Cloud Kitchens are also called virtual kitchens, ghost kitchens, shadow kitchens and the future of takeaways. This cost-effective, convenient and hassle-free model is not available for dine-in since they do not function in the traditional brick-and-mortar model. In simple terms, cloud kitchens are only an area for cooking and preparing food.
These commercial kitchens operate for delivery either online or through food delivery services. Thus their delivery is carried out by their staff or through a third party. Cloud kitchens also use the leasing model where multiple brands operate from one kitchen and share resources.
There are innumerable opportunities for growth and countless merits of this model. It not only provides ease to customers by increased choices, home delivery and better quality since the staff only has to focus on cooking. They also provides benefits to the operator because of low operational cost, overhead cost, maintenance cost and reduced risk. It is highly beneficial for the new entrepreneurs to start and expand their businesses.
The price difference between a traditional restaurant and a cloud kitchen ranges significantly. Primarily because of tax, while dining out one has to pay 18% GST and on the other hand a cloud kitchen only charges 5%.
In FY 2023, the market size for cloud kitchens stood at $1.09 billion. It is assumed to grow 16.63% annually from the period of 2024-2031.
Cloud Kitchens : Rebel Foods and Others
Rebel Foods is a pioneer in the industry. Founded in 2011 by two IIM alumni, it now operates 11 kitchens in India and has expanded to 10 countries. From brands like Faasos to Oven Story to Sweet Truth and many more. The company reported $150 million as revenue in FY 23. The company is also planning to go public in 2025, it will then become the first cloud kitchen from India to get listed.
Several fast food chains such as McDonald’s, KFC, Taco Bell etc. have been evaluating the concept. In 2021, the American fast food chain Wendy’s partnered with Rebel Foods to begin about 250 cloud kitchens in India.
ITC Ltd, a prominent private sector company with a diversified portfolio, announced earlier this year to scale up their cloud kitchen business in India. It plans to expand from Chennai, and Bengaluru to Delhi, Mumbai and Kolkata. ITC made its way into the industry with three brands namely ITC Master Chef Creations for North Indian cuisines, ITC Aashirvaad Soul Creations for North Indians and ITC Sunfeast bakes creations. An average order for the industry is about INR 450. On the other hand, an average order for ITC cloud kitchen is priced at INR 900.
The industry holds potential and opportunities for growth. Due to evolving patterns in consumption, food delivery and consumer preference, the industry will continue to flourish and scale.
We are used to the comfort and enjoying moments at our convenience. From watching movies in a theater to switching to streaming media. From enjoying meals at a restaurant to ordering through food delivery apps. During this transition, the concept of a cloud kitchen caught on and has become significantly important.