What Investors look for in Dark Kitchens

Short Description
Investors at the event talked about the opportunities that lie in the cloud kitchen model, what do they look for in this model to invest and why they think that this model has a lot of space to grow in the country.
  • Kritika Agrawal Correspondent, Restaurant India
Investors at the event talked about the opportunities that lie in the cloud kitchen model, what do they look for in this model to invest and why they think that this model has a lot of space to grow in the country.

While running a physical restaurant has become difficult today, the concept of delivery only kitchen is emerging in India. Not only is it cost effective but also yields good returns. However, the model here is still in a nascent stage and with time it is expected to spread across the country. Various investors have different theories about this concept and they are eyeing for successful dark kitchen models to invest their funds. 

Recently at a latest Restaurant Congress event in Bangalore on Dark Kitchens, Investors like Shanti Mohan, Founder and CEO at LetsVenture, Sam Subramaniam, CEO at Brand Capital and Aditya Somani, Private Equity Investment Professional and Advisor to FreshMenu talked about the opportunities that lie in the cloud kitchen model, what do they look for in this model to invest and why they think that this model has a lot of space to grow in the country.

Shanti, who runs a marketplace, where it connects startups to investors says, “There is a huge opportunity in the cloud kitchen model because it allows a lot of aggregation and local food. I think at the end of the day, food is still local. So, you might want to talk about scale of it, but I think the combination of scale and it being local, will still continue to be a challenge.”

“I think this model is a combination of asset light versus somebody managing the infrastructure. I believe this is still in a nascent stage. It is just the beginning but it is in an evolving stage. I think this is a huge opportunity for people who don’t want to do a lot of customer front ending,” she further explains.

Meanwhile, Sam who also runs a restaurant in New York echoes the same sentiment as Shanti. He says “Overall what I am seeing is that the scale of each brand within a dark kitchen is not enormous. In future I will see massive dark kitchens having 20-30 brands within them like for example, Procter and Gamble or Unilever, where they have a portfolio of brands.”

He also talked about dark kitchens which are being operated in the US and Europe and how the businesses operated there are different from here. “In the US it started first in the bigger cities like NY, San Francisco and so forth.  It is driven slightly by different set of inputs. Restaurants became untenable there, I think over 7-8000 restaurants have shut down in the city of NY in the last 3-4 years. So, eating in restaurants is becoming expensive and operating it became more expensive.  Here in India also it is not like running a restaurant is more affordable. However, people’s time is getting compressed. So, now dark kitchens have come up.”

“What I have seen is at the end of the day people want to eat and the question is how you meet that demand and how do you meet in a dynamic and flexible way. I think the very first thing is specializing in unique cuisines and then is how you scale it. Lastly how do you make it affordable and how are you going to deliver matters. It’s not about being a fancy chef, it’s about productizing it and scaling it, which is ruthlessly hard,” Sam says.

 

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