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Staying relevant in a crowded cloud kitchen segment

Wednesday, May 11, 2022, 17:35 Hrs  [IST]
Asmita Mukherjee | Hyderabad

With the lockdown brought about by Covid-19 and the corresponding stay at home, the growth in food ordering has been tremendous over the last two years. This trend has resulted in mushrooming of cloud kitchens which are further fuelled by the low operating costs of these establishments.
Several firms are launching cloud kitchen brands to home-delivery popular foods to Indian patrons. Not only big brands but home chefs have also jumped on the cloud kitchen bandwagon to easily operate and deliver their delicacies to patrons. However, most of the brands eventually lose their charm to woo foodies due to various factors such as quality, quantity, packaging, or in these current times - hygiene. Asmita Mukherjee spoke with some of the big players in the segment to know how to stand out in the crowded cloud kitchen market.
While speaking on the importance of product standardisation in cloud kitchens, Ankit Nagori, Founder, Curefoods said, “I think, while it is easy to set up a cloud kitchen, standardisation, quality, and, overall, the food products require a lot of focus. And if we don’t use a lot of technology and a lot of standardisations the products will not be good. So, while it is easy to set up these kitchens, it is not easy to create a very standard product.”

 According to Nagori, it takes months, quarters, or years of effort to standardise a food product in order to improve the quality, get the portion size right, and ensure that the product is of the highest quality. “We have seen hundreds and hundreds of cloud kitchens come and go because they are not able to standardise their quality. So, while it is easy to set up infrastructure, it does not mean that it would scale seamlessly,” he added.
The quality of food is perhaps the most critical factor that decides the fate of a cloud kitchen business.
Promotional Strategies to be relevant
The pandemic helped the cloud kitchen industry with tailwinds as the number of cloud kitchens increased significantly during the pandemic. Cloud kitchens have become one of the most cost-effective means of making a profit in the Indian food business.

Speaking on the promotional strategies that cloud kitchen owners can consider to stay relevant in this competitive market, Sharath Rice, Restaurant Operations COO & Director, VRO Hospitality said, “The growth of cloud kitchen industry and food aggregators is co-dependant and considering that the largest share of the brand touchpoint happens on the aggregator apps, building an interactive menu and pictorial additions is the most important part. Coming to performance marketing on social media which is one of the only effective tools for overall brand interaction, building a diverse content dump and targeting distinct genres of content to focus groups has been proven effective”.
According to Nagori, most of the cloud kitchens end up advertising on platforms such as Swiggy and Zomato. “They are pretty good platforms to advertise and build your product and your business on. But some larger ones use a lot of social media and a lot of other promotional techniques like newspaper fliers etc. This business is no different from any other retail business, just that the channel here is online first. But, you have to do your own promotions and social media too. A lot of good brands are also doing influencer marketing.”

While elaborating on the promotional strategies that a cloud kitchen owner should keep in mind to increase relevancy in a cutthroat market, Debaditya Chaudhury, Managing Director of Chowman, Oudh 1590 & Chapter 2 mentioned the usage of exclusive apps and website optimization. For instance, Chowman has got its own app with advanced features that facilitate a user-friendly interface. Features like live tracking, easy payment method, convenient scrolling of menus with item images and details, and auto-detection of location, have helped attain customer traffic. This can further benefit a brand in avoiding any commission for aggregator platforms. Website promotion with pop-ups on new events, valentine’s combo meals, and amazing discounts on in-app ordering can also be some of the essential promotional features in this case.

While speaking about the various promotional activities that a cloud kitchen can adopt, Sanjay Vazirani, CEO, Foodlink said, “Since each unit of the cloud kitchens can only cater to a particular hyper local geography, a lot of promotions are to do with targeting the right audiences at a hyper local level, from housing societies, to corporates, to other institutions in the vicinity and so on. So, a lot of BTL activities, such as flyer distribution, banners, targeted digital campaigns in the serviceable areas and collaboration with quality influencers of the city, cross promotions with local stores, milk vendors, club houses and so on are undertaken to connect with the customers at multiple touch points.”

Chaudhury opined that since cloud kitchens don’t have a physical presence leading to a lack of visibility, and therefore, the need for a robust marketing strategy on social media platforms and aggregator platforms is very important to ensure the brand’s recall value. He also added that important factors to keep in mind are a well-defined online menu, irresistible looking food images, product descriptions and competitive pricing. “In the case of cloud kitchens, it can be a little complex to go for ATL marketing. However, BTL strategies like the distribution of flyers, and influencer marketing can be a huge benefit in promotional strategies. Moreover, I believe digital promotions through social media platforms, SMS blasts, push notifications, and WhatsApp blasts can help in reaching out to potential customers,” he said.
According to Nagori, “Not all brands can do ATL and BTL type of marketing but the ones that are able to scale can definitely do local and BTL level marketing such as events & sponsorship of events, flyer-ing, giving coupon codes as part of all the orders, etc. But like I said for cloud kitchens, the primary mode of advertising must be on platforms like Zomato and Swiggy.”
Importance of tie-ups
Tie-ups can also be a good way to promote the brand. Elaborating on the topic, Rice said, “The primary principle of a cloud kitchen is low Capex, which is also the key to optimising marketing spends. Expanding to multiple locations across a given market even if there is a slight overlap of delivery radius and having multiple brands under one kitchen has been the most effective revenue growth concept according to our studies. This also reduces the marketing burn per point of sale among other advantages. It is definitely recommended that cloud kitchen tie-ups with B2B vendors which suit their brand. This helps in piggybacking on each other's marketing strategies and untapped demographics. Also helps cover costs in the procurement of products from associated brands or sometimes even reduce effort on building parts of the menu like desserts and beverages”.
New business concepts for maintaining profitability
It’s essential for any business to stay ahead of the competitive curve by implementing new concepts from time to time. Similarly, in the cloud kitchen segment, leading players try to maintain their market share by bringing in new business concepts. Rice informed that considering the way delivery business is rapidly moving towards shorter delivery timelines, the three main concepts which have a strong future are automation of kitchens; shorter KPT products and Hybrid models (QSR + Cloud). This helps cover costs for prime delivery area real estate.
Vazirani pointed out that some of the interesting new concepts such as, gourmet confectioners, home chefs launching cloud kitchens, celebrity chef kitchens, specialty food kitchens that focus on a single type of ingredient, healthy meals for the calorie conscious, vegan concepts, etc.
Nagori opined that one can see a lot more meal box concepts. “I think a lot of offline experiences are being created online. I have seen brands try to do a grill as well in a cloud kitchen format. So, while on one extreme end there is a lot more standardisation, chilled products and higher shelf-life products being tried, on the other end of the spectrum, even gourmet food is being tried very heavily,” he added.
Chaudhury said that shared kitchen space is one of the newest concepts in the industry. That way the profit earned is more, and the kitchen space gets utilised better, as well.

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