Also referred to as ghost kitchens, virtual kitchens, or dark kitchens, cloud kitchens are a type of restaurant development that goes by many names, but all referencing a new model which is a restaurant with no storefront but operations solely through delivery.
With the millennials, Gen Z and Gen Y forming the bulk of our population, dine-out and online delivery are trending like never before. We ask industry experts to give us their take on the phenomenon that has become all the rage, thanks to COVID, and is growing only bigger.
Dhaval Udeshi, Co-Founder, Chrome Asia Hospitality, and Awadesh Jha, Director, Food & Beverage, Holiday Inn International Airport Mumbai, answer queries that pop up about the rise of cloud kitchens, the pitfalls to avoid if starting one and whether the trend is here to stay…
- Do cloud kitchens have the potential to provide a growth mode to the hospitality industry?
Dhaval Udeshi: “Technology has not just impacted but disrupted various aspects of our lives, including the relationship we have with food. India’s food aggregators have changed the dynamics of the hospitality landscape impacting the standard and model of restaurants and food delivery space. Most of the credit for this change can be given to the pandemic that kept every individual indoors for almost two years. Along
with it, demographic advantage has been a huge driving factor. GenZ and millennials who are the young employable workforce dominating the smartphone era are leading to increased internet penetration which have expanded the market for cloud kitchen owners to establish themselves across cities and townships.”
Awadesh Jha: “Cloud kitchens have evolved post pandemic and the buzz around cloud kitchens has been welcomed by the industry. Cloud kitchens look a great proposition for emerging players and existing brands may use the model to scale up and target a larger geographical reach through presence in multiple areas.”
- What are the pitfalls to avoid while running a cloud kitchen?
Dhaval Udeshi: “The idea of a cloud kitchen sounds very interesting in a generation where technology is taking hold of everything, but sometimes proper management becomes a roadblock. The major pitfalls that one should avoid while running a cloud kitchen includes:
To remain careful when it comes to food costing: People adhere to cloud kitchen to have what they like in reasonable prices, so in order to have growth and fame, use of a standard food cost system and investing in a robust POS (Point of Sale) system that tracks the opening and closing inventory stock, records every sale, and analyses the hidden costs that go unnoticed in terms of food wastage or excessive stocking is very essential.
Lack of proper knowledge of technology: Technology is one of the most important aspects of growing a ghost kitchen business. Investing in restaurant technology and advanced equipment is more essential to the cloud kitchen model than to a dine-in facility. Failure in implementing a proper ordering system, delivery network, kitchen automation, logistics support, customer servicing, and tracking service has an adverse effect on the overall efficiency of a virtual restaurant. Thus, heavy spending on technology is a necessity.
To build a connection with the customers as there is no customer interaction: To remain consistent in business, cloud kitchen needs to have a proper social media appearance as due to virtual existence, customer interaction does not happen on a regular basis.
As per the country’s current demographics, we see both dining-in and cloud kitchen thriving across geographies. From a business point of view as well, we see a bright future for the restaurant industry as a whole.
Awadesh Jha: “Cloud kitchens, being easier to operate, have seen a rapid rise. The constant pitfall continues to be supply and demand. Intensive market survey is critical while designing the concept ensuring cloud kitchens operate in appropriate locations. Distance of the cloud kitchen in B2C model needs to be reviewed as loss of temperature and freshness remain threats for the business.”
- Are cloud kitchens here to stay?
Dhaval Udeshi: “Cloud kitchen is the future of the hospitality industry in India, due to its technology advancement and also providing the consumers breakthrough innovations in terms of ambience by bringing similarities of a restaurant dining experience at home by serving everything from simple home-cooked food to speciality and luxury dinners.
“According to industry experts, the Indian food industry is expected to grow and double the value to $13 billion by 2025 and cloud kitchens are definite to be a $2 billion industry in India by 2024 from $400 million in 2019. With no doubt in anticipating that cloud kitchens will thrive in the next five years considering, the younger population income will grow, an ongoing shift in the lifestyle, easy and secured pathways for payments and a definite hectic work life with zero interest to come home and cook food after a long day. All these factors are definite to cater to the rise in the growth of cloud kitchens, thus providing a definite growth potential for the hospitality industry.”
Awadesh Jha: “Cloud kitchens are here to stay as low cost of start-up, ease of business continuity and limited use of real estate will propel immense opportunities for new concepts and innovative development in the sector.”
