Food has always been one of the biggest joys of living in Kolkata.
And before the pandemic hit, no walk through the city was complete without one experiencing the aroma of piping hot samosas or
koraishutir kochuri, the heady whiff of biryani and chicken
chaanp or quaint street-side stalls selling the evergreen fried rice-chilli chicken combo.
Moreover, no shopping trip was complete without a round of
bhanrer cha and eating out.
But the pandemic changed all that.
The lockdowns and the resultant WFH culture shifted customer focus from the dine-in to the order-in mode.
And with restaurants closed for a major part of the past 18 months, another F&B business model rose to the fore – cloud kitchen.
“It is a good business model to follow during lockdowns as people usually stay indoors and order in.
That’s why cloud kitchens emerged as a successful business vertical during this period, not just in Bengal or India but across the world,” says Sudesh Poddar, president, Hotel & Restaurant Association of Eastern India.
The reason for the success is relatively simple “Cloud kitchens require much lower upfront investment, with the bulk going into setting up the infrastructure.
Marketing takes up another 3-5%.
Given the lower overheads, they are more viable in the current situation,” says restaurateur Abhimanyu Maheswari.
THE PANDEMIC & CLOUD KITCHENS
According to Dalia De, the founder of five cloud kitchen brands including Bowl Out, Daily Bhoj and Asian Deli, the pandemic has made the industry focus on the safety and hygiene aspects of production and packaging.
“Sanitisation is top priority now, be it in the kitchen, the utensils or the packaging material.
We ensure staff hygiene and also wash ingredients with FSSAI-approved food sanitisers,” she says.
On the other hand, the lockdowns and the resultant work-from-home culture created a high demand for home-delivered food, especially after the initial wave of ‘contact’ fear wore off.
“But the pandemic also resulted in an oversupply of cloud kitchens.
That way, the volume of business got split into bits and pieces,” says Abhimanyu, whose company runs Deja Bowl and Rozi Roti.
CHANGES IN CUSTOMER BEHAVIOUR
According to food entrepreneur Surojit Rout, who now runs his café, Ekdalia Rd, as a cloud kitchen along with the home-style and health food brand, Diet Fixx, home cooks are also eating into the order volumes.
“The current scenario is complicated when it comes to customer behaviour.
Food aggregators have contributed to these complications by shifting customer focus to discounts and cashbacks rather than brand value and food quality.
If we look at the margins that go to these aggregators per delivery, a restaurateur is left with around 10-15% of profit, which is not at all viable,” he said.
Akarsh Bhargav, founder, Chaccha Jaan Biryani Aur Kebab Wale and Dil Desi Dhaba, agrees with Surojit.
“Aggregators are the biggest predators in the market now.
The discounts and cashbacks that lure customers are actually killing off businesses.
No business can survive on such low margins,” he says.
Surojit opines that there are currently three types of customers — those who want simple, home-style meals, those who watch what they eat and those who love to relish everything sinful.
“The last category of customers is a dwindling breed, especially after the pandemic.
Their numbers surge during special occasions like Durga Puja or reopening of restaurants and recede equally fast.
At the end of the day, it’s only food quality that ensures customer loyalty,” he says.
WHAT EXACTLY IS A CLOUD KITCHEN?
It’s just that – a kitchen.
Usually there’s no associated takeaway counter or dine-in setup.
A cloud kitchen is strictly delivery only.
The business model may differ, right from purely home and corporate delivery or catering to supplying cooked food to hotels and restaurants, but at its core, it’s just a kitchen.
And since it is a low-visibility business, sustainability relies on the right brand positioning and quality of food.
Says Dalia: “Visibility plays a major role when it comes to traditional restaurants.
But cloud kitchens are purely online.
So a lot of effort goes into making it a visible and trustworthy brand.
Marketing needs a fair bit of investment and so does the packaging.
Even then, it usually takes a cloud kitchen brand a year to 18 months to reach profitability if managed properly.”
PACKAGING MATTERS
According to the stakeholders, packaging plays an important role in positioning a cloud kitchen brand in the market.
Moreover, the increased focus on making an eco-friendly statement has translated into higher investments on packaging, which is not always viable.
“The cost of alternatives to plastic is too high as of now and is usually 20% higher.
So we usually stick to reusable or biodegradable plastic,” says Abhimanyu.
Dalia is of the same opinion.
“We had tried a plastic alternative made from food grains, but the cost was too high.
When required, we now use food-grade plastic that can also be microwaved,” she says.
According to Surojit, a lot of thought goes into packaging.
“After all, it’s the last step of brand building.
I had once tried corn starch packaging, which is an alternative to plastic.
But the cost came to around Rs25-Rs30 per pack.
That’s unaffordable when you’re working with low volumes and low margins.
Moreover, when it comes to Indian or continental cuisine, where each dish may have multiple components, it’s very difficult to always stick to high-value packaging material,” he says.
COMBOS AND PORTIONS
According to Abhimanyu, combo meals make sense now, as it’s a time for a bit of thrift.
“The aggregator apps and brands are offering combos because students, individuals or couples working from home get to save money and have a good meal at a good price,” he opines.
But Surojit has a slightly different take on the topic.
“The average Indian has grown up eating these so-called combos, right? We’ve always had
dal-chawal-sabji or
roti-tadka and so on.
So what’s new? Well, it’s the way these combos are being marketed now, making them seem to be something special,” he says.
As for portions, Dalia says that portion sizes in the delivery mode are often defined by the size of containers, while Abhimanyu opines that it depends on the type of cuisine being served, especially when it’s north Indian or continental.
But according to Surojit, some other factors are also at play.
“It’s true that portion sizes are decreasing by the day.
There may be several reasons behind this.
For one, it may have to do with the discounts being offered by food aggregators that eventually force the producing brand to cut corners to earn a profit.
Then there are the steeply rising prices of ingredients.
Last but not the least is the customer, who is hit equally hard by the pandemic but still wants to eat good and that too on a budget.
So brands offer discounts but also cut down on portion sizes to make a profit.”
Pics: iStock