The convenience of ordering through apps without the drudgery of going out to eat has driven the demand
The term ‘cloud kitchen’ was coined about a decade and a half ago. New terms like virtual kitchens, ghost kitchens or invisible kitchens which essentially have the same meaning have been coined later.
The Indian F&B industry is witnessing a major drift from dine-in to delivery business and the pandemic has worked as a "catalyst" in the growth story.
According to DataLabs by Inc42, the food ordering market in India is expanding at a CAGR of 16 percent to reach $17 billion by 2023. The market size of a cloud kitchen is expected to reach $1.05 billion by 2023.
Earlier, the contribution by cloud kitchens was estimated to be 20 percent of the food delivery market. However, this percentage is changing and will undergo drastic changes in the favour of cloud kitchens.
The food delivery industry is witnessing an upward facing graph with a surge in the number of orders and customer awareness around food safety and hygiene is increasing. Increased work-life participation of more members and the resultant paucity of time has made home cooking activity to avoid. The convenience of ordering through apps without the drudgery of going out to eat has driven the demand. Enlisting your restaurant with food aggregators is a double-edged sword. You might gain visibility and see a steep rise in sales but the biggest irritant is the steep discounting game which will eventually start to hurt margins. If that model sounds familiar, you just have to recall the relationship between taxi aggregators Uber and Ola with its drivers, and hotel aggregator Oyo with member hotels. Cloud Kitchens came up as the most natural offshoot to the aforementioned dilemma.
While online food ordering and deliveries have started to pick back up, it is undeniable that consumer behaviour has been significantly altered. Extended lockdowns and work from home practices have allowed customers the time to cook at home. Hygiene and safety have replaced discounting as the primary factor in most food purchasing decisions. Trust in the brand to be sure it adheres to strict safety measures in both the preparation and delivery of food is of utmost importance. There has been a clear shift away from deals and discounts to safety and hygiene during the pandemic. Cloud-kitchen based brands have had to quickly adapt to these new realities or risk running out of business and have had to innovate themselves.
Discounting will continue to be an omnipresent sales strategy even with the changing times, the call of the hour is to build trust with your customers, and this cannot be faked. Customers do not want to be bombarded with coupons and discounting. They want to know that you are doing everything you can to keep them safe and are being transparent. Communicate genuinely with Brands that can back their safety and hygiene communication by showcasing their backend operations will decidedly gain the trust of their customers more than brands that do not.
Cloud-kitchen brands that emphasise safety and hygiene in their operations will continue to be a safe-bet during the COVID-19 pandemic. And those brands that understand and adapt to the changing shift in consumer demands and behaviour and are genuinely able to build trust with their customers will likely come out thriving at the end of the pandemic.
At The Masala Story we have daily and hourly temperature checks for all kitchen and delivery staff, to regular cleaning and sanitisation of kitchens and work stations, to the advent of contact-less delivery – every possible step that enhances the safety of customers and staff has taken precedence.
The author is Manav Deep Singh, Co-Founder, The Masala Story
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