Current Cloud Kitchen Scenario Aiding Women Empowerment

Research suggests the Indian cloud kitchen’s market size is expected to reach about USD 1 Billion by the year 2023. It is currently growing with a healthy double-digit growth rate every year. The cloud kitchen market is increasingly becoming a significant part of the overall food delivery market estimated to reach 5 Billion USD. However, the recent Coronavirus pandemic is likely to alter some of these numbers. But there is no stopping this obvious phenomenon of ‘Cloud Kitchens’. The recent pandemic is likely to keep people away from dine-in restaurants. This will further cement the cloud kitchen market not just in India but also globally.

Homefoodi conducted research across metro cities with over 2000 respondents (both homemakers and consumers). The report highlights some very interesting insights on why cloud home kitchens are likely to be the next frontier. Before we progress on to the ‘Why’ and ‘How’ of this phenomenon, it is important to understand this.

What is Cloud Kitchen?

Every few months we come across fancy coinages like ‘Ghost Kitchens’ or ‘Virtual Kitchens’ but they are all the same. To put it simply, any delivery or takeaway-only establishment without any dining facility is a cloud kitchen. Or in other words, ghost or virtual kitchens.

Types of Cloud Kitchen:

1. Commercial Kitchens: Leased commercial space of (100-500) sq. ft in by lanes of neighbourhood/local markets and turned into makeshift kitchens with an owner managing a cook and some helpers to assist.

2. Home Kitchens: New, growing and promising phenomenon wherein homemakers who are passionate about cooking turning into home chefs by serving home-cooked food from their home kitchens.

All or most of these commercial cloud kitchens are listed on multiple food delivery aggregator mobile apps. These deliver food to consumers when they place an order through their app.

Two Factors have led to the evolution of "Commercial Cloud Kitchens":

Supply-Side Factors

Opening a restaurant requires sizeable fixed and operational investment. And it also needs high-cost rentals in premium high street markets and mall locations. The net profit margin for such establishments has been largely in the range of (5-10) %. With the current situation of COVID-19, these ROI numbers will certainly shrink further.

On the other hand, you can open a cloud kitchen with minimal fixed and operational investments. This is because the location of the establishment does not matter considering it is only about delivery. This significant saving of rent and other operational expenses makes a cloud kitchen more profitable. The margins range in the good 10-15%. This is one of the biggest reason for this emergence. And it is most likely to continue driving the growth of cloud kitchens.

Demand Side Factors

Increased work-life participation of more members in the family and the resultant paucity of time; these two have made us see a gradual shift in home cooking. Convenience and affordability have been the two big triggers for changing consumer behaviour for the increase in food ordering and reduced in-dining for restaurants. Growth in Internet and usage of smartphones penetration has strongly influenced this changing behaviour. With 50% of India's population internet connects more than 500 million people having a smartphone, food ordering through delivery apps is the new normal. With the COVID-19 situation that we are all in, ordering food is going to replace in-restaurant dining at a faster pace than ever before.

Challenges of Cloud Kitchen

Commercial Cloud kitchens have their challenges and listing down the major 3:

- High dependence on food aggregators for orders

- Inventory management for orders and wastage.

- Hygiene and food quality standards.

Unless companies address the above challenges keenly, not all commercial cloud kitchens will have an inspiring story to share. And this leads us to the emergence of home kitchens.

Similar to the cloud kitchens the same two factors have led to the evolution of ‘Home Cloud Kitchens’:

Supply-Side Factors

The research shows that about 10% of homemakers are very passionate about cooking and baking. They are equally keen on creating their own identity while also contributing to their family finances. Homemakers are very eager to start a home kitchen if they have access to a platform that addresses their challenges related to marketing and operational execution of delivery, packaging, payments, billing, certification and finally getting customers. A strong validation of this emerging phenomenon is the countless WhatsApp groups in most residential societies where homemakers share pictures of dishes and seek orders from residents.

Demand Side Factors

Consumer research on home food very positively establishes the love for home food with over 90% of the respondents preferring home food over outside eating. College students, young working professionals and elderly people express a strong desire for home food but share reasons of not enough time or energy to cook at home.

As per the research, 97% of consumers in India believe home food to be healthy, fresh and hygienic and are consciously aware that outside eating is exactly the opposite. Most people agree that there is something hugely satisfying about ‘Ghar Ka Khana’. Everyone agrees and rightly so that there are many benefits of home food. It’s delicious, it’s healthier, it’s fresh, it's hygienic and something that we should have every day for a balanced diet. The ongoing COVID-19 pandemic has cemented this fact and we trust home-made food.

Cloud Home Kitchen is not just a growing culture but is an important link between a ‘Healthy India’ and ‘Women Empowerment’.

It's a recognized fact that women make a lot of sacrifices. They take leadership roles in managing the house, raising children, looking after parents and/or in-laws. That said every woman wants an opportunity to showcase their skills and contribute towards nation-building.

About the Author:

Narendra Singh Dahiya, Founder and Director is the leading force behind Homefoodi App. The app is World’s 1st Mobile Application for Home Food made by Home Chefs. The company aims to revive the culture of home food by giving everyone a variety of cuisines across home food and Bakery choices.

Before his venture, he has held Leadership roles in some of the Top Organizations like Microsoft, LG, Nokia, and Pepsi. He is an industry veteran and possesses an in-depth experience of over two decades in Retail Channel Management across FMCG, Consumer Durables, Telecom & IT industry with bigwigs on the likes of Microsoft, LG, Nokia and Pepsi.

In his carrier span, he has a successful and proven track record of a go-getter and being a thought leader to enable robust practices in the area of Retail Channel Strategy, Marketing plans, Account Management, Category Management, Partner Profitability Dynamics, Omni Channel Retail experiences, GTM & Operational excellence, etc.