CLOUD KITCHEN AND ITS FUTURE PROSPECTS

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CLOUD KITCHEN AND ITS FUTURE PROSPECTS

As per the latest guidelines of unlock 3.0 the restaurants are now allowed to open. However, it will take a while before they operate in full capacity. This has also led to alternate options explored by restaurateurs. Cloud kitchen being one of the alternatives for them. Cloud kitchens - also known as virtual, ghost and dark kitchens - are helping restaurants compensate for their losses since the time of the pandemic. Many see it as a profitable model, since it requires no physical space to operate from beyond a kitchen and is solely dependent on third party integrations, orders placed on calls, apps and websites for functioning. Its relevance has increased manifold during the pandemic. It is also the best way to keep your business afloat while maintaining social-distancing guidelines. Even five-star hotels are switching to this model. The five-star hotel chains are doing so with aggressive marketing on social media for their prospective clients. Cloud kitchens are better suited to the needs of socially distanced customers than traditional dine-in restaurants. They are also able to minimize some costs, such as rent, and require fewer people on payroll. With the Coronavirus lockdown keeping restaurants closed and potential diners at home, takeaway meal options have been booming in India and there are signs that the shift toward home-delivered food is here to stay. The online and takeaway share of most food-service businesses will increase phenomenally in India. As per survey the online food business is likely to reach up to 2 billion dollars by 2024 which was merely $400 million in 2019.  It has to sustain and grow as operating cost is low and less capital is required for the same.

Looking at the change in consumer behaviour and an evolved market, we foresee a tremendous growth opportunity in the concept of cloud kitchen.

A successful cloud kitchen model consists of a chain of small kitchens that are held together with one or multiple processing units that partially or fully service the smaller kitchens. Location wise also it should be designed in such a way so that it could adequately cover all the pin-codes of a city.  Placing the right-size kitchen in the right zone are important considerations and need to be chalked out very carefully.

The specialized cloud kitchen companies typically display expertise beyond just the ability to cook food. In addition to cooking, consistent quality food, a large and scalable cloud kitchen network must be tech-enabled. Without a perfect tech backbone, it is very difficult to develop a strong supply chain. Technology also manifests in studying consumer behaviour and preferences. A thorough study of consumer behaviour is one of the essential pre-requisites to have a perfect edge in the market. Branding through social media network and digital marketing tools can immensely penetrate the potential customers.

 Unlike a physical restaurant, the customer interface in a cloud kitchen is extremely limited. You get a small window to wow your guests and retain them. Therefore, tech enabled tools will facilitate to look inside deeply for understanding the behaviour and preferred choices of consumers.

Lastly, the delivery pattern is equally important as far as branding is concerned. Quality packaging, faster and timely delivery would certainly enhance the value of the company.  A cloud kitchen can either develop its own delivery chain or they can outsource the same. Developing its own delivery chain can be viable only with higher volume.  However, with own delivery chain, you can avoid certain expenses and commission of aggregators. 

In conclusion, we can say that cloud kitchen as a concept has a potentially exciting future but the million-dollar question is how efficiently and successfully one can run it? That’s the real challenge!

- Rajendra Jhanwar

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