Introduction to the Segment
- A cloud kitchen is a delivery-only restaurant that has no physical space for dine-in.
- One of the most lucrative part of the segment is the need for low capital investment, which leads to better management of funds and the ability to launch more than one brand using the same kitchen infra.
- Cloud kitchens are benefited mostly because they do not incur high overhead costs which general restaurants usually do and can have an option to build digital brand awareness with that extra funds.
- Since lockdown, cloud kitchens in multiple countries have had the opportunity to grow their customer base and business and help customers embrace social distancing norms.
- The challenges this segment faces is high competition, since rivals tend to provide better offers and discounts to achieve customer loyalty, which leads torequiring steady amount of funds to attract the market.
Cloud Kitchen Market
- Currently there are more than 317 cloud kitchens in India which run over 2000 internet restaurant in 35 cities
- An individual looking to venture into the cloud kitchen market usually would have to invest approximately 1/3rd the setup cost of a regular restaurant setup. The profit margin in such setups varies in the range of 10-15%
Market Advantages in the Cloud Kitchen Segment
- Millennials these days are more fitness conscious and tend to follow the trend of ordering ‘healthy’ food due to various reasons. Companies take advantage of such niche markets and change their strategies accordingly.
- With increasing number of food lovers in across the globe, people try experimenting with different cuisines, which in turn has led to the increase in exotic and specialty-based restaurants.
Industry Analysis
- The cloud kitchen segment is expected to reach $71.4 billion by 2027.
- With a rapid growing CAGR of 12% (2021-2027), this segment focuses to deliver and serve food with emphasis on quality of food and hygiene.
- Food discovery apps are the biggest boon for the industry since they provide a teaser of the dining experience.
- Contact less services has become one of the most focused upon feature a user/customer looks at before they make their decision to order online. Integration of mobile payment platforms and other technology advancements make it easy to achieve these services.
- There are more than 3000 startups in the food service industry, out of which more than 146 startups have collectively received $268 million of funding.