Over the last decade, the growth of the Indian foodtech segment, especially the cloud kitchens in India, has been tremendous. With the growth of giants like Zomato and Swiggy, several Indian cloud kitchen brands, including Faasos, Biryani by Kilo, Oven Story and many more, saw a boom.

This is just the beginning, as with increasing consumer inclination towards online food services, the Indian cloud kitchen market is set to be a $2 billion industry in India by 2024, up from about $400 million in 2019, as per RedSeer Consulting.

Backed by this growth, many industry experts believe the future of dining in India to be cloud kitchens.

Factors Driving The Growth Of Cloud Kitchens In India

Presently, the Indian cloud kitchen and restaurant market are vastly underpenetrated compared to the US and China. And because of factors like high rent, a lack of space in the big cities and a rising middle class, cloud kitchens are believed to be the future of dining.

For people still confused about the clod kitchen concept, let me explain what Cloud Kitchen means in simple terms.

A Cloud Kitchen or a ghost kitchen is fundamentally a restaurant kitchen that accepts customer orders online and provides no dine-in facility for customers. They only take online orders and deliver food to the customer’s doorstep. 

What makes the idea of a cloud kitchen so special is the fact that it got some game-changing cost benefits over a traditional restaurant.

Here are some major cost advantages of Cloud Kitchen over Conventional Restaurants:

1. Location:

A conventional restaurant needs to be in the right location where more and more people can reach and dine, usually in the marketplace where more and more people come, and still, they can only target specific geography.

But cloud kitchens don’t need to be started in a fancy place as long as they can serve the requirements of the online order. It also expands the area they can target.

2. Property Cost:

For a conventional restaurant, rent accounts for a major portion of the total budget.

In the case of Cloud kitchens, food preparation and business operations can be carried out even at home, in some small apartments, and in areas where property costs are lower. That flexibility helps cloud kitchens to save a lot of money which could be a great advantage in a low-margin business like restaurants.

3. Increased efficiency:

Because cloud kitchens work with on-demand delivery as their core competency, all their processes, custom-built space, technology, and operations are targeted to achieve this objective.

It leads to increased efficiency in order execution and more than one brand with different kinds of recipes and menus.

4. Employees cost:

To operate a cloud kitchen, one only needs Chefs, a few helpers, and housekeepers. This helps in bringing down the total employee cost to a great extent compared to a traditional restaurant.

A few other advantages of a cloud kitchen are:

• Lower operational costs due to a fall in the rent and daily costs required to operate a traditional restaurant.

• Increased profit margins due to a decrease in cost while revenue remains the same, thus leading to more efficient marketing opportunities.

Cloud Kitchen Segment Leaders:

Curefoods, a startup that operates with a Thrasio-like model, has been acquiring and incubating multiple cloud-kitchen brands over the past few years.

This year, it acquired five food brands, taking its total number of acquired brands to 20, with plans to acquire another five by mid-2022. 

Rebel Foods operates the world’s largest chain of internet restaurants powered by an operating system for building and scaling brands globally. It operates over 450 kitchens with brands like Faasos, SLAY Coffee, The Good Bowl, Ovenstory Pizza, Behrouz Biryani, Mandarin Oak, and Sweet Truth.

Future of Cloud Kitchens In India:

Backed by venture capital funding, startups in the segment are scaling and growing fast. In 2021, total funding for cloud kitchen startups doubled to $234.2 million (as of October) from $112.4 million in all of 2020, as per data from Tracxn.

As the Indian cloud kitchen market is vastly underpenetrated compared to the US and China, much room is present for growth. The market share is also bound to grow because of factors like high rent, a lack of space in the big cities and a rising middle class. 

Additionally, the growing youth population of the country and rising disposable income offers a perfect growth recipe that will drive the growth of the Indian cloud kitchen market in the upcoming five years.

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