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International Journal of Research in Engineering, Science and Management 158

Volume 4, Issue 7, July 2021


https://www.ijresm.com | ISSN (Online): 2581-5792

Rise and the Future of Cloud Kitchens in India:


A Consumer Study
Nikhil Chhabra1*, Arpit Rana2
1,2
Student, Department of Management, Symbiosis Centre for Management Studies, Pune, India

Abstract: Cloud kitchens are online-operating eateries lacking a Cloud kitchens have ‘ticked the checkboxes’ for many
physical presence, and their growth has been key in the growth of consumers in this respect, where the key consumer expectations
the food industry as a whole. Cloud kitchens operate on the basis are met by efficient models of preparation and delivery. Cloud
of Food Delivery Apps (FDAs) that enable a set foundation to
reach out to consumers. The role these eateries have played during kitchens have seen extreme success, with popular brands such
the COVID-19 pandemic has been and continues to be important as Faasos, Fresh Menu, Oven Story, etc. taking over FDAs, and
– especially with rigid lockdowns in India. Cloud kitchens such as have been central to tackling the many impacts of the COVID-
Faasos, Fresh Menu, etc. operating through FDAs have supported 19 pandemic.
food demands and dealt with demand and supply fluctuations,
setting up an efficient food production and delivery process. This Table 1
paper studies the factors that differentiate cloud kitchens from Different food industry bodies and market sizes
traditional kitchens, consumer behaviour and reaction to cloud Formats Market Size (INR crores):
kitchens, and the impact COVID-19 has had on consumer 2018-19
interaction with food delivery, specific to cloud kitchens. The Quick Service Restaurants (QSR) 32,880
analysis of this industry is important for future growth, so as to Affordable Casual Dining Restaurants 60,255
identify the main pain points and consumer behaviour specific to (ACDR)
cloud kitchens in terms of expectations and prioritization of Premium Casual Dining Restaurant 19,984
elements related to food delivery. (PCDR)
Fine Dining Restaurant (FDR) 2,872
Desserts, Ice Cream (D&CI) 4,121
Keywords: Cloud kitchens, COVID-19, Food delivery, India.
Cafe 9,370
Pubs, Bar Cafe and Lounge (PBCL) 17,979
1. Introduction Cloud Kitchen 928
Source: Express Food and Hospitality, India Food Services Report 2019
As consumer spending patterns change and demand as well
as consumer confidence patterns fluctuate, so do the
Cloud kitchen as a concept has a very diverse background. It
technologies to adapt to these. With the advent of e-commerce
has taken inspiration from the East and the West alike,
came a concept that has taken off in the last few years – that of
incorporating processes from Chinese takeout restaurants and
cloud kitchens. Cloud kitchens are fully online-based food
American pizza delivery chains. Cloud kitchens are centralised
aggregators that supply prepared meals in the mode of delivery
facilities located in residential hubs and other high populous
only, having no physical presence consumers can visit
areas. These warehouse-like structures sometimes may have
(Chouadhary, 2019). Cloud kitchens operate on a low-cost,
dozens of restaurants operating under the same roof all of which
demand based model relying on solely the online delivery of
are vertically integrated and optimised for delivery. Cloud
food, and have been an essential element in sustenance during
kitchen as a concept in India was pioneered by rebel food in
COVID-19 lockdowns in India, and even beyond, with social
2003. Today this parent company operates over nine brands
distancing now being an essential safety measure.
including Faasos and Oven Story. The cloud kitchen concept
Cloud kitchens eliminate many of the hassles that come with
has been executed on the backing of various business models
traditional kitchens – supply chain disruptions, inventory
which are incorporated below:
management, and dependence on the nature of the consumer
1) The independent-kitchen model
base amongst many others. By prioritizing food quality,
This is the purist execution of a cloud kitchen model. This
hygiene and preparation, these models have proved to be
model is based around having only a small kitchen space and
beneficial to most consumers of food delivery apps (FDAs),
has no seating or physical storefronts. Their entire business is
especially in a time period when convenience and safety
optimised for delivery only and they usually only specialise in
through distancing has been of utmost importance. Motivators
one cuisine in order to further optimise their process.
such as hygiene, food quality, ratings, comfort/past experience,
2) The multi-brand & single kitchen model
and many others have served as essential factors in consumer
This is a relatively sophisticated execution of the cloud
decisions, impacting buying behaviour in the context of FDAs.
kitchen business model. The business decisions are based on
*Corresponding author: [email protected]
N. Chhabra et al. International Journal of Research in Engineering, Science and Management, VOL. 4, NO. 7, JULY 2021 159

analysis of massive datasets across categories such as is a significant time, cost, and effort saved by the elimination of
demographics of residents, most ordered cuisines and logistics factors such as storage, sitting space, prime property pickings,
infrastructure. The cornerstone of this execution is to fulfill the etc. (Choudhary, 2019). The cloud kitchen market is projected
demand for the most ordered dishes across cuisines within a to reach an evaluation of 2 billion in India by 2024, and high
pre-decided radius. This model allows the owner of the cloud domestic and international investments into large companies
kitchen to operate multiple brands under the same roof. Hence, operating on cloud kitchen models reflect this fast growth.
keeping their operating cost low. COVID-19 as a pandemic has forced offline businesses to
3) The aggregator owned business model adapt, and concepts such as cloud kitchens to rise (Maurya,
Under this business model food delivery aggregators i.e., Subramaniam, and Dixit, 2021).
Swiggy and Zomato provide established or new restaurant Food Delivery Apps (FDAs) have not existed in Indian
businesses with kitchen space along with infrastructures such markets for very long, but have taken hold in the Indian food
as gas pipelines, drainage and ventilation systems already in industry better than most other new businesses in the past
place. decade. With the evolution of e-commerce and related
The availability of a vast delivery network, data on consumer technologies, companies such as Zomato and Swiggy have
preferences and marketing capabilities makes this model the taken advantage of the growing youth population and demands
optimal choice for smaller brands. of the same in India, by eliminating logistical costs and worries,
The food industry has suffered the consequences of the and expanding to an online-only system (Sufi and Srivastav,
pandemic in the form of many different challenges, but has also 2020). Studies have also reflected on the main elements
adapted to a large extent to suit consumer needs, as FDAs have contributing to this extreme growth in the food delivery
efficiently done. This study aims to analyse cloud kitchens, and industry, mainly focused on a growing middle-class income
the role they continue to play in the context of COVID-19 and group, hectic work hours, and a growing economy reflecting a
Indian consumers, ascertaining the changes in consumer higher standard of living (Bhotvawala et al., 2016). Food-tech
behaviour specific to the challenges the pandemic has brought companies have expanded into cloud kitchens to a major extent,
forward, therefore filling a research gap existing with regards financially supporting such undertakings and enabling small
to cloud kitchens in India specific to pandemic factors. businesses to operate on low-cost and low-risk models,
negating the normal risks of any cloud-based business
B. Research Objectives
(Meenakshi and Sinha, 2019). Multiple primary concerns have
The research objectives of this study are: also emerged, however, with regards to FDAs and cloud
1. To demonstrate the viability of a cloud kitchen based kitchens - including hygienic preparation of food, material
model by in-depth examination and analysis via case condition, pandemic-related drawbacks, etc. that present a
studies. unique opportunity for FDA companies - to set stringent
2. To demonstrate the consumer sentiment around the standards that can be trusted by an expanded consumer base
existence and practices of cloud kitchen via a primary (Munshi and Singla, 2020).
study. The Indian ‘Dabbewala’ model has also been a concept
3. To elaborate on the various challenges faced by regularly compared to food delivery models in the country, with
proprietors and operators of major cloud kitchens. shared factors such as ease of delivery, no collection point
C. Research Question required, and ease of payment (Patel and Vedula, 2006). The
The following article attempts to answer the following stemming concept of FDAs has brought about multiple
questions: opportunities for further growth in this market - technological
1. What is the current status of the Indian restaurant advancements, further supply chain developments, and the
industry (pre-covid) and where do cloud kitchens fit revolution of food products to support a large consumer base
within the industry? included (Thamaraiselvan, Jayadevan, and Chandrasekar,
2. Is the cloud kitchen business model sustainable and 2019). One of the largest opportunities for improvement in
scalable? infrastructure and processes lies in sustainability - with the
3. What is the future scope for growth and technological advent of ease of purchase and online-based models,
innovation within the cloud kitchen business model? sustainability in terms of the environmental impact of food
delivery has also been called into question as part of the 3 key
2. Literature Review sustainability pillars and must be addressed in the coming years
(Mirosa and Bremer, 2020).
1) Cloud kitchens and their significance in India Supply chain disruptions due to the pandemic have only
Cloud kitchens refer to shared or non-shared spaces where
further highlighted the requirement of FDAs and safe, circular
restaurants operate on a delivery-only model, having operations
model-based cloud kitchens in India, with multiple logistic
and processes specifically geared towards the delivery of food
failings chalked up to supply chain cuts and making the need
items and not catering to in-person customers (Chern and
for cloud-based systems even more prevalent (Mahajan and
Ahmad, 2020). Aside from a few disadvantages mainly
Tomar, 2021). Cloud kitchens are, therefore, not only on the
concentrated on overdependence on virtual infrastructure, cloud
rise but also a concept that is being and will continue to be
kitchens have all the advantages over physical eateries as there
adapted across India for better income and food security of
N. Chhabra et al. International Journal of Research in Engineering, Science and Management, VOL. 4, NO. 7, JULY 2021 160

businesses and individuals. and needs above all - as the higher the ease, the more customers
2) Consumer behaviour in an online model that a food delivery company can bring to its platform (He et
Online models have boomed in Indian markets, although al., 2019).
only 10% of the Indian population makes use of e-commerce 3) Consumers and Cloud Kitchens
websites and apps, with a strong retail segment still going in Indian consumers have in the past decade shown an
India supporting rural parts of the country (Tandon, 2021). inclination towards online services - but this has gotten highly
India is a country with a large youth population, and pronounced in the last year due to the pandemic and consequent
approximately 70% of this age group uses the internet on a daily lockdowns. Food security has been negatively affected by a
basis and is aware of online sold goods and services. A survey large extent, specifically daily wage workers who are often
found that a large part of this population prefers cash on dependent on government school schemes to feed their children
delivery as the payment mode for online products, and (Alvi and Gupta, 2020). The Indian restaurant sector offers
approximately one-fourth of the responding population have employment to almost 7.5 million workers, and those that had
faced difficulties at some point or the other with online shifted to online models were able to keep employing these
shopping (Rastogi, 2010). The online shopping behaviour of workers. Although Indians have shown a general aversion
millennials consumers in India follows similar patterns towards eatery food during COVID-19, more families and
throughout - with cash on delivery as the most preferred mode individuals have shifted to online food delivery systems during
of payment, and the cost rather than quality or brand of products the pandemic (Sufi and Ahmed, 2021). In India, an average of
being of utmost importance (SivaKumar and Gunasekaran, 20% of the population depends on food from eateries and
2017). Studies have also found certain age and buying relations. restaurants, which made food delivery essential during
Older customers are less likely to research online before lockdowns (Kumar, 2020). FDAs have seen tremendous growth
purchasing and are more likely to consider quality at par with in their customer base due to the minimization of contact they
cost (Goyal, 2017). Singular results were found as well, such as bring as a benefit and the dependence many had on such
older customers buying as much as younger ones, but applications during the pandemic (Mehrolia, Alagarsamy, and
researching and marking products at a significantly lesser rate Solaikutty, 2020).
than youngsters (Sorce, Perotti, and Widrick, 2005). A study found that the highest prioritized factors by
With motivators in online shopping, reasons for online customers with respect to food delivery during COVID-19 have
purchases can be narrowed down to goal-oriented and been loyalty and comfort with the restaurant, quality of food,
experiential shoppers. Goal-oriented shoppers browse and variety, and quality of preparation amongst many others
purchase with specific requirements and demands in mind, (Dsouza and Sharma, 2021). Research also suggests that
while experiential shoppers do so for the experience and often although shifting to cloud kitchens has been profitable during
retail therapy online purchasing caters to (To and Sung, 2014). the pandemic, restaurants have faced many problems such as
The former drives most of the retail online shopping that takes adaption to an online-only model, inventory/food stock issues,
place. Experiential shopping as compared to goal-oriented and investment into an efficient admin order management
shopping creates long-term value add and results in future system (Kumar and Shah, 2021). With respect to cloud
purchases and browsing (Wolfinbarge and Gilly, 2020). These kitchens, standardization of processes and the mass-production
described factors and distinctions also apply to the FDA sector of food with a focus on quality makes the concept an ideal fit
of online shopping. for the demands Indian consumers have during COVID-19.
In terms of food and grocery delivery, factors such as income These fast-tracked systems require investment in many cases,
group, age, tastes, gender, etc. have extremely diverse impacts but the benefit of cloud kitchens is their optimal adjustability,
on the buying decisions of consumers, and also fluctuate within making it relatively easier to shift from offline to online
product categories (Prasad and Aryasri, 2011). With regards to modules (Reardon et al., 2021). These online models, therefore,
food delivery, three dimensions rule the preferences and tastes make the process of food delivery faster, easier, standardized,
of Indian consumers - service and delivery, product, and quality and of a higher quality.
dimensions. This includes factors such as hygiene and Multiple factors make cloud kitchens the perfect fit for Indian
nutritional content of food products, both of which result in the consumers and force them to seek out virtual infrastructures,
first preference of most Indian consumers being homemade focused on quality, usability in online interfaces, delivery
rather than eatery sourced food (Goyal and Singh, 2007). speed/efficiency, and preparation factors (Panse, Sharma, and
Zomato, one of the leading FDAs in Inda, reports a high Dorji, 2019). The food industry has had to adapt to a large
customer growth rate year-on-year, specifically during the extent, but so have consumers. FDAs have had to make it easier
pandemic, which in itself is a reflection of the growing for first-time customers to hop over to an online model, and the
popularity of online food delivery services. The company uses prioritization of factors such as quality and consistency in cloud
multiple marketing tactics to attract a growing customer base, kitchens has played a large role in this (Jha, 2021). Factors such
including an emphasis on quality over quantity, an aspect that as income constraints, COVID-19 restrictions, and general
brings more Indian customers to the table (Sparta, Alsumait, consumer behaviour leaning towards variety, new experiences,
and Joshi, 2019). The three key players in this model, and a break from routine force consumers to sometimes step out
customers, FDAs, and restaurants, need to work in tandem in of their comfort zones for the usage of FDAs. These influences
an efficient low-effort chain that prizes the customer’s wants make consumers lean towards cloud kitchens, whether known
N. Chhabra et al. International Journal of Research in Engineering, Science and Management, VOL. 4, NO. 7, JULY 2021 161

or previously untried ones (Gupta and Duggal, 2020). COVID-  Sample size – 108
19 has forced an era of higher online dependency, and this
applies to consumer behaviour with regards to food delivery 4. Data Interpretation and Analysis
services to a large extent as well. The survey conducted helped us find out consumer behaviour
with respect to cloud kitchens and online food ordering.
3. Research Methodology Questions were also included to understand how the consumer
A. Research Problem behaviour has been affected because of the Covid-19 pandemic.
Although there is a wide base of research on FDAs and cloud In order to avoid confusion between normal restaurants and
kitchens, there is lacking research on the Indian consumer base cloud/ghost kitchens, the definition of cloud kitchen was given
and the impact COVID-19 has had on consumer behaviour in the description of the questionnaire. The survey was filled by
specific to food delivery. This research can help build a basis 108 consumers which mainly included college students.
for reaching and targeting consumers more effectively during
COVID-19 in a changing sector using insights gained from a Q.1. What is your age?
study of consumer behaviour and changing patterns.
B. Significance of the Study
1. This study will be significant to potential and current
entrepreneurs on the verge of entering or expanding in
the hospitality space, as it will propose an alternate and
disruptive business model.
2. This study will provide in depth consumer insights to
current operators of cloud kitchens, which will further
help them optimise their business decision
C. Research Design
Fig. 1. Graph showing percentage age distribution
This study will follow a descriptive research design where a
smaller sample of the wider population will be targeted to
Data Interpretation and Analysis:
ascertain the behaviour of the population. The design of the
The following chart shows the age distribution on the
research leans on both primary and secondary sources, with no
consumers who filled the survey.
prerequisites to limit sample size or authenticity of samples.
It was found that 63% of the consumers were 20 and below
 Population – The larger population is that of Indian who were mainly college students.
consumers who use FDAs and delivery services.
 Targeted sample – Indian consumers of different Q.2. What is your occupation?
ages who use food delivery services within Table 2
accessible range. Occupation of the Sample
 Time period – Collection of data within 1 week. Category Number of Participants Percentage
Student 96 88.90%
D. Research Data Collection Sources Part Time 1 0.90%
Job 4 3.70%
1) Secondary Research Self-Employed 4 3.70%
For the purpose of setting a base knowledge and studying Homemaker 3 2.80%
what other research implied or found, secondary research is Unemployed 0 0%
done in an extensive manner. The study of existing research
helps to point to existing pain points, and new ones that other
studies have detailed. The sources used are:
 Published papers of reputed journals from sources
such as T & F, Science Direct, JStor, etc.
 Census data and statistics from online sources
 Online websites and trusted news platforms
 Conference proceedings and books
2) Primary Sources
For primary research collection, a questionnaire was utilized
so as to gather data on consumer behaviour and opinion and
ascertain thought process on cloud kitchens, COVID-19 and
food delivery, etc. Fig. 2. Occupation of the sample
 Method used – Online questionnaire
 Platform used for collection – Google Forms Data Interpretation and Analysis:
The questionnaire was mainly filled by the college students
 Type of data – Mostly Qualitative, Quantitative
N. Chhabra et al. International Journal of Research in Engineering, Science and Management, VOL. 4, NO. 7, JULY 2021 162

as they are the ones who use online food services the most and Q.5. How important is the level of hygiene of an eatery when
thus would be a great audience to answer questions in the ordering food online?
survey.
Table 5
Percentage impact of hygiene of an eatery on consumers
Q.3. How often do you use food delivery services in a week?
Category Number of Participants Percentage
Extremely Unimportant 1 0.90%
Table 3 Unimportant 0 0%
Frequency of food delivery service used Neutral 3 2.80%
Category Number of Participants Percentage Important 12 11.10%
Every day of the week 1 0.90% Extremely Important 92 85.20%
4-5 Days a week 11 10.20%
2-3 days a week 32 29.60%
Once a week 44 40.70%
Rarely 20 18.50%

Fig. 5. Graph showing percentage impact of hygiene of an eatery on


consumers

Data Interpretation and Analysis:


The first few sets of questions in the questionnaire
concentrated on gathering information on general consumer
Fig. 3. Graph showing percentage of frequency of food delivery services behaviour and reaction in terms of cloud kitchens. Level of
used hygiene was found to be an important factor in FDA deliveries
according to existing studies, and this is supported in the above
Q.4. How important is delivery speed for you when using food graph. Hygiene is an important consumer factor, one that has
delivery apps? increased in importance with the pandemic’s progress. Most
responses were leaning towards the importance of hygiene
Table 4
Percentage impact of delivery speed on consumers being very high when ordering food, indicating an important
Category Number of Participants Percentage factor of focus. Therefore, for close to 85% of consumers,
Extremely Unimportant 0 0% hygiene is a very important factor when ordering food from
Unimportant 0 0% eateries.
Neutral 10 9.30%
Important 47 43.50%
Extremely Important 51 47.20% Q.6. In most cases, people order food from restaurants they
have visited physically in the past. How important is this to you
when ordering food?

Table 6
Percentage of importance of physical visit for consumers
Category Number of Participants Percentage
Extremely Unimportant 1 0.90%
Unimportant 16 14.80%
Fig. 4. Graph showing percentage of impact of delivery speed on Neutral 40 37%
consumers Important 37 34.30%
Extremely Important 14 13%
Data Interpretation and Analysis:
The results of the importance of delivery speed were skewed
more towards somewhat and very important options. Most
respondents selected either option, allowing for the
establishment of the importance of delivery speed as high,
owing most likely to factors such as impacted quality of food,
shortage of time, etc.
Fig. 6. Graph showing percentage of importance of physical visit for
consumers

Data Interpretation and Analysis:


Online shopping and services generally necessitate the level
of comfort the consumer has with the shop, product, or service,
and this applies to some extent to FDAs as well. Most
N. Chhabra et al. International Journal of Research in Engineering, Science and Management, VOL. 4, NO. 7, JULY 2021 163

respondents were neutral about level of comfort with the eatery,


but the sum total of the responses for somewhat and very
important is higher than the neutral option. Hesitancy in
ordering when the eatery is not known/experienced is therefore
high, most probably also impacted by the hesitancy and caution
COVID-19 has made necessary. This also indicates that a
significantly high number of people trust offline eateries and
their experience with them, and although this does not mean a
clear preference over cloud kitchens, it points to consumer Fig. 8. Graph Percentage of Impact of Covid-19 on Consumers
intention when it comes to offline experience and comfort level
when ordering food. Data Interpretation and Analysis:
Although this question does not analyse the exact reasons for
Q.7. If you have tried delivering from cloud kitchens, is your a change in buying behaviour, it still indicates an important
overall food experience better than with traditional restaurants pattern – most consumers believe that their choices in ordering
(in terms of food quality)? food and selecting eateries have been impacted, to some extent,
by COID-19. 67.6% on respondents believe that it has, whilst
Table 7 18.5% are unsure of the same. Such a high rate of positive
Percentage of consumers finding food quality of cloud kitchens better
Category Number of Participants Percentage
responses suggests that there are factors that have increased in
Yes 27 20.60% importance when ordering food for most consumers that must
No 19 18.60% be emphasized by eateries and cloud kitchens.
Maybe 62 60.80%
Q.9. In the COVID situation, which of the following kind of
eateries do you trust when ordering food?

Fig. 9. Percentage of consumer’s choice of eateries for ordering food

Fig. 7. Graph showing percentage of consumers finding food quality of Data Interpretation and Analysis:
cloud kitchens better The largest group of responses pointed towards the high
significance of being comfortable with and having visited an
Data Interpretation and Analysis: eatery previously. 95.4% of respondents believe that the factor
As with a few other analysed questions from the survey, the of past experience is an important one when ordering food,
majority of respondents have a neutral opinion on the which again points to changing consumer behaviour. A more
preference of cloud kitchens over traditional kitchens. This conscious approach has been adapted by most consumers with
could be owing to the fact that there is no clear and always regards to the usage of FDAs. Another significant takeaway
present distinction between the two, with most consumers being from this is the disparity between well rated but untried
unaware of the concept and differentiation. However, a higher restaurants and well rated but untried delivery-only eateries. A
number of people do clearly believe that their experience with significant difference lays between the comfort of consumers
cloud kitchens in terms of food quality is better than with with untried restaurants and untried cloud kitchens, which
traditional kitchens (this difference is minute, only 2%). points to factors such as a lack of transparent cooking process,
Although this is a significant question and the data is important, human touch, etc. that may impact cloud kitchens negatively.
the results do not help conclude anything concrete with regards
to a preference. Q.10. With respect to delivery-only kitchens, or cloud kitchens,
which of the following are most important to you when
Q.8. Do you think COVID-19 has impacted your choice in ordering?
ordering food and the eateries you select in any way?
Table 8
Percentage of Impact of Covid-19 on Consumers
Category Number of Participants Percentage
Yes 73 67.60%
No 15 13.90%
Maybe 20 18.50%
Fig. 10. Percentage of factors affecting consumers while ordering from
cloud kitchens
N. Chhabra et al. International Journal of Research in Engineering, Science and Management, VOL. 4, NO. 7, JULY 2021 164

Data Interpretation and Analysis: provide to consumers, firms, and the surrounding business
Again one of the highest prioritized factors when ordering environment can benefit further strides made in the research of
food has come out to be hygiene, which is a predictable this sector.
outcome given the circumstances. Ratings and reviews,
however, are more important to consumers by a small extent References
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