Virtual restaurants may be taking over the way we dine out

The cloud kitchen model — which allows the restaurant to run in a delivery-only model without dine-in service — was already growing in popularity before the pandemic.
Kitchen staff
Kitchen staff

It’s no secret that the pandemic has battered the restaurant industry. The spread of COVID-19, and the numerous restrictions it has brought, has deeply impacted the relaxing, social experience that was once dine-out culture. It’s a change that’s also led to a major pivot to delivery, as more diners choose to stay at home and more eateries look for ways to continue serving customers. Enter cloud kitchens, a model that chefs and restaurateurs are embracing, and diners are patronising, whether they realise it or not. 

Cloud kitchens — commercial kitchens that operate through delivery services and do not have a physical dine-in space — is not a new model but it’s one that gained favour this past year. The cloud kitchen industry in India is reportedly projected to become a $2 billion industry by 2024, up from $400 million in 2019. Even before India’s first lockdown shuttered bars and restaurants for several months, eateries were facing the brunt of a virus that seems to thrive in closed, social environments. Delivery services, however, continued, and dining out became more and more confined to people’s homes. New names have popped up on food aggregators week after week, from five-star hotels to corner eateries selling chili beef and parotta. And some restaurateurs are forgoing the traditional restaurant model for cloud kitchens.

In the last few months, brands like HakkaChow, Ginger Tiger, Windsor Food Factor (formerly Windsor Pub) and Ministop Brownies, a cafe in JP Nagar that now runs as an online store, have all stepped into the food delivery space. 

Chef Vikas Seth, the culinary director at Embassy Leisure, which operates brands such as Sanchez and Sriracha, started Hakka Chow about two months ago. The group now operates four brands through cloud kitchens, including Bangalore Pizza Company and the recently opened north Indian spot Garam Masala. 

Though the concept for the new brands had been in the works for the last year, the move to cloud kitchens and the use of their existing kitchen spaces — while foot traffic to restaurants remained low — was the most effective way to continue their business. “Because the guest can’t come to us, we will come to the guest,” he said.  

Why the model works

The success of cloud kitchens have been well documented in the last decade through major players. Rebel Foods, which has billed itself “the world’s largest internet restaurant company” with brands like Faasos and Behrouz Biryani, runs over 300 cloud kitchens in over 35 cities in India, and is said to be valued at a billion dollars. Swiggy, through its subsidiary Swiggy Access, has also opened cloud kitchens across India, as has rival food aggregator Zomato. Ola Foods has announced plans to significantly expand its cloud kitchen network over the next five years. 

But cloud kitchens haven’t only proven effective in sprawling networks, but smaller businesses as well. Chef Anand S, who ran Chennai’s popular continental fusion restaurant Cornucopia from 2004 to 2009, decided to revive the brand through a cloud kitchen. Since the beginning of June, he and his wife, Chef Dhanashree, have been catering to a small clientele through word-of-mouth and they soon hope to expand to a larger kitchen before the Christmas season.

Image courtesy: HakkaChow

Unlike brick-and-mortar restaurants, which need front-house staff and maintenance of a dining room, cloud kitchens do away with those requirements and the expenses that come with them. Guru Shivaram, managing partner of hospitality and projects at real estate services and advisory firm Avenuez, noted that the capital expenditure for a cloud kitchen is less than 30% that of a traditional restaurant.  

“I’m saving a lot of money. I don’t worry about a restaurant, air conditioning, or service staff. There are so many things I don’t have to bother about,” Anand said. 

It also allows chefs and restaurants to expand their brands and the food they serve accessible to other parts of the city or country, without having to invest in opening brand new dining spaces. 

Shylesh Jain, co-owner of Bengaluru restaurant NeverMind Bar & Social in Indiranagar, recently opened The Indian Canteen, which specialises in Indian street food, as a cloud kitchen. He also noted that the low operating cost is a major advantage for restaurateurs. “It’s a very safe and right model in times like these.” 

Hygiene and safety take new meaning 

COVID-19 has given new importance to hygiene and sanitation around the world, and restaurants have not been spared. “Of course [the food] has to hit all the right spots on taste, but safety has become paramount,” Vikas said.  

Ashwin Bhadri, CEO of Equinox Labs, a food, water, air testing and auditing lab, told TNM that more and more restaurants have shown a willingness and eagerness to comply with hygiene and safety inspection norms, including testing and training. Today, we are no longer in the discount-led economy, we are in the hygiene-first economy,” he said.

Equinox also carries out seperate hygiene audits required by food aggregators Swiggy, Zomato and DineOut before restaurants can be featured on their sites. Now, as an increasing number of restaurants look to get onto these platforms, Equinox has started a new product that allows eateries to secure ratings for all three apps in one audit. They also offer virtual safety audits for kitchens multiple times a day, Ashwin said. 

Challenges ahead

Though there is an appeal to the relative ease with which cloud kitchens can be started, it doesn’t mean there isn’t a hard road ahead. “Everybody thinks, OK, it's a small capital, I can invest and open a cloud kitchen. But if you do not do your research and take professional help, you're going to fail because cloud kitchen margins are not great,” restaurant consultant Guru Shivaram says. “If you cannot manage your costs, you're going to end up losing money there as well.”

Image courtesy: The Indian Canteen

Shylesh, of The Indian Canteen, also noted the challenge in finding staff for cloud kitchens as many prefer restaurants where customers can tip. The lack of direct contact with the customer can also be a concern. “With delivery, you have just one chance to make it right,” he said. 

There’s also a question of standing out. New restaurants could once rely on storefronts to draw in customers in the neighbourhood or within commercial districts. But scrolling through the numerous new options on food aggregators can be a daunting task today (especially if you’re hungry).  

These platforms also take hefty commissions from restaurants for providing delivery services. While some like Chef Anand run deliveries through Dunzo and hope to launch their own website for their orders soon, others like Shylesh say the expense and hassle of coordinating logistical services is not worth the effort. 

Future of cloud kitchens versus restaurants

Since pubs and restaurants were allowed to reopen and serve alcohol in September, diners have been stepping out once again. Though it will be a long while before restaurants are able to return to pre-COVID levels of business, experts are hopeful that the industry — both dine-in restaurants and cloud kitchens — will flourish. “The industry is going to grow five-fold in a decade,” Guru Shivaram said. 

And as cloud kitchens continue to grow, there is an expectation of innovation in the space, from packaging to automation of services to food and cocktail kits, each designed to evolve, if not replicate, a restaurant dining experience. 

Chef Vikas said, “People with all precautions are coming out. You have your dine in, and you also have a segment of people who are making themselves happy with delivery. So delivery is here to stay.”

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