Cloud kitchens redefining Indian food service space by attracting significant investments
Mumbai, December 4: Cloud kitchens are redefining the food service business across most Indian cities accounting for one out of every five orders, according to experts speaking on the second day of India Food Forum, Friday.
“With advantages like low initial investment and operating costs, higher profit margins, and relatively easier geographic expansion, cloud kitchens have taken the foodservice industry by storm,” said Pakhi Saxena, Business Director Head of retail and consumer Products at Wazir Advisors – a consulting firm.
Owing to their rising popularity, cloud kitchens have attracted significant investment in recent times with Rebel Foods becoming a unicorn in 2021, Saxena said at the 16th edition of India Food Forum.
The shift in food service consumption trend is also an outcome of the fast-paced lifestyles of employed individuals, an increased number of women in the workforce with higher disposable incomes coupled with scarcity of time.
However, the rising cost of raw material, factors like seasonal shortages, economic slowdowns, and surging fuel prices contribute to spikes in prices of raw materials such as eggs, meat, fish, and vegetables that squeezes margins, compelling operators to raise menu prices, posing a retention challenge with value-conscious customers.
Amid all these challenges and opportunities, India’s food service industry of USD 57.2 billion size with 47 percent organized market in 2023 is seen rising to USD 78.8 billion with 53 percent in 2026¸ according to Wazir Advisors.
Within the organized Foodservice Market Revenue of USD 27.1 billion in 2023, USD 5.9 billion came from the organized chains and the rest from independent establishments. By 2026, this organized revenue for food service is seen growing to USD 42.7 billion, with organized chain share accounting for USD 9.8 billion, Saxena said.
The surge is this market is also an outcome of easy access to the internet that millions of Indians today have via smartphones that has catalyzed the order placement with mobile wallets and one-tap payments.
The two-day India Food Forum saw several exhibitors launching new products and reaching out to the traders visiting the conclave in large numbers.