By Sakshi Singh, Contributory Author
Jan 12, 2024 / 9 MIN READ
Commencing its growth in response to the challenges posed in 2020, the cloud kitchen phenomenon in India has not only navigated through adversity but has also emerged as a potent force, intensifying the competition against traditional dining establishments.
ITC, recognized for its North Indian culinary offerings through food delivery apps, is expanding its cloud kitchen business beyond Bengaluru, reaching Chennai, and planning further expansion into Mumbai, Delhi, and Kolkata. Hemant Malik, ITC's executive director, envisions the addition of breakfast and oriental cuisines, marking a strategic move in the evolving food-tech landscape.
Operating under three distinct brands, their 19 cloud kitchens in Bengaluru and four in Chennai have already achieved the break-even point, a testament to their winning formula involving established brands, curated cuisine by ITC Hotels' chefs, and leveraging capabilities from their packaged foods business. With a digitalization-driven operational model and market leadership achieved within two years in Bengaluru's premium space, ITC aims to replicate this success in other cities, showcasing their commitment to innovation and excellence in the dynamic cloud kitchen industry.
Simultaneously, in the burgeoning cloud kitchen landscape, Kitchens@, a startup based in Bengaluru, has secured a significant boost with a $65 million investment from London-based private equity firm Finnest during its Series C funding round. Kitchens@ provides turnkey solutions for F&B brands, facilitating their expansion with comprehensive services, including infrastructure, technology, and operational support. The company collaborates with a spectrum of food brands, including major players like Domino’s, Subway, Taco Bell, Nando’s, ChicKing, and national chains such as ITC, Mainland China, and Barbeque Nation.
Adding to the diversity in the cloud kitchen sector is Impresario Entertainment & Hospitality Pvt. Ltd., which has recently introduced its latest cloud kitchen brand, Aflatoon.
Unveiling the Market Potential
According to a comprehensive report by RedSeer, the projected value of the cloud kitchen market in India is set to soar to $2 billion by 2024, a substantial leap from $400 million in 2019. The sector is witnessing interesting trends, including consolidation, where a select few players assemble well-known cloud kitchen brands, and the rise of kitchen as a service (KAAS). Industry experts anticipate a sustained growth rate of 15 percent to 20 percent year-on-year for the next decade, positioning cloud kitchen players as integral components of the Indian F&B ecosystem.
Pakhi Saxena, Business Director Head - Retail & Consumer Products, Wazir Advisors said, “With advantages like low initial investment and operating costs, higher profit margins, and relatively easier geographic expansion, cloud kitchens have taken the foodservice industry by storm.”
Curefoods claims its position as the second-largest cloud kitchen player in India in terms of footprint, hosting an array of brands such as CakeZone, Nomad Pizza, Great Indian Khichdi, Sharief Bhai, and Iceberg Ice Cream, among others.
The enduring success of cloud kitchens, extending beyond the challenges posed by the pandemic, can be attributed to three pivotal factors: habit formation, ease of delivery, and the strategic integration of technology. These elements have not only sustained the momentum but have positioned cloud kitchens as a resilient and evolving force in the culinary landscape.
The Triumphant Factors
Habit formation plays a crucial role in the continued preference for cloud kitchens. Over time, consumers have developed a reliance on the convenience and efficiency that these virtual kitchens offer. The habit of ordering meals for delivery or takeout has become ingrained, contributing significantly to the sustained growth of cloud kitchen operations.
The ease of delivery has been a game-changer, especially in a world that values convenience and time efficiency. Cloud kitchens, with their streamlined processes and dedicated focus on delivery logistics, have mastered the art of reaching consumers' doorsteps promptly. This aspect has not only met but has exceeded consumer expectations, further solidifying the appeal of cloud kitchen services.
Additionally, the strategic utilization of technology has played a transformative role in the success of cloud kitchens. Karan Tanna, founder of Ghost Kitchens, emphasizes that large cloud kitchen companies are poised to continue shaping the future by creating reliable supply chains and advancing automation in kitchens. Leveraging technology across various facets, including marketing, kitchen management, supply chain control, and human resources management, is becoming increasingly integral. This integration of a comprehensive Tech Stack facilitates efficient operations, cost reduction, and an elevated overall consumer experience.
Tanna's insights underscore the trajectory that the cloud kitchen sector is poised to follow. The ongoing commitment to innovation and the adoption of cutting-edge technologies not only enhance operational efficiency but also influence how food is prepared, packaged, and ultimately delivered. This continuous innovation is not just a response to current challenges but is shaping the future landscape of the entire food industry.
“Cloud kitchens, being easier to operate, have seen a rapid rise. The constant pitfall continues to be supply and demand. Intensive market survey is critical while designing the concept ensuring cloud kitchens operate in appropriate locations. Distance of the cloud kitchen in B2C model needs to be reviewed as loss of temperature and freshness remain threats for the business,” Avdhesh from Holidayy Inn Mumbai mentioned.
As cloud kitchens mature and expand, the integration of technology at every stage of the process is becoming a hallmark of success. The ability to adapt, automate, and enhance the consumer experience positions cloud kitchens not just as a trend but as a transformative force that is reshaping the culinary landscape. In the years to come, this combination of habit formation, seamless delivery, and technological innovation is expected to keep cloud kitchens at the forefront of the evolving F&B ecosystem.
Commencing its growth in response to the challenges posed in 2020, the cloud kitchen phenomenon in India has not only navigated through adversity but has also emerged as a potent force, intensifying the competition against traditional dining establishments.
ITC, recognized for its North Indian culinary offerings through food delivery apps, is expanding its cloud kitchen business beyond Bengaluru, reaching Chennai, and planning further expansion into Mumbai, Delhi, and Kolkata. Hemant Malik, ITC's executive director, envisions the addition of breakfast and oriental cuisines, marking a strategic move in the evolving food-tech landscape.
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