The F&B industry in India has been growing exponentially over the years until the recent outbreak of coronavirus, which not only disrupted the sector but halted its progress for a long time due to safety constraints. The pandemic has changed the approach of various sectors and is influencing them to re-imagine the definition of new normal. Contributing to these times and deriving an opportunity amidst a crisis is the concept of cloud kitchens.
Cloud kitchens and dark kitchens have existed for a while in India but are finally getting their due traction due to the social distancing norms and safety guidelines issued by the government to curb the impact of the pandemic. Catching pace and getting their due traction now, cloud-kitchens are acting as a future-forward tool to establish a stable F&B venture which caters to consumers at the comfort of their homes.
Owing to the latest developments and technological integrations, especially the cloud kitchens, the food and beverage (F&B) industry’s revenue is expected to show an annual growth rate of 14.4 percent in the term of 2020-2024, resulting in a projected market volume of $10,058 million by 2024 end. With over 60% millennials ordering food from cloud kitchens at least once a month, the concept is creating its space in Indian society by every passing day.
In current circumstances, cloud kitchens are not only serving as a sail that’s keeping the boat afloat amidst a storm but also putting India on a map while making it globally competitive. Minimising human interaction and maximising serving the customers’ food craving to the best of abilities, ghost-kitchens are creating a buzz in the market.
Furthermore, they are also helping in digitalising the sector along with making the restaurant services tech-enabled and customer friendly. Maintaining high levels of hygiene and quality while taking care of social distancing and other safety guidelines, cloud kitchens are surpassing the dine-in business and creating a new normal for people along with a secure future for the Indian F&B industry.
In this line, the global Cloud Kitchen market was valued at US$0.65 billion in 2018 and is expected to reach US$2.63 billion by the year 2026, at a CAGR of 17.2%. U.K. based food delivery giant Deliveroo recently revealed that it now claims 2,000 virtual restaurant brands in the U.K. alone – a 150% increase on the previous year.
RedSeer Management Consulting, in a recent report, said cloud kitchens were set to become a $2 billion industry in India by 2024, up from $400 million in 2019. In fact, it called cloud kitchens the “secret sauce to survive in the post-COVID restaurant market.”
Apart from being a better fit in the time of social distancing, cloud kitchens have gained in popularity as they help minimise costs, especially those of rent and wait staff. The market opportunity is high, investment is low, and the model offers ease in experimentation and scaling.
The low overheads make the cloud kitchen model highly profitable. However, it necessitates high order volumes to reach profitability.
With lots of brands entering into the segment, there’s been a lot of changes and innovation, in packaging, contactless options etc. They are looking for ways in which customers can get the best experience possible in the comforts of their home.
Here are a few initiatives that top cloud kitchens have taken in order to improve the processes, enhance the customer experience and increase the revenue:
1. More novelty food in the menu – As a preventive measure against any risk of infection, most of the people have opted for preparing food at home and prefer to order only novelty food based on their mood and preferences.
The idea here is to address the demand for the most ordered cuisine such as Biriyani, North-Indian, Chinese, Burgers, Pizza, Pasta etc in a neighborhood. This model is widely opted by cloud kitchens because it ensures the continuous flow of orders, resulting in more revenues.
2. Safety measures: Despite the positive response to online food delivery services, it is quite evident that the recent turn of events has made most of the consumers skeptical about ordering food online. So, it has become imperative for the cloud kitchens that they take all necessary precautions when delivering food to customers. To win the trust of customers, cloud kitchens brands such as Swiggy and Ola are taking aggressive measures in ensuring proper hygiene and promoting contactless cooking.
Throughout the industry, cooking staff are practicing social distancing and following hygiene habits such as covering mouths with N95 masks and gloves, frequently washing hands, sanitizing the kitchens etc.
Rebel Foods is taking precautionary measures to ensure that the entire process of food delivery is handled hygienically. They introduced a live body temperature tracker on its app. This feature provides customers with a live feed of body temperature checks for all those handling their delivery orders.
3. Digital Payment – In order to promote zero contact delivery, the cloud kitchens have tie-ups with digital payment merchants to provide customers with a plethora of online payment options to choose from. Customers are also being encouraged to transact through digital payments, thus eliminating the physical transfer of cash.
4. Better and Consistent communication with the customers: While it is important to follow the safety measures, but it is equally important to communicate effectivity about all the measures that they are taking in the kitchens through delivery apps such as Swiggy or Zomato. So, the brands have taken initiatives such as sharing images and videos of their staff working in the kitchens through delivery apps, social media in order to gain the customers confidence which is resulting in more orders.
5. Adoption of Automation – Most of the cloud kitchen brands are adopting new ways and methods through automation where cooking/cooking processes can be executed with less contact and less human touch. It is also helping them on less dependency on labour when it is migrating from urban to rural areas. They are facing a lot of challenges due to skilled labour shortage. So, it is making a lot more sense to them for adopting automation in current context.
6. Full proof and smart packaging – The brands started giving a lot of emphasis on the smart packaging so that it can cover all the delivery orders adequately in an outer bag. They started considering paper or cardboard based bags to maintain safety as well as environmental standards.
7. Pre-delivery check devices – Food taste and quality play very important role in the cloud kitchen business because they can’t serve the experience. It is just the food which speaks on their behalf. Cloud kitchen brands can’t afford to receive complains on the quantity or quality aspects. Therefore, in order to improve NPS data and reducing customer complaints, most of the brands are intended to adopt pre-delivery check device to capture temperature, weight, and image before delivery of the food. So that they can win the customer’s trust and confidence.
Since cloud kitchens are going to see a sudden surge, the top brands are focusing on product quality, portion size, safety measure and innovation, because that’s the real winner.