The rise of Kitchens as a service - Cloud kitchen industry overview

Cloud kitchen industry is set to grow to 2 Billion USD in India by 2023 and although this sounds great, it is nothing compared to Developed markets like the USA where it has already reached 26 Billion USD (2020) or China (51 Billion USD) 

Uber Eats stands as most widely available service in the world (6 continents) but the largest food delivery app in the world by revenue stands to be Meituan from China which commands 53% of the market 

However, the most interesting fact is that only 9 percent of the people with internet are ordering delivery in India compared to 36 percent in USA and 50 percent in China

the rise of kitchens as a service

Evolution of Kitchens as a service in India

In India 2014-16 was marked by the rise of Food delivery tech & delivery apps like Zomato & Swiggy 

2016 – 2019 was marked by the evolution & growth of delivery centric restaurants & cloud kitchens 

In 2020 – 2021, with the COVID impact in place, major restaurant chains started moving towards delivery only as a format 

2021 – 2022 was the birth of Plug and play kitchens by Zomato & Swiggy (access) but they failed very quickly owing to unrealistic revenue shares & demanded exclusivity from brands

 Many small players simultaneously started creating Co working kitchens based on this model but most of them barely survive at break even levels as there are limited by the confines of four walls with no upside of rev shares

Even in cases where rev shares started hitting a ceiling, brands moved out as the figures were unjustifiable & the cost itself will permit opening their own kitchens rather than staying in co working facilities 

The truth is, no one is making profits as no one has figured the formula yet 

Why do Cloud kitchens fail while scaling ?

Food business is no longer food business, it is a distribution business 

You may have the best biryani in the world but your reach and access will define whether you are visible and selling and successful 

A brand with 20 locations to order from in a city will fairly beat a single brand selling better biryani 

of course there are exceptions if you are selling a legacy brand and have loyal clientele but that takes decades to build 

Consistency of food 

Achieving scale in multiple locations remains a huge challenge in India owing to skills. expertise, availability of resources & general economic costs attached to logistics & transportation 

Making one dish same every time in multiple locations is a nightmare and only few have been able to master it so far (think Mcdonalds, Dominos etc)

Hence comes in place – automation & industrialisation of food 

1st world costs, 3rd world sales 

The costs of rentals, salaries, electricity etc are first world and are at par with developed countries but the spend per person on ordering food is third world 

The average order value in India is 1/7th of China which makes the cost of delivery high in ration compared to other economies 

Uneven market prices across cities 

The prices of raw materials vary from city to city and are volatile making some cities unviable for business 

If you source from a single supplier across the country, the money required to set up a cold chain in place will kill you as cost per mile in India is multiple times of sending the same material abroad 

Lack of processes and compliance 

India is known to be a non compliant country, a place where imposing processes and rules is a nightmare 

Being a poor country, the loyalty among employees is fragile and there is a lot of turnover in short term impacting the quality of food 

Low returns on management time 

If you scale in width and not in depth, the costs associated with travel will eat up all your margins unless you have a decentralised management structure in each city 

Thus a few companies making profits at unit level will still be prone to making losses at corporate level 

Project X by Cloud kitchen exchange (kitchens as a service)

project x managed kitchens by cloud kitchen exchange - kitchens as a service

What is the solution ?

Project X (Managed kitchens) or Kitchens as a service model by Cloud kitchen exchange is the natural evolution of delivery kitchens 

Project X is a venture of Cloud kitchen Exchange using Kitchens as a service model to enable brands to scale in newer geographies with Zero CAPEX*

We are a network of strategically located licensed kitchens in delivery hotspots in major cities & an operating system of  Culinary innovation, Industrialisation of complex Food formats, Cold chain setup & robust technology

What do the Project X kitchens (kitchens as a service) do ?

We connect 

We receive orders on your behalf from aggregators (Zomato / Swiggy and D2C channels) and manage the POS level order management 

The orders are taken via our POS or by integrating with brands’s POS 

We source*

We source raw material at best prices and keep our kitchens well stocked for your brand to gain advantage 

In some cases, brands maintain their sourcing and we stock and manage the SKUs as per brand guidelines 

We cook 

We cook and prepare your orders as per your specifications 

We also undertake Research & development for industrialisation of food for brands which is a necessity for a brand to do well to reduce dependence on Manpower & skills, a common problem known within the industry 

We deliver 

We dispatch your orders white labelled via last mile delivery partners from Zomato / Swiggy or other independent delivery operators like Shadow fax / Dunzo etc 

Why should food brands scale with Kitchens as a service model ?

Benefits for brands under Kitchens as a service model in India (Project X)

Zero upfront costs 

Brands would need no upfront investment in infrastructure for building kitchens saving a lot of CAPEX (Capital expenses)

All managed kitchens are well equipped and ready to produce food at any given time based on recipes and SOPs

Consistent products 

We bring consistency in products via processes and automation 

Industrialisation of food is our forte and deconstructing food to recreate recipes is what we do for most brands which are new and trying to gain footprints in the market

Superfast expansion 

In under 30 days, a brand can open multiple outlets via our managed kitchens as we take care of the training, execution. and operations via our existing facilities 

Larger reach 

A brand with 1 outlet vs a brand with 15 outlets in one city will obviously have visibility advantages and economies of scale in place 

A brand can get higher ROI on their advertisement spends & marketing 

Hassle free operations 

A brand does not need to manage operations on day to day basis 

What are the differences between traditional cloud kitchens and Kitchens as a service model ?

  • Traditional Expansion
  • Kitchens as a service
Traditional ExpansionKitchens as a service
OUCH
YAY
CAPEX needed
Rental pressure
Monthly Salaries
Utility payments
General & Admin costs
Operational management
Standardization of food
Return on Investment
Return on management time
Large management team size
Profit
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