It's time for cloud kitchens now

Source: ET

India’s largest quick-service chain Jubilant FoodWorks is scouting for space to start its cloud kitchen business for not only Domino’s Pizza but also for Chinese cuisine, two officials close to the developments said.

So far a domain of online aggregators such as Zomato, Swiggy and smaller caterers and restaurants, the cloud kitchen business is set to heat up in the coming months with big retailers and restaurants operators planning to enter the segment.

India’s largest quick-service chain Jubilant FoodWorks, which operates Domino’s Pizza and Dunkin Donuts in India, is scouting for space to start its cloud kitchen business for not only Domino’s Pizza but also for Chinese cuisine, two officials close to the developments said.

“They are experimenting with multiple ways to grow and cloud kitchen is one such potential growth engine,” one of the officials said. An email sent to JFL’s spokesperson remained unanswered till press time.

Kishore Biyani’s Future Group is planning to roll out its own cloud kitchen to sell meals for ?40 on Swiggy and Zomato, to tap the growing online food-delivery business.

Impresario Entertainment and Hospitality, that runs popular restaurant chains such as Social, Smoke House Deli and Salt Water Café, is also “piloting” into cloud kitchen space, according to its CEO Riyaaz Amlani.

RedSeer Consulting estimates that the food ordering market in India will grow by just 35% in 2020, reaching 1.5 billion orders and the consulting firm estimates that India’s food delivery market to touch $2.5-3.5 billion by the end of 2021.

A cloud kitchen is a takeaway outlet with no dine-in facility. It serves as a production unit with a space for the preparation of food.

“Cloud kitchens are the future of the eating-out industry,” said Kabir Jeet Singh, founder of Tipping Mr Pink that currently operates more than 35 outlets of Burger Singh fast-food chain. In December last year, Tipping entered the space with its venture Bowl Hub by simultaneously launching 17 cloud kitchens in Delhi, Noida and Gurgaon. “The online food aggregators are here to stay, customers have gotten used to them. Every player must get into cloud kitchen either today or tomorrow,” he added.

As the app-based delivery business is growing in India, restaurants find it cheaper to service online orders from cloud kitchens mainly located in nondescript low-rented locations than delivering from high-rented restaurants that also causes inconvenience to dinners in restaurants.

“Cloud kitchens are growing at faster worldwide as compared to other segments of the restaurant industry,” said Karan Tanna who last year launched Ghost Kitchens, an investment and incubation company for start-ups in the cloud kitchen segment. The company will focus on very fast growing food delivery market and will incubate and invest in companies that focuses only on home delivery, he said.

Food companies are saying that online delivery companies are heavy on data and their algorithm is helping them with the perfect locations to open cloud kitchens.

“Now with the amount of data available with Swiggy and Zomato where they can advise you to open in locations that are absolutely viable for deliveries and whether there is a market for any particular product,” said Singh of Burger Singh. “You can open a cloud kitchen with fairly accurate analytics to ensure it is a success.”