How Food-Tech Companies are Adopting Cost-effective Business Models
- BY Jaspreet Kaur
Feature Writer, BusinessEx
- Aug 01,2019
- 11 Mins Read
In recent times, the Indian food-tech industry has evolved immensely and engineered new ways to make profits. Prominent companies viz. Swiggy, Zomato, and Uber Eats have built up new business models, which enable them to serve better, besides merely focusing on the food delivery business. According to Statista’s report, revenue in the online food delivery segment amounts to US$107,438 million in 2019.
By shifting the focus from the core food delivery business, food tech companies are working on slashing costs and serving good quality food. In that quest, the companies have found cloud kitchen as one of the mediums to gain traction of the Indian consumers and offer lip-smacking food at customers’ doorstep.
Cloud Kitchen is the New Business
A cloud kitchen is the latest modification of low-budget restaurants, who could not offer seating space to the customers. Under this model, an outlet prepares food as per the customer’s demand and then, delivers food at the customer’s chosen space. The outlet fundamentally works a unit where food is retained, cooked and packed. This kind of model is quite effective as it brings a restaurateur’s focus on creating quality food instead of concentrating on dining facilities and space available for customers.
This concept is new in the Indian industry while in foreign countries, giant food-tech firms are employing it massively and expanding their footprint in the cloud kitchen niche. NOSH, Sweetgreen, and Keatz are some of the cloud kitchen brands running in foreign nations.
Successful Cloud Kitchens in Indian Territory
Witnessing the cost-effectiveness of cloud kitchens, many food tech companies have forayed in this niche. Behrouz Biryani, which is operated by Rebel Foods, offers food to the customers via cloud kitchens across India. The company presently owns over 200 cloud kitchens throughout the country, as reported by the daily news, Bloomberg.
Rebel Foods offers a wide range of food, ranging from biryani to Chinese cuisine to dosas. Earlier in July, the company received $125 million funding from Goldman Sachs, Coatue Management, Gojek, and other investors, according to the cited report.
Rebel Foods, which currently operates Behrouz Biryani, used to run a restaurant chain named, Faasos. However, the restaurant business closed down due to high rental expenses three years ago. Seeing the cloud kitchen as a cost-saving model, the company initiated its business from enclosed kitchens.
Besides Rebel Foods, there are several other food tech companies that are enhancing its business via the cloud kitchen concept. In 2017, food-delivery giant, Swiggy established its cloud kitchens under the name, Swiggy Access.
Initially, Swiggy established its primary ‘Access Kitchen’ by collaborating with two restaurant partners and a few other F&B (food and restaurant) brands viz. House of Dabbas, The Bowl Company and Punjabi Rasoi and worked collectively in 3,200 sq. feet. Further, the company housed more than 30 brands, encompassing Krispy Kreme, Truffles and Paradise Biryani, as reported by the Indian daily news, Mint.
Apart from the cloud kitchen, there is another concept that is relevant at the present time i.e. virtual restaurant. In the previous year, Uber Eats initiated a virtual restaurant in collaboration with CCD, named Home Cravings. The food-tech company has been administering virtual restaurants in other countries as well; the company did not launch its virtual restaurant in India until 2018.
Since competition has become stiff in the food tech industry, cloud kitchen and virtual restaurants have become the newest segments for the food tech business to enter in.
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