Building a Dark Kitchen Business to Scale: The journey of innovation

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The global cloud kitchen market size was valued at $43.1 billion in 2019, and is estimated to reach $71.4 billion by 2027 with a CAGR of 12.0% from 2021 to 2027, as per reports.
  • Nusra Deputy Features Editor
Food Delivery

With the pandemic, eating out as a group and celebration with family and friends has drastically reduced. And, hence brands have introduced various home dining experiences, not just bringing meals at the comfort of home but they have also come with accompaniments which provide the ambience of going out and celebrating, while staying at the comfort and safety of homes. According to a recent report by Adobe, “where technology is a gap, brands are taking a broader look at personalisation, evaluating all of the building blocks that support a better experience: data, content, decisioning and delivery. The pandemic has helped teams to understand where they have struggled to bring the experience together.”

“Delivery is no longer a retro-fitted business. The business has evolved so much and you have specialist needs to this category,” shared Joseph Cherian, India Head, Kitchen Plus who started a cloud-kitchen brand himself 5-6 years ago before partnering with Swiggy.

Also Read: How Cloud Kitchen has Emerged as a New Online Vertical

It’s no more about MORE is good: Today the ecosystem in the food delivery is far more evolved in comparison to few years back. These days’ brands just need to focus on quality. “In dark kitchen you can spend your money on operations, efficiency, people, detail understanding and flexibility of the menu etc. But in an offline world if you have to change the menu the cost is huge, you have to change a lot of collateral, communications. It’s much easier in terms of quickly change in dark-kitchen and delivery space,” added Cherian by pointing that data is available wherein you have an understanding of the consumer. So, how do you leverage all of that and quickly adapt and make these changes is easier at the delivery front.

Getting the right transaction: The emergence of ‘delivery-only restaurants’ has been expedited because of the current crisis. The global cloud kitchen market size was valued at $43.1 billion in 2019, and is estimated to reach $71.4 billion by 2027 with a CAGR of 12.0% from 2021 to 2027, as per reports. People may be very selective in terms of which restaurants and crowded places they visit in years to come but delivery is definitely going to change the whole gamut of dining-in trend. “Delivery and dark kitchen business looks very appealing as everyone knows that it is low capex, quick on return business. We at Wendy’s took almost 2 years to decide on it. It may look fun initially but it’s all about the mass and getting the volume,” shared Jasper Reid, Founder, IMM that runs Wendy’s, Jamie’s India by adding that the bottom line is about getting the transactions.

It’s all about optimisation: With delivery model soaring, an entirely new model as we may call it dark kitchen/ cloud-kitchen has emerged. In comparison to the delivery business, dark kitchen is much optimized business. “Earlier for most of the dine-in centric outlet delivery was only 3-5 per cent of the business. So, you didn’t optimize. People need to understand that delivery is one of the core business today and as restaurant sale has increase to 60-65 per cent from an average 5% per cent today is all because your optimisation has moved to such pace,” said Rakesh Ranjan, Chief Sales Officer, Zomato.

The right menu engineering: “The biggest mistake that a restaurant do when they enter into delivery or a cloud-kitchen business is that they put in the same fine-dining menu that they have online. Restaurants need to think here differently because the same customer might behave very differently when he comes online verses when he visits a restaurant for a dine-in experience. Hence, a nuance approach in menu engineering is very helpful,” pointed Renjith Prahladan of UrbanPiper as online business is all about making yourself visible to the right customer. And, with more restaurants and start-ups looking at online availability and visibility, aggregators are also trying to fix on how they would give space to each of these restaurants.

Must Read: Covid-19 has made most restaurant kitchen a dark kitchen, Is Brand Trust Next

The better ‘For You’ space: The consumption pattern has change in last 2-3 years wherein people are looking at healthy options that has both health and entertainment attached to it. We see that calorie counting foods, chef-driven menus, immunity booster ingredients are also high on demand in all these years. “Based on our internal data 35% per cent of our customers that are on subscription basis, half of which would have a goal attached to it whether it is weight loss, diabetes, heart conditions etc. I think that number continues to hold as we look at completely new kind of customers seeking more entertainment. I think the whole concept and awareness about health has gone few notches up and it’s now about goal-based approach. Health food is important and it will complete to improve in years to come," concluded Ankit Nagorio of Eatfit who has completely changed the health food spectrum in the country.

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