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CEO, Foodlink F&B Holdings India Pvt Ltd
The concept of takeaway food or home delivery is not unfamiliar to the food and beverage industry and the masses; rather it has been in existence for over decades, globally. The term ‘delivery only, without dining in’ which has been now coined as ‘Cloud Kitchen’ has been prevalent in India for a long time in the form of traditional Dabba/Tiffin delivery services and mobile canteen (food trucks). With this, Cloud Kitchens had already established a tested and proven successful business model in India that gained its strong foothold under the pandemic situation which was further revamped with advanced technical assistance.
Generally, the thought of consuming outside food on occasion immediately draws a picture of an ambient dining experience in a restaurant, delectable food presented in luxurious cutlery and celebrations with family and friends. However, cloud kitchens are making breakthrough innovations in this arena by bringing similarities of a restaurant dining experience at home by serving everything from simple home-cooked food to speciality and luxury dinners. According to industry experts, the Indian food service delivery market is expected to double in value to $13 billion by 2025 and cloud kitchens are set to be a $2 billion industry in India by 2024, up from $400 million in 2019.
Cloud Kitchens – Factors responsible for its sustenance and growth:
With recent changing times, the outlook toward the restaurant business has seen a rapid shift from the perspective of customers and business owners. A few years ago, the home delivery business contributed a small portion to the restaurant’s revenue which has today observed an upward growth. Though the pandemic acted as a catalyst in setting a major shift in the Indian F&B industry from dine-in to delivery, there are many other factors which fuelled its mushrooming growth in India which mainly included increasing internet penetration, technology integration in business, and the rise of mobile App-based food delivery and online food aggregators.
The cloud kitchen market in India is anticipated to thrive in the next five years considering rising disposable income among the younger population, a shift in lifestyle and eating habits, easier and secured payment pathways, and a hectic and busy work-life culture that influences a lack of interest toward home cooking.
Technology integration and its role in the growth of cloud kitchen:
Technology advancement and integration have led to fundamental changes in the ordering and consumption of food. Today, cloud kitchens are disrupting the food industry by bringing revolution through online food ordering apps. The F&B industry has also welcomed innovative technologies with robotics and Artificial Intelligence (AI) interface for cost reduction of prepared/delivered food and improving standards of services.
Cloud Kitchen being digital in nature is introducing innovative technologies e.g., the implementation of the Kitchen Display System (KDS) to enhance productivity in the high-octave kitchen space. Details of the customer’s food order are accurately mentioned in the KDS which helps the staff to curate the dish as per the customers’ needs and requirements. Unlike the waiters in the restaurants mixing up the orders which cause food wastage and damages customer service. The integration of AI-based technology in the cloud kitchen helps to streamline its operations more smoothly and efficiently. It identifies the right ingredients to use while curating a dish, helps in experimenting with menus, manages inventory and suggests ways to deal with the customer’s feedback in a professional manner.
In this evolving world, technology including ground-based robots and aerial drones could further assist in reducing the delivery cost. Also, automated standardised processes that use machine learning-based prediction tools and robot chefs to prepare customised quality meals in less time at lightning-fast delivery speed are set to redefine the future of the cloud kitchen industry.
Lucrative business model – Restaurant business vs Cloud kitchen:
The cost factor involved to start a cloud-kitchen business is relatively very low in comparison to the brick-and-mortar business model and set-up of a restaurant. A cloud kitchen includes a low Capex and its setting up typically needs 1/3 rd of the investment required to start a restaurant business. Cloud kitchen entrepreneurs do not need to worry about high rental costs, restaurant interiors and guest facilities, unlike traditional dine-in restaurants. However, the larger chunk of investment in cloud kitchen business is infused in technology that drives its operations, well-equipped kitchen infrastructure, training the manpower, delivery fleet and supply chain management.
Some of the benefits of operating a cloud kitchen over a restaurant include lower rental costs, quick business set-up, buildable scalability with low investment and increased customer reach with delivery-optimised channels. The cloud kitchen model generates value and creates win-win situations for both end-consumers by offering them the convenience and service of ordering food from home and business owners in the F&B industry by significantly reducing their operational and real estate costs.
Trends driving the popularity of cloud kitchens:
Today, in the race to offer unique services and maintain their individual identity, many cloud kitchens have emerged as environmentally conscious brands. Many cloud kitchens have adopted a sustainable and authentic approach that flows through their cooking techniques to food packaging material. The food is delivered in authentic earthenware, steel cutlery, reusable glass jars, paper bags and cardboard boxes that encourage the customers to help minimise plastic waste and pollution. These initiatives not only help in preserving the flavour and nutrition of the food but also promotes a sustainable and healthy lifestyle among customers.
In recent times, cloud kitchens are revolutionising the F&B industry with advanced technology, changing consumer food consumption trends and an operationally sound business model. Automated deliveries, complex machine learning algorithms and a skilled workforce will be critical factors in shaping the future of the food service industry in India.
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Views expressed above are the author's own.
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