When we talk about internet and people connection we have seen a large disruption happening across sector; from Amazon, Netflix, Iphone and Airbnb disrupting their own sectors to food industry being closer to the disruption with the cloud-kitchen and internet restaurant model.
According to a report published by restaurantindia.in and FranCorp, India’s cloud kitchen market is anticipated to grow with approximately 15.5% to 17.5% CAGR value during the forecast years 2024-2028. Demands for online food delivery and pre-cooked meals are the major factors driving the growth of the Indian cloud kitchen market in the upcoming five years.
In the process of disruption
“We never started to build a disruptive model but to start a QSR chain that was called Faasos. The idea was to build a McDonald’s from India. What happened in the last 12 years was to completely survive as we never tried to build a tech disruptive business,” shared Kallol Banerjee, Co-Founder at Rebel Foods that runs some of the largest cloud-kitchen brands like Faasos, Behrouz Biryani and others.
Food needs to be present digitally
Internet and social media presence has become huge in India in last 3-4 years. The increased usage of social media marketing is expected to create a lucrative potential for the cloud kitchen market to grow and expand its consumers. According to Forbes, Facebook mobile ads make for 87 percent of ad income, which was USD 9.16 billion at the beginning of 2018. Also, there’s a certain behavioural change where new age customers wants to see and are loyal to brands that are digitally present.
Real-estate is the biggest issue
“When we were doing Faasos and we wanted to expand, we feel that we have the money but we still couldn’t fasten enough. If we look at restaurant business in India per capita, there are three chains that have more than 500 outlets for a population of 1.5 billion that number is 75 in the US, 25 in China. What is the one reason that we don’t have multi-city big chains is simply the real-estate,” he pointed as India still lack enough organised real-estate and with whatever the supply is there the entire focus of the retail is the same places. And, all thanks to the rental fees which is the highest as compared to other developing countries.
Convenience is driving the game
We have seen approx. 75 % recovery in the food delivery market post pandemic. The food delivery company is becoming increasingly dominant for big brands like McDonald’s, Wendy’s where key focus is on convenience channels like delivery. “People are leaving places for work and there’s apartment now a days made with only microwave, small little fridge because people are eating all 3 meals from outside or they are picking something from outside that they can microwave and that’s their food. Cooked food, food cooked with love is luxury as people don’t have time,” added Banerjee by pointing that people don’t want human interaction and they want to order food even if it is 100 meter away from them. Hence, we can say that if delivery is going to become extremely important and that’s going to be the new normal then restaurants have to introduce those experience digitally.
Food is driven by occasion
For a customer a food is very often about occasion and not cuisine. If you think about coffee, there are different types of coffee…its difference of occasion. “There is no multi-cuisine restaurant as a world leader. In the customer head, there is expert for every occasion,” he pointed by adding that customer choose food and restaurant as per the occasion.
Hence, there is always a positive and negative aspect of a business. Cloud-kitchen obviously doesn’t involve a large real estate cost, no overhead cost, provide expansion opportunities, higher profit margins, easy trend adaptions but it definitely has lack of consumer interaction, issue with time management, dependency on D2C channels and maintaining hygiene standards.