Bright Sunshine for Cloud Kitchens

The pandemic has created new norms in all walks of life. Restaurateurs, with SOPs like social distancing and allowing only 50 percent accommodation for their dine-in clientele, after adopting drive-ins and takeaways, are now contemplating on cloud kitchens. A cloud kitchen is, basically speaking, a restaurant with no costs on rent, electricity, waiters or any other fixed charge. In the post-Covid world cloud kitchens have become a favourite venture for investors. Ashok Malkani examines why they are gaining so much popularity

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Coronavirus, has created massive disruptions in the restaurant industry. Social distancing has resulted in lower footfalls. This has, in turn, encouraged home delivery. As restaurants remain shut for dining, hotels, and restaurants are pivoting to takeaway to stay open, and retain staff. However, with the SOPs in the new norm, for restaurants which have been designed for dine-in, profits from takeaway is often not able to even provide a breakeven.

For those in the F&B industry starting a new restaurant has always been a glamorous ambition. However, with severe restrictions imposed due to the pandemic, they find cloud kitchens easier to launch and keep running.

According to CRISIL, the restaurant footfall, due to the pandemic is at an all-time low. The analytics company states that sales are down by as much as 90% compared to the pre-pandemic period. CRISIL estimates that the recovery of Rs. 1.5 trillion ($ 20 billion) will take at least a year after the lockdown is lifted.

As restaurants remain shut for dining, hotels, and restaurants are pivoting to takeaway to stay open, and retain staff. However, for a restaurant that has been designed for dine-in, profits from takeaway will never be enough to break even. Many of them now believe that cloud kitchens are easier to launch and keep running, thanks to low entry costs, low capital expenditure, and lower rents. Cloud kitchens are becoming a more democratic market space where a new start-up can potentially compete with the biggest players in the business. And brands like SLAY coffee, Keventers, Penang, Burger king only go to prove it.