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Cloud kitchens: Delivery only

Delivery-only food brands, cloud kitchens are saving on rentals and thriving on quality

Cloud kitchens: Delivery only

Arushi Chaudhary

In the small town of Nangal, Rohit Suri, the 48-year-old owner of Chief’s Restaurant, recalls riding his bicycle to the family restaurant run by his father at the time and spending his after school hours learning culinary skills from the ustad in the kitchen. Three decades later, life has come full circle, as his 18-year-old son, Madhav, has begun his initiation into the family business. The millennial kid aspires to expand the business, taking it beyond the confines of his hometown. The emergence of cloud kitchens in India presented just the kind of opportunity the Suris needed to act on the expansion plans. In September 2019, they took the plunge by setting up Cloud Kitchen by Chief’s in Mohali.

Cloud kitchens are virtual restaurants comprising just a kitchen and support staff, built to cater to the model of delivery-only food brands. As a young man training in hospitality to become a restaurateur, Rohit could not have envisaged a time when food could be ordered with a few taps on a phone and delivered to your doorstep within minutes. “The food scene in India has changed remarkably in the past 15 years. A rise in people’s paying capacities, emergence of platforms like Zomato and Swiggy, and preference toward eating in are some of the factors to have fuelled this change,” Rohit says.

Following dreams made easy

Cloud kitchens have not only transformed the way we consume food but also presented a platform to people with a passion to pursue their culinary dreams. Pankaj Gupta, a 41-year-old former Chartered Accountant, quit a promising career to follow his passion for food. He now runs a cloud kitchen named Petu Pankaj, in collaboration with his cousin Sandeep Gupta, operating out of Chandigarh’s Industrial area. “I was always a food lover, which earned me the nickname petu as a child and it kind of stuck. When I decided to take a detour from my career as a CA to open this cloud kitchen, the name Petu Pankaj seemed like an obvious choice,” Pankaj says. The USP of this restaurant is authentic Indian preparation sans any artificial colour or flavour. The entire menu celebrates the goodness of Indian spices and herbs, and turns to ayurvedic and Unani concepts for usage of ingredients.

“As a result, despite being rich in its preparation, every dish on your menu is light on the body yet delicious to taste,” he adds. The USP has earned Petu Pankaj quite a sturdy following in the tricity over the past two years, and propelled expansion plans. They already have outlets in Patiala, Noida and Delhi, and aim to open 500 outlets in the next five years.

“The cloud kitchen model seems appealing since the initial investment is low, which is what drew us to the business as well. But once you get in, you realise that the operating cost is much higher, owing to factors like packaging and so on. Also, with so many new outlets opening up in this realm now, longevity of a venture can be a challenge to scale. People’s expectations are higher. One miss in quality and consistency is all it takes to lose a customer. So, that’s something you have to work toward constantly — offering high-quality, hygienic and delicious food every time,” he adds.

Mohit Sardana | COO, Food Delivery at Zomato

It is definitely the choice for those who wish to own a restaurant without investing a large sum of capital

Mohit Sardana, COO, Food Delivery at Zomato, agrees that cloud kitchens open up a new world of possibilities for people with a passion for food. “It is definitely the choice for those who wish to own a restaurant without investing a large sum of capital. If you look at the Zomato model, we ensure the restaurateur can open a restaurant or expand to a new location with relatively low investment and business risk, and is supported well enough to focus on what he does best — food, instead of being weighed down by compliances, high rentals among other necessities,” he says.

Karan Tanna | Ghost Kitchen

Cloud kitchens have made venturing into the business easier, but, to sustain, people must have their ear to the ground

Karan Tanna of Ghost Kitchens also has had a journey not very different from Pankaj’s. An automobile engineer by profession, he wanted to chase that childhood dream of opening up a restaurant. He started out by buying equity in a Gujarat-based quick service restaurant chain called Kutchi King. Then moved on to Yellow Tie Hospitality, which emerged as India’s first franchise brand in this sector and went on to take 12 international brands under its aegis. In May 2019, Karan exited this venture too to explore the possibilities of a cloud kitchen model and set up Ghost Kitchens.

“In less than a year, we have taken 18 home delivery brands under our wing and service four cities — Delhi, Mumbai, Ahmedabad and Pune. The focus of Ghost Kitchens is to invest in home-deliver startups and offer them growth capitals, infrastructure and mentorship to thrive in this up and coming sector,” Karan says.

Market marquee

Cloud kitchens have definitely made venturing into the business easier with lower entry barriers. However, to sustain and thrive in this model, people must have their ear to the ground and eye for detail, he feels. “It’s important to acknowledge that the consumer behaviour is changing drastically,” says Karan. The key to success is a multi-brand model that focuses on the bottom of the consumer pyramid and offers quality and choices at affordable price points. If done right, cloud kitchens have immense potential for growth, which in turn, causes a positive ripple effect in the industry by creating more business and employment opportunities.

Faasos, an Indian food on demand initiative that was set up in 2011 by two Bengalis — Jaydeep Burman and Kallol Banarjee, has made impressive strides in the cloud kitchen model. The company rebranded as Rebel Foods in 2018, and launched key food brands that include Oven Story Pizza, Mandarin Oak, Behrouz Biryani, which operate across multiple channels today.

Raghav Joshi, CEO — India Business at Rebel Foods, talks about the brand’s migration to the cloud kitchen model: “It was in 2014 that we realised that more and more people were placing orders through phone or website instead of visiting the outlets. That’s when we thought why spend on rentals then. Why not operate on kitchen-only model? Then, came the concept of setting up a multi-brand model that caters to multiple needs of customers while operating from the same kitchen,” he says.

“Cloud kitchens are impacting the way people consume food. It offers a more economically viable model. That said, a vast majority of these ventures fizzle out. We have been able to tide over that by using data-driven decisions on our expansion plans and bet on areas instead of localities. Owing to this, we’ve never had to shut down a kitchen due to demand issues,” he adds.

Behrouz Biryani — a brand of Rebel Foods launched in 2018 — has become a textbook example of success in this highly competitive sphere in its short lifespan. Throwing light on the secret of this success, Raghav says, “Biryani is and has been a popular cuisine among the masses but there was no strong brand presence for this dish. We figured that the reason for this was the preparation of this classic and people’s palate for it changes every 200km or so. The idea behind Behrouz was to find a common ground that caters to the taste of people across the country. Trials for this began in August 2017 and the brand was launched in 2018. We seemed to have hit the nail on the head, as it has grown into a multi-crore brand in just two years.”

Today, food choices have become more personalised than collective. When a family or a group of friends decides to order in, someone may want pizza, someone else a wrap, others still Indian or a salad. A multi-brand model caters to this trend. It was this need for diversity that drove the founders of Food@U — another Chandigarh-based virtual food court — to launch a string of brands under their aegis. The venture started out as a base kitchen in 2017, serving multi-cuisine varieties such as pastas, pizzas, Indo-Chinese, Indian and desserts.

Ashank Arora | Food@U

The takeaway for us has been that consistently delivering quality food is the only way to earn a loyal customer base

Co-founder Ashank Arora, 24, says, “We soon realised that this wasn’t going to be enough to serve our patrons in true earnest. People today seek variety and authentic preparation of different cuisine. Keeping this in mind, we launched brands like Curries, Hardy’s, Buns&Wraps and Biryani Box, offering a range of delicacies from gourmet and affordable burger, Amritsari kulchas, Indian, biryanis and so on. This propelled a growth in our business, taking us from a small 500 sq ft set up to one with a multi-city presence with 17 outlets in Bombay, Pune, Hyderabad, Bangalore, Gurgaon, Jalandhar, Ludhiana, Patiala and Bathinda.”

The cloud kitchen model is also being seen as an alternative that can counter the high failure rate in the restaurant industry. Sardana agrees: “Cloud kitchens are helping improve the restaurant supply ecosystem in India. With the democratisation of demand due to aggregators like us, new restaurants are being discovered by thousands of potential customers. While the sector is still in nascency, we believe that it will play an important role in the upcoming phase of growth.”

Quality the best bet

In the past two-three years, the country has witnessed a huge rise in outside food consumption which has transformed the food delivery industry. Factors like traffic, parking woes and hectic schedules have made consumers turn to delivery for convenience but without compromising on quality or variety.

Vishal Bhatia | CEO, New Supply, swiggy

We help restaurants optimise their kitchens for factors like stock planning, demand forecasting, preparation time, etc.

Speaking of food delivery platform Swiggy’s role in this milieu, CEO Vishal Bhatia says, “Over two years ago, Swiggy pioneered the growth of cloud kitchens for restaurant partners to expand their business and bring quality food closer to consumers through Swiggy Access. With a combination of technology, data science and operational excellence, Swiggy has made it possible to run a high-volume delivery restaurant that lets even the smallest restaurant partner take advantage of the massive food delivery market. Restaurant partners also leverage Swiggy insights to improve their food quality through consistent consumer feedback. We also help them optimise their kitchens for factors like stock planning, demand forecasting, preparation time and order edits. Swiggy also enables both intra-city and inter-city expansions for its partners, which is a first for the industry.” According to a report, the startup has established 1,000 cloud kitchens for its restaurant partners in the country — more than any of its local rivals.

Food@U’s Ashank also agrees that a change in people’s consumption patterns has opened up a whole new world of opportunities for those aspiring to make a mark in the food industry. “Of us three partners, none has any formal training in the hospitality industry. We learned the ropes as we went along. For anyone out there planning to take a leap into this industry, I’d strongly recommend getting a seasoned consultant onboard to get a handle on the realities of this business. The takeaway for us has been that consistently delivering quality food — no matter what the market conditions — is the only way to earn a loyal customer base and that’s the only way to grow in this market space with cut-throat competition,” he adds.

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