Because of COVID, we have seen many shifts in consumer behaviour when it comes to food.
As dine-in restaurants are shut and only deliveries allowed, cloud kitchens have shown a little sustainability in their business. They have recovered faster and in a sustainable way as compared to dine-in restaurants.
However the question is, Are Cloud kitchens a good business opportunity ?
People have accepted social distancing and it has become a new normal for the society. New trends are emerging, consumer is shifting to new norms, creating a structural shift in its consumption patterns creating an ever evolving impact on the businesses. So in order to understand the impact of this global commotion, we will have to evaluate point of view of all stakeholders;
Consumer, Restaurant/ Cloud Kitchens and Delivery App Aggregators
The nation wide lockdown imposed by the government had closed all dine-in facilities and had allowed only delivery operations to keep restaurants afloat a while back.
Customers had mixed reaction towards food delivery operations. Where some countries saw a rush in online ordering, some countries saw a sharp dip in demand from the shock effect due to a huge paranoia.
In India, on the other hand, many restaurants have closed permanently because of lack of finances, but a lot of cloud kitchens have sustained during the high tides as the city remained under lockdown.
Rashmi Mathur, who owns a delivery only restaurant in Gurgaon says, “There were no orders in the initial first week of the lockdown, however, we started posting videos on social media, showing how we sanitize our kitchens, how food is handled right from procuring it at the kitchen till it is ready for delivery, we started monitoring temperature of the chef, food handlers & the delivery boys. This helped us get customer confidence and deliveries picked up. We are doing an average of 20 to 25 orders a day with an average order value of Rs. 500”.
Two months in the lockdown, and with work from home in effect, consumer behaviour has a new set of triggers, as listed below;
Paranoia and Fear –
With more than 5 million cases world wide and over 300,000 + deaths, this global pandemic has definitely created a panic and anxiety among consumers all across. Consumers may avoid going to crowded places or share social spaces for a while, till we do not have any cure or a vaccine for COVID-19. This will definitely reduce foot-fall at dine-in restaurants across the city. According to a survey done by Local Circles, 74 percent people said that they will not be visiting their favourite restaurant in the next 30 days, even if it was open.
However consumer might feel comfortable in ordering food from any delivery app or opt for a takeaway from a nearby food outlet.
Boredom and Weariness in Lifestyle –
Our lifestyle has been changed in a big way during this prolonged quarantine. A lot of modern, young and urban consumers are not used to cooking their meals, however, as they have started doing domestic chores, very soon they will grow weary of making their meals at home to change their daily routine. As working from home becomes a new normal and schools being shut till the beginning of the last quarter, parents will find it difficult to manage their work and domestic life balance and will look out for alternatives for convenient food options. With limited options available in the market, consumers will move towards home delivery of food or simply takeaways.
Hygiene levels of kitchens, kitchen staff, packaging material and delivery partners has become the biggest concern of all consumers. Restaurants & food brands are trying their level best to communicate with their consumers and giving them an image of hygienic facilities and business practices to gain their confidence. With practice of online payment methods and contactless deliveries, consumers are more likely to trust food delivery services over going to a restaurant or grabbing something from their favourite street vendor.
The global economy is struggling because of the impact of this pandemic, and with the rise of unemployment & salary cuts, consumers will not be able to spend much on fancy restaurants. This shift will make food delivery and takeaway more affordable than spending on dine-in restaurants.
Despite the lockdown and the global upheaval, we have seen a sizeable and sustainable growth in the food delivery sector. With many new restaurants, new customers and established delivery players, this sector is surely to grow faster as compared to their dine-in counter parts
Restaurants/ Take-aways & Cloud Kitchens
During the lockdown, we have seen many restaurants starting their online delivery through Swiggy, Zomato and other aggregators like Dunzo etc. However Cloud Kitchens will always have an upper hand over dine-in restaurants. With salaries, high rentals and other overheads, it is difficult for brick & mortar restaurants to sustain because of their high operational cost as compared to a lean delivery only kitchen. This clearly gives cloud kitchens an opportunity to grab more customers at a lower cost leading to a sustainable growth. It is also very easy to open a cloud kitchen with limited or no cost*. Read – How to start your own Cloud Kitchen.
Post Pandemic, we will see a lot of restaurants shut down because of their financial instability, which will create a gap between demand & supply, thus creating opportunities for delivery only brands to start and grow.
Food Delivery Apps
With new practices like contactless deliveries, rider health & safety and managing operation during these times have made delivery apps a hero to everyone. People were not allowed to step out during the initial phases of the lockdown, however food delivery apps like Zomato, Swiggy and Dunzo were working seamlessly, delivering essential items and food delivered to your home. It seems as if there was no lockdown when it comes to ordering food from outside with these aggregators in place. We are sure that even when the lockdown is over, people will see food delivery as a new normal and convenient habit for times to come.
If you are a chef, an investor or a F&B professional, you would know that the hospitality industry will go through a rough phase and will take some time to bounce back. Instead of waiting on the side-lines to see the revival of this industry, now is the time to dip your feet in the Cloud Kitchen concepts and stay ahead.
Originally published at www.smarterinvestr.in Image courtesy – The Restaurant Times