These restaurateurs don’t own any restaurants
In 2014, restaurateur Jaydeep Barman did a survey of customers who regularly ordered from or ate at his restaurant chain Faasos that had 60 outlets across Mumbai, Bengaluru and Pune. The results took him by surprise. As many as 73% of his customers had never seen the inside of a Faasos restaurant and only ordered food online. That prompted him to do away with dine-in spaces altogether.
No more expensive rentals and overheads for décor, serving staff etc. Instead, he changed his business to running only kitchens that operated from a cheaper address and dished out fare meant for only for home deliveries. Such kitchens are popularly called cloud or dark kitchens.
Today Faasos, now renamed Rebel Foods, has 200 such cooking spaces. “A physical restaurant typically clocks in 5-6% growth year-on-year. Our cloud kitchens have been growing at 90% year-on-year,” claims Barman, founder and CEO. Rebel Foods not only runs its own brand Faasos from these kitchens but eight more, like Oven Story, Behrouz Biryani, Olive Trails and Firangi Bake. “We launched Behrouz Biryani 18 months ago and it has clocked a revenue of Rs 150 crore since its launch without opening a single physical restaurant,” adds Barman.
As the appetite for ordering food in rather than dining outgrows, foodpreneurs like Barman see more sense in setting up virtual restaurants that exist only on apps rather than the brick and mortar kind which you could find on Google Maps. No crowd of diners here, just a row of bikes with delivery boys hunched over waiting to whisk away the food to a nearby home.
Rajesh Sawhney of Innerchef is also betting big on the delivery-only model. His food brand Innerchef, which started with one cloud kitchen in Delhi-NCR in 2015, today runs 25 such kitchens that are also a co-cooking space for independent food brands. Last month, Innerchef got Rs 43 crore in funding for expansion. “When we started out we knew that a shift towards delivery-only options is going to take place but we were surprised by how fast it happened. We plan to open 1,000 shared cloud kitchens in the next five years” says Rajesh Sawhney, founder and CEO.
While Fresh Menu, Rebel Foods and Innerchef operate completely from the cloud, a number of physical restaurants are also going ‘dark’ to expand to newer locations and markets. Swiggy’s cloud kitchen business, Swiggy Access, has over 100 such restaurant partners in six cities and aims to take the number to 300 by June. Biryani Blues, Delhi-NCR-based quick service restaurant chain, is one such partner which started on the cloud in early 2018. “A physical space requires four times more investment than a cloud kitchen, which can be operated anywhere as long as it has easy access and is located in a well-populated area,” says Raymond Andrew, founder of Biryani Blues.
Even local outlets, like Bengaluru-based restaurant Vasudev Adigas, are expanding outside the state via the cloud route. Delhiites can now order their dosas and idlis through Swiggy.
Food consultant Sourish Bhattacharya agrees that home delivery is the future of food business. “Not only is opening a physical restaurant expensive, it requires running around for licenses, and dealing with cops, power failures, fires. Delivery business is more convenient. You have a base kitchen, and you tie up with an app or launch your own label,” says Bhattacharya.
UberEats, another food aggregator app, has partnered with Café Coffee Day to launch multiple, pan-India cloud kitchens. Even food aggregator app Zomato has reportedly invested Rs 100 crore in Loyal Hospitality, a cloud kitchen business based in Bengaluru.
So, are cloud kitchens killing the restaurant? Not everyone is pessimistic. “Restaurants are the only entertainment option for most Indians so they will stay in business. People will keep visiting restaurants to celebrate occasions, like anniversaries, promotions etc,” says Andrew of Biryani Blues.
Barman says the cloud kitchen model has disrupted restaurants but not affected their business. “It’s like how Walmart still does sales of $480 billion,” he explains. Sawhney of Innerchef, on the other hand, feels that the real disruption has taken place in the rasoi rather than the restaurant. “Busy working professionals are increasingly relying on food delivery apps. The result is that fewer people are cooking,” says Sawhney.