This Industry didn’t exist until 2015!
Do you know which industry has a tremendous 16% year-on-year growth rate in India? Let me give you a hint. This industry did not exist anywhere in the world until 2010. Are you able to guess it now? Let’s make it a tad easier. Unlike the technology sector where the companies came to India from the west, in general obviously, this industry’s concept initiated in India and bloomed in all the major countries. Congratulations to everyone who is right for the industry we are discussing today is the Ghost Kitchen industry or the term it is more famous with, the Cloud Kitchens.
Cloud Kitchens are one of the fastest-growing business in India. It is in its adolescence stage currently and is yet to be a billion-dollar market. Globally, it has a 12% year-on-year growth and, as of 2019, was worth just over 43 Billion dollars. What caused this industry to grow at an astonishing rate?
During the era when people were not cursed with technology, and there wasn’t any concept of courier services, people used to travel mighty distances to trade. They used to pack their food for the whole journey — to and fro — until the early 12th century. Between two major cities of 12th century China, the people going for trade refused to eat local cuisines from each other’s towns. This gave birth to the notion of serving Ethnic cuisines to the traders at a designated place which happened to be the very first restaurant on the planet. Slowly, the concept grew across the globe. For a really long time, restaurants were meant for travellers, but the trend changed in the past few decades. People have started to eat at restaurants frequently, making it a highly lucrative business for opportunists.
Multiple waves of new restaurants came, and the latest one got synchronized with the tsunami in the technology industry. With the advent of telephones, people started ordering pizza from Dominos with just a phone call which was the origin of the home-delivery of cooked food items. Though Dominos wasn’t the first to offer home delivery, it can be called the one that mainstreamed it. With the internet, it changed. Many new startups came and went that provided an option to order food from restaurants from your computer. Waiter.com was the first to bring this idea to light and is currently being ruled by UberEats and many different startups worldwide. However, not many people noticed that if people keep ordering food online, there is no need to have a physical dining area. The one to catch it first was Faasos, a Bengaluru-based startup, which is now called Rebel Foods.
In India, the first cloud kitchen came in 2015. Since it requires significantly fewer investments, growth for the startups like Rebel Foods has been tremendous. The idea was an instant hit among entrepreneurs worldwide, with the first cloud kitchen coming up in the USA just after India in 2015, though it was a different startup that initiated it. Canada and the UK, too, saw a burst of cloud kitchens starting in 2016.
Within the last 5 years, the United States of America saw an opening of more than One Hundred Thousand ghost kitchens. For reference, McDonalds took 65 years to open Forty Thousand franchises, and McDonalds is actually considered the fastest growing franchise in the world. These certainly are some eye-popping figures. How did cloud kitchens come up at this pace?
Let’s take the example of Rebel Foods. Rebel Foods owns multiple different brands that serve a specific set of cuisines. For instance, you have OvenStory for Pizzas, Behrouz for Biryani, MandarinOak for Chinese, and many other brands under the hood. All these brands can operate from the same kitchen, which significantly reduces operating costs by saving rent, sharing utensils, etc. This way, one could have tens of different brands operational from almost half the covered area of a physical restaurant. This should explain why there was a hyperfast growth in the industry.
Instead of having a cloud kitchen, numerous startups provide spaces for people to open their own cloud kitchens for a small fee while also managing the orders, dispatch, delivery, utensils, and machinery required for cooking. This has made it even more accessible for anyone to start their own business.
The cloud kitchens have also made it easier for multi-national brands to reach new markets faster. For example, Wendy, a popular burger chain in the United States, operates as a cloud kitchen in India. In a survey, it was found that 52% of the restaurants are currently planning to run a ghost kitchen. However, the numbers of this survey could possibly be biased due to the Pandemic induced restrictions as the restaurant owners had to pay the same rent as before while not having any guests to entertain. Therefore, these numbers are likely to shift again, and more accurate analysis would only be available once normalcy returns.
Cloud Kitchens are rising to the moon and would continue to do so. After all, India is a big country, and it would probably take decades for each nook and corner of the country to have a cloud kitchen. It will be interesting to see how this industry reaps.
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