Food businesses are changing. Costly initial investments, intricate regulations, and recently COVID-19 have all posed challenges to the restaurant industry and conventional food business models.
Among the many recent shifts in the food and beverage sector, the rise of “cloud kitchens” stands out the most.
In today’s article, we will dive deeper into the emerging sector that promises a billion-dollar market in the coming years. Let’s begin!
What is the cloud kitchen industry?
Cloud kitchens, often called “ghost kitchens,” are shared commercial kitchens that transport and prepare meals for takeout and delivery. In contrast to more conventional brick-and-mortar stores, cloud kitchens enable food businesses to produce and deliver food with little to no overhead.
Some companies that are using ghost kitchens as an expansion plan include:
- Restaurants,
- Caterers,
- Meal prep services, and
- Delivery-centric manufacturers of packaged foods.
From an estimated $400 million in 2019 to a whopping $2 billion by 2024, the domestic cloud kitchen industry might see substantial growth. On the other hand, experts predict that the worldwide cloud kitchen industry will expand from a current valuation of $58.61 billion to a whopping $177.85 billion in a decade.
The market might expand as more and more people choose to have their food delivered online.
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How to open a cloud kitchen in India?
- Choose an idea:
As a cloud kitchen owner, you may choose the type of cuisine or speciality you want to offer. The first step in launching a successful cloud kitchen is deciding what kind of cuisine you want to specialise in.
- Find your ideal spot:
Ideally, you should think about how far away your kitchen is from your intended customers and how much it will cost to rent the space.
- Choose the right staff:
The success or failure of your cloud kitchen enterprise depends on your cooks, as the food you serve is determined by its quality, flavour, and nutritional content. For the first few months, you should be confident in your culinary abilities if you’re going to be a personal chef.
- Make sure you have the permissions:
Getting the necessary licences as a cloud kitchen owner involves securing GST licences, FSSAI licences, a No-Objection Certificate (NOC), and a fire licence.
- Partner with a delivery service:
You may recruit a delivery partner or pay someone else to deliver the products.
- Set up a marketing plan:
If you own a cloud kitchen, you need to market your business aggressively. To establish your presence, you must devise a solid marketing plan and allocate funds accordingly.
Also read: Navigating the future: The rise of warehousing and logistics in India
Evolution of cloud kitchens in India
By 2021, India’s online food delivery industry had grown to a value of ₹410.97 billion. From 2022 to 2027, the market is projected to grow at a CAGR of 30%, reaching ₹1,845.76 billion by the end of 2027.
The necessity for cloud kitchens has arisen in response to a dramatic shift in the food sector in the past few years. In the wake of the pandemic, when many restaurants had to close their doors and turn to delivery and takeaway services to meet customer demand, the concept of cloud kitchens gained traction, and these types of kitchens have since grown in popularity.
There has been an upsurge in the restaurant industry in 2023, whether it’s dining out or using a cloud kitchen. Significant events such as the G20 Summit, World Food India, and Millet Year have contributed to the sector’s impressive growth.
A lot of things have changed because of how the world’s economy and technology have evolved. Modern technological advancements, such as contactless services and individualised dining experiences, are changing the way the hospitality sector functions.
Today’s cloud kitchen business in India
With over 2,500 food-tech startups launching in India between 2014 and 2016, the country’s food-tech market was an ideal environment for growth. The increasing purchasing power of India’s young population, along with the nation’s large working population, will push the cloud kitchen industry in India to new heights over the next five years.
Over the past ten years, the country’s youth have experienced significant growth in their use of the internet, literacy rate, and social media-influenced habits.
As online food ordering grows in popularity, analysts predict that India’s cloud kitchen market will increase from $800 million in the financial year 2022 to $1.9 billion in fiscal 2026. Moreover, with a gross merchandise value (GMV) of approximately $400 million in 2019, the Indian cloud kitchen sector is projected to grow to $2.3 billion by 2025.
Future of cloud kitchen companies in India
Since these kitchens are unique and consumer behaviour is changing, it is expected that the concept of cloud kitchens will expand over the coming years. The cloud kitchen market has been experiencing some growing trends. The use of technology as well as automation in restaurant operations is one of the significant developments in the industry.
The report claims that cloud kitchens are trying to get an advantage by standardising food quality and flavour, saving time, and utilising kitchen automation tools powered by AI and machine learning.
Not only that, major multi-brand cloud kitchen participants are joining forces and integrating their company portfolios into one D2C-led website/app, providing customers with a variety of cuisines, deep discounts, and even subscription-based schemes.
Along with these developments, the cloud kitchen industry is witnessing the expansion of QSRs into cloud kitchens, the rise of alternative ordering and delivery platforms, and an increase in demand from Tier 2, 3, and 4 cities.
The India cloud kitchen industry is projected to expand at a CAGR of 15.5% to 17.5% between 2024 and 2028, with the potential to reach a USD2.5 billion market size by 2028.
Also read: How is Coca-Cola planning to expand its business in India?
Top cloud kitchens in India
Rebel Foods is among the biggest cloud kitchen operators in India, bringing approximately 11.95 billion Indian rupees in revenue in the fiscal year 2023.
Rebel Foods, the company behind well-known brands like Behrouz Biryani and Faasos, is getting ready to go public and is probably going to file its draft red herring prospectus in the second half of 2024. It plans to go public on Indian stock exchanges in 2025.
However, investors can still take part in the growing industry by investing in big names like Jubilant FoodWorks, which is exploring cloud kitchens to enhance their delivery networks.
| Company | Market cap (₹ cr.) | Total revenue in FY2023 (₹ cr.) | Share price % returns (1Y) as of March 6, 2024 |
| Jubilant FoodWorks | 29,531.37 | 5,208.66 | 0.1 |
Conclusion
As the world is now driven by changing consumer preferences, technological advancements, and the rising purchasing power of the nation’s youth, the cloud kitchen industry in India is set to experience remarkable growth in the coming years.
With increasing demand from tier 2 and tier 3 cities, the growth of QSRs into cloud kitchens and emerging names like Jubilinat FoodWorks and Rebel Foods, the market is soon to reach a $2 billion market size.
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