The reset of Cloud Kitchens

The future of the QSR industry in India does not lie in cloud kitchen versus traditional restaurants.

It lies in how to leverage the best of both the worlds.

Pre-covid, the Cloud kitchens were operated in a lean and technology-driven manner, focusing primarily on delivery, which appealed to the QSR industry. However, post-pandemic, and with normalisation Cloud kitchens are facing a reset in their workings.

Cloud kitchens became a major business because of the increasing real estate costs and the overwhelming influence of delivery platforms. This prompted the QSR companies to test new menus and to understand evolving delivery behaviours with menu performance before committing to long-term physical expansion. Convenience and the ability to make informed decisions quickly were the major benefits.

But post-pandemic, reality brought them face to face with some harsh truths like high-commission fees, aggressive competition, customer acquisition costs and operational intricacies which began to chip away at the margins. Many global players began to scale down operations, consolidate kitchens or shut down entirely.

The lesson

Cloud Kitchens are no shortcut for profitability and require the same operational discipline, brand clarity and cost control as traditional QSR's.

The reset

Cloud kitchens are now seen as an extension of an omnichannel model rather than a standalone model.

Success would come down to selective scaling and not blind expansion. It is to be brand-led and not platform-led.

Cloud kitchens lead in integrating peak demand, extending delivery-only menus, and improving last mile efficiency even as the brand continues to invest in physical outlets to drive visibility for their brands and customer trust.

Another reset would come in operational efficiency where brands avoid menu-bloating and focus on better packaging, faster preparation time, quality retention and are viable from a delivery cost perspective. Cloud kitchens are no longer low-cost alternatives for food products.

And lastly the reset would re-emphasize the significance of customer data ownership as well as maintaining customer relationships. Smart QSR's are developing their own delivery systems as well as technology infrastructure.

The cloud kitchen is no longer an endpoint, it is a powerful enabler.