Have you heard of virtual restaurants?
Cloud kitchens and ghost kitchens are the new horizon of the growing urban food business changing the way India thinks of food
On a sunny December afternoon, 32-year-old Anirudh Gupta is in his office on the ground floor of a private residence in a posh South Kolkata neighbourhood, with a steaming kulhar of sweet-smelling Kesari Chai. A few months ago, Gupta, along with his lawyer-friend Dhruv Grover, had launched 'The Brewing Leaf' that serves up a versatile range of hot and cold tea-based beverages from perennial favourites like Masala Chai and Adrak Wali (ginger-infused) Chai to quirky numbers like the Shahi Chai topped with cream cheese, flecks of almonds and pistachio, and saffron, or the Chaat Chai—chilled green tea jazzed up with lime, green chilies and spices. They also offer an extensive food menu, but at The Brewing Leaf, tea is clearly in focus.
However, The Brewing Leaf is not a café or a tearoom that you can walk into, grab a table at and order a cuppa. Instead, it operates out of a 350 sq ft professional kitchen, adjoining Gupta’s office room, where everything is prepared from scratch with formulaic precision and delivered to one’s doorstep through food delivery apps such as Zomato and Swiggy. In other words, they are a cloud kitchen aka dark kitchen, named so because they are invisible to customers who order from them. Then there are the ghost kitchens, which supply food to restaurants, where the diner doesn’t know the cooking has been outsourced, prepared by high-tech methods as per menu formulas provided by the restaurant.
Both are tech-driven virtual restaurants, which do not serve food on location. So, with a few taps on your phone, you can enjoy restaurant-quality food in the comfort of your home at relatively lower prices simply because ghost kitchen operators do not have to bear the cost of infrastructure and services offered by brick-and-mortar restaurants—a rather enticing proposition in the age of ‘Netflix and chill’. “Restaurant expansion via cloud kitchens simplifies things by removing big barriers like setting up dine-in facilities at prime locations, hiring and retaining staff, customer acquisition, market fit, etc,” says Vishal Bhatia, CEO, New Supply, Swiggy, one of the leading food aggregators in the country.
For the last few years, the food-tech-driven cloud kitchen scene in India has been buzzing. It is one of the fastest-growing segments in the F&B industry today. “This is only the beginning,” says restaurateur Karan Tanna of Yellow Tie Hospitality. Last June, he launched Ghost Kitchens, an investment and incubation for start-ups in the segment. “The idea is to use our experience and expertise in food and beverage scalability to help potential start-ups to grow fast and penetrate the market,” says Tanna.
Ghost Kitchens provides restaurateurs everything from backend infrastructure, warehousing and logistics support, to branding and marketing support to start-ups ensuring quick growth. “This helps each start-up in synergising with each other, which makes for better economics,” says Tanna. Since its inception in June 2019, his portfolio has expanded to include more than 15 active brands and over 150 active internet restaurants in five cities in India. “Ghost kitchens is going to deploy $3 million in the coming year and expand its portfolio to include 30 brands and over 350 live internet restaurants by the end of 2020,” Tanna adds. The growing popularity of the cloud kitchen format can be attributed to several factors. From restaurateurs’ point of view, the model is more cost-effective with front-of-the-house essentials. “Cloud kitchens can break even and pay back at a much faster rate, in less than a year and under 18 months respectively,” says Rashmi Daga, the founder and CEO of Fresh Menu. Cloud kitchens require far less investment than regular restaurants, which worry about costly overheads and prime locations when real estate costs are sky high now.
Cloud kitchen ventures have attracted significant investments from venture capitalists and angel investors alike. Gurugram-headquartered shared cloud kitchen platform Inner Chef, for instance, has received funding from Japanese VC firms like Mistletoe and Das Capital and Singapore’s M&S Partners. Bengaluru-based food-tech company Fresh Menu, which delivers freshly cooked food to a home or an office through their app as also other
food aggregators, has reportedly received funding from American venture capital firm Lightspeed Venture Partners. Uber cofounder Travis Kalanick is reportedly set to launch his cloud kitchen venture, City Storage Systems, in India. Uber Eats, whose Indian operations has been acquired by Zomato for `2,485 crore, is giving established services a run for their sushi. Everything is not business for such foodpreneurs, because food inevitably becomes cuisine with passion. Take Monish Bali, who launched Mount Shivalik Concept Cuisines late last year. Bali, besides being a foodie who loves to cook himself, has been passionate about the moveable feast, in fact literally.
Way back in 2001, he launched Jashan, ready-to-cook food which was available in all main retail stores. Before that, Shivalik was behind special edition chocolates by designer Raghavendra Rathore. So how have cloud kitchens made a difference? One could always order in from your neighbourhood Chinese takeaway. “That has changed,” says Bali. “Earlier, only basic dishes were available; say tandoori chicken or veg chowmein. Now gourmet food that reaches your doorstep is just a phone call away. And people are willing to pay for it.”
This behavioural shift among consumers is thanks to the cellphone revolution, which has changed the idea of entertainment especially for millennials. “Staying in is more appealing than going out. This has affected the way people eat,” says Daga. According to her, the number of nuclear families where both partners are working has gone up in cities. Long work hours and hectic lifestyles mean fewer people are stepping into the kitchen. “People are keen on convenience and want a wide variety of food easily available on demand to be delivered home” says Daga. Friends Pranav Kale and Siddharth Shetty, both Culinary Institute of America graduates with experience working in restaurants like Daniel and Nomad in New York, partnered to launch Namaste in Mumbai.
They echo Daga’s opinion. “Considering the nightmarish Mumbai traffic and parking hassles everywhere, stepping out to eat at a restaurant is a daunting prospect to many,” says Kale. India’s own peculiarities affect the cloud kitchen business too. Hyderabad-based Abhishek Reddy, owner of Sahadeva Reddy Sweets, says, “In addition to our flagship sweetshop in Dilsukhnagar, we also ran a food truck for two years in Mettuguda. The business was profitable but we faced severe issues with the police, parking and neighbours. We decided to test out the idea of a cloud kitchen.” It paid off. “Today, although there is no physical entity called Sahadeva Reddy Tiffins, we are available on food delivery apps under the name and have expanded our repertoire to include, chaat, snacks and desserts.”
Cloud kitchens are in tune with the times, many specialising and catering to health food. Read salads, kombucha teas and blackberry smoothies. Many have understood the need for variety, and hence specialisation. Bali has two speciality food brands: Zubi which serves up pan-Asian cuisine and The Sacred Grain that offers a meticulously curated selection of dishes from across India. He operates out of a 7,000 sq ft, state-of-the-art kitchen. A third brand with a globe-trotting menu featuring dishes from all over the world, The Glass Bee, is almost ready for launch. “Since I have a variety of special cuisines, the cloud kitchen format seemed most suitable,” says Bali. So, which are the bestsellers? “Pork belly, Firecracker Chicken, Cumin Lamb, Haleem and butter chicken with a cashew nut base but now no sugar.” Does he himself cook? “Yes, I cook genuine Haleem. It takes the right amount of pulses, barley and time,” comes the answer.
Start-up Zesty Kitchen is taking Indian regional cuisines to Mumbaikars. “We noticed the huge gap in that space,” says co-founder Sambit Satapathy. Zesty Kitchen launched about a year ago by Satapathy and Aditya Singh has offered Jamai Shoshthi for Bengali customers and Medha Malvan for Malvanis.
Existing food businesses are also hopping on the cloud bandwagon. “Traditional restaurants are likely to tap into the cloud kitchen model where they get their food prepared in a ghost kitchen, and only finished in kitchens on location, thereby cutting down on kitchen space on location,” says Bali.
Delhi’s Amit Burman and Rohit Agarwal, who own over 200 standalone restaurants, are experimenting with this model and find the results satisfactory. Aakarsh Bhargava, whose The Big Fat Belly occupies a prime spot on Kolkata’s bustling Sarat Bose Road, chose the Picnic Gardens area a distance away to set up his second brand Chacha Jaan. Currently, his cloud kitchen Fat Cloud not only offers an impressive selection of Mughlai cuisine under the Chacha Jaan brand, it also handles part of TBFB kitchen operations. “The kitchen is equipped to handle four different cuisines. We will be introducing two new brands for Chinese and North Indian cuisines,” says Bhargava. So how does Bali get the food perfect? Food tasting sessions, of course. He invites well-heeled, well-travelled friends in small groups to try out the dishes. “Exposure matters in food,” he says.
Space matters too. Satapathy and Singh launched Zesty Kitchen with a joint investment of `1.5 crore. Angel investors soon came up with `3.5 crore. The cloud kitchen operates from a 2,500 sq ft central kitchen in Chandivali and four smaller satellite kitchens in Andheri, Malad and BKC.
Food delivery business has grown through cloud kitchens and vice versa. “Until a couple of years ago, food delivery was an ancillary business for restaurants. Today many of them are riding solely on the strength of their delivery-only business,” Tanna says. Swiggy and Zomato have jumped on the bandwagon. In 2017, Swiggy launched Swiggy Access, an invite-only programme for restaurant partners to open delivery-only kitchens in neighbourhoods where they do not otherwise operate. Bali says the biggest markets are Delhi and Mumbai followed by Bengaluru and Chennai while Chandigarh is on top of the Tier II city list. Bhatia is bringing a wide variety and better quality food to the customer through Access kitchens or ‘pods’, as he says. Hence, Swiggy will soon be within 10 minutes of 99 percent of its consumers. In addition to the `175 crore invested in cloud kitchens nationwide, Swiggy is infusing an additional `75 crore to expand to 12 new cities, including Guwahati, Tirupur, Bareilly and Surat by March. “This would add over 7,000 direct and indirect jobs to the restaurant industry in the next six months, in addition to the 8,000-plus jobs that have already been created through Swiggy Access,” Bhatia adds.
The result is both intercity and intracity expansion for established brands. Tier 2 cities now have access to culinary brands in metros. For example, Buhari and Kumarakom of Chennai are now in Coimbatore, Delhi’s Biryani Blues is in Chandigarh, and NIC Natural Ice Cream has expanded from Pune to Chandigarh and Jaipur. Marky Momos from Jaipur has made it to Delhi, and Ludhiana’s Baba Chicken is now available in Chandigarh. Incidentally, Swiggy has also launched its own cloud kitchen brands like The Bowl Company, Breakfast Express, etc—not without objection from the restaurant community. Zomato’s cloud kitchen venture Zomato Kitchens has the same aim. Says Mohit Sardana, COO, Food Delivery, Zomato, “Our data revealed there is demand for South Indian food in Dwarka and Noida in NCR, which has led to Bengaluru’s Vasudev Adigas to open a kitchen there.”
Data places food aggregators and their restaurant partners at an advantage to pick the right location for a cloud kitchen. “It helps us to identify where to start the next kitchen and the type of food in demand there,” says Bhatia. A cloud kitchen is a tightly run high-tech ship. As Bali points out, “Margins are not particularly high, so volume plays a crucial role.” Technology, be it in the form of robust cloud-based PoS system or automated food production units, is a crucial part of ops. The challenges of getting the food right are many, with finding the right chefs. Bali sourced them from various upscale restaurants across the country. Not only does he pay them substantially better but also gives them company accommodation which he feels is a small price to pay for his upscale operation.
The Brewing Leaf’s kitchen staff undergoes constant training, has a standard instruction manual with the tea sourced from estates in Darjeeling, Assam etc. It is brewed in a custom-made stainless-steel, five-litre capacity machine fitted with a thermostat and a timer. “We have developed a precise formula so the tea tastes the same every time,” says Grover. In Chennai, a fully automated cloud kitchen, where food is cooked from scratch by a robot, is already a thing. RoboChef uses massive stainless-steel equipment operated by computer-coded sensors, which can cook hundreds of pre-programmed dishes in bulk, within minutes. Recipes are sourced from specialised chefs, recorded and loaded into RoboChef. “Once loaded, a recipe can be run any number of times with the same, consistent result in terms of taste and quality,” says founder and CEO of RoboChef, Saravanan Sundaramoorthy. Besides, the food is customisable; any ingredient can be added, removed or replaced at any time. “We plan to expand to multiple cities across India,” says Sundaramoorthy. His target is to be a cost-effective replacement for restaurants.
The traditional restaurant scene could be a victim of the cloud kitchen phenomenon. “The casual dining scene is likely to take a hit. High Street restaurants offering immersive experiences are not replaceable,” says Tanna. Chef-restaurateur Sabyasachi Gorai agrees. “People come to a restaurant for a rounded experience like ambience, service, a wide assortment of cocktails and more,” he says. “A significant part of his menu is meant to be enjoyed at a restaurant, straight out of the kitchen on the table,” says Chef Kavan Kuttappa.
For cloud kitchen, ‘packaged look and feel’ must be on point in the absence of the visual experience of a restaurant. Look and feel is crucial to telling the brand story and creating recall. Take, for instance, Biryani by Kilo that has tapped into the popularity of the Mughal dish. It is delivered in brand-embossed clay pots in which the food has been cooked in. Zesty Kitchen has cuisine cards that explain the genre of the dish. Brewing Leaf delivers its products in customised cardboard flasks lined with food grade foil, which keeps the beverage piping hot for up to 45 minutes without altering its flavour.
Challenges notwithstanding, cloud kitchens are here to stay. “The opportunities and benefits heavily outweigh the challenges,” says Sardana. In a decade, he estimates that consumers will order in about 40 meals a month of which 75 percent will be delivered to their homes and offices,” says Bhatia. Tanna is certain his will be India’s first billion dollar food and beverage company. It is no wonder that the high-tech online foodpreneurs are on cloud nine.
With inputs from Rashmi Rajagopal (Bengaluru), Sonali Shenoy (Chennai) and Manjulatha Kalanidhi (Hyderabad)
The Virtual cookery
Cloud kitchens and ghost kitchens are tech-driven virtual restaurants which do not serve food on location. Cloud kitchen aka dark kitchen is named so because it is invisible to customers who order from them. Ghost kitchens supply food to restaurants, where the diner doesn’t know the cooking has been outsourced, prepared by high-tech methods according to menu formulas provided by the restaurant.
Fat Cloud Kolkata
Aakarsh Bhargava The cloud kitchen not only offers an impressive selection of Mughlai cuisine under the Chacha Jaan brand, it also handles part of TBFB kitchen operations. “The kitchen is designed and equipped to handle four different cuisines. We will be introducing two new brands for Chinese and North Indian cuisines.”
Zesty Kitchen Mumbai
Sambit Satapathy and Aditya Singh
Launched about a year ago, the cloud kitchen operates from a 2,500 sq ft central kitchen in Chandivali and four smaller satellite kitchens in Andheri, Malad and BKC. It has offered Jamai Shoshthi for Bengali customers and Medha Malvan for Malvanis.
“On one hand, we want to start a conversation around the diversity of regional cuisines while on the other hand we want to cater to people who have moved into the city from different parts of the country and often have no access to their native cuisines.” Sambit Satapathy
Mount Shivalik Concept Cuisines Delhi Monish Bali
Has two speciality food brands: Zubi which serves pan-Asian cuisine and The Sacred Grain that offers a meticulously curated selection of dishes from across India. Operates out of a 7,000 sq ft, state-of-the-art cloud kitchen. A third brand with a globe-trotting menu featuring dishes from all over the world, The Glass Bee, is almost ready for launch. “Since I have a variety of special cuisines, the cloud kitchen format seemed most suitable.”
“The opportunities and benefits of cloud kitchen heavily outweigh the challenges.” Mohit Sardana, COO, Food Delivery, Zomato
“We are available on food delivery apps under Sahadeva Reddy Tiffins and have expanded our repertoire to include chaat, snacks and desserts.” Abhishek Reddy, Sahadeva Reddy Sweets, Hyderabad
“Restaurant expansion via cloud kitchens simplifies things by removing big barriers like setting up dine-in facilities at prime locations, hiring and retaining staff, customer acquisition, market fit, etc.” Vishal Bhatia, CEO,New Supply, Swiggy
Namaste Mumbai Pranav Kale & Siddharth Shetty
The Culinary Institute of America graduates with experience working in restaurants like Daniel and Nomad in New York, partnered to launch Namaste. “Considering the nightmarish Mumbai traffic and parking hassles everywhere, stepping out to eat at a restaurant is a daunting prospect to man.” Pranav Kale
RoboChef Chennai Saravanan Sundaramoorthy
Uses massive stainless-steel equipment operated by computer-coded sensors, which can cook hundreds of pre-programmed dishes in bulk, within minutes. “Once loaded, a recipe can be run any number of times with the same, consistent result in terms of taste and quality. We plan to expand to multiple cities across India.”
The Brewing Leaf Kolkata Anirudh Gupta & Dhruv Grover
Serves up a wide range of hot and cold tea-based beverages besides an extensive food menu. Operates out of a 350 sq ft professional kitchen, where everything is prepared from scratch with formulaic precision and delivered to one’s doorstep through food delivery apps. “We have developed a precise formula so the tea tastes the same every time.” Anirudh Grover
Ghost Kitchens Pan-India Karan Tanna
Provides restaurateurs everything, from backend infrastructure, warehousing and logistics support, to branding and marketing support to start-ups ensuring quick growth with profitability.
“We are going to deploy $3 million in the coming year and expand our portfolio to include 30 brands and over 350 live internet restaurants by the end of 2020.”