not only for the regular customer craving a multi-cuisine experience but also for the health conscious customers who have a variety of diet requirements, whether it is a protein-rich diet or a keto diet. Businesses are carving their niche in this industry with customized menus and quality offerings. Looking at this scenario, the time of the lazy and gluttony are here to stay.
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