Madhav Kasturia is the Founder and CEO of ZFW. He started ZFW back in 2015 and through multiple pivots over the last six years, has grown ZFW’s portfolio to include both B2C & B2B services and has been successful in positioning it as India’s fastest growing expansion Platform. Madhav did his graduation from Hindu College, Delhi University, New Delhi alongside scaling his delivery kitchens & graduated in 2018, & that’s when he decided to scale up in the cloud kitchen space. A start-up and tech enthusiast, he loves understanding customer behaviour across the web and mobile. His specialities include GTM Strategy, scaling up a venture from scratch, understanding and interpreting online customer behaviour, launching new product lines, and forging mutually beneficial alliances across networks. He also believes in giving back to the start-up community and is a mentor at multiple start-ups.
Technology shifts coupled with changing consumer habits & rising disposal incomes are paving the way for disruption in the F&B space- just like in other industries. Cloud kitchens are one such emerging segment gaining popularity & even more so since the COVID pandemic. This trend will only get more profound as Gen Z’s (who’ve grown up with the internet & smartphones) enter the marketplace (sorry boomers!).
Chances are that you’ve come across terms such as ghost kitchens, dark kitchens, or virtual kitchens before. Cloud kitchens are delivery-only restaurants where the preparation + packaging of food takes place while operating at a fraction of the costs incurred by traditional restaurant establishments (rentals, decor, equipment, & wait staff can be saved while operating virtual cloud kitchen brands). Simply put, a cloud kitchen is a 4-walled kitchen structure from where food is dispatched to customers who’re ordering from their offices or homes.
According to a well-known industry report, cloud kitchens are expected to grow to a $4 billion industry in India by 2024, up from $1 billion in 2021. With no physical location, cloud kitchens don’t benefit from walk-in traffic or footfall, but you are competing in a crowded world of digital restaurants. However, if you focus your efforts on serving & delighting customers, you will reap the benefits thanks to customer loyalty, social proof (good reviews) & word-of-mouth referrals.
Around 55% of new restaurants come tumbling down within year 1, while almost 77% shut down before they reach year 5. So, if technology can help empower our industry with a much-needed boost, I will count that as a massive win.
Unlike traditional F&B concepts, the new kids on the block namely foodtech & cloud kitchens are highly scalable, profitable, & asset light. Hence, they have increasingly become VC favorites with investments & ROIs reaching record highs in 2021. There are distinct approaches to running a cloud kitchen, ranging from an opportunistic delivery-only brand to an existing legacy restaurant or even a purpose-built commissary kitchen housing multiple brands & concept.
Consumers place their orders via food delivery aggregators such as Zomato, Swiggy, or direct-ordering platforms such as DotPe, Thrive, etc. These orders are then accepted on POS Systems such as Posify, Posist, & Limetray. In the end, direct orders are fulfilled via third-party logistics (3PL) providers such as WeFast, Dunzo, Pidge & others.
The technology play doesn’t end here: platforms like ZFW help food & consumer brands scale rapidly using their network of tech-driven kitchens & fulfillment centers across different geographies. It provides brands with an opportunity to stay ahead of the curve & focus on product + demand + stellar guest experiences. Technology is the primary growth driver behind food delivery & hyperlocal fulfillment: leveraging data to aid the growth of F&B & D2C brands in a sustainable & scalable format is a win-win for all stakeholders.
Similar to a traditional restaurant play, the most critical KPI here is a green P&L!
“Lookup in the sky! Your latte’s here.” Delivering food & goods via drones seems like something straight from a sci-fi flick, but many tech companies are now working towards making that a reality. 2020 saw them conduct drone trials with the hope to go live by 2022. While there are major regulatory hurdles (DGCA) to overcome- drones will be a boon for the food delivery space given rapid delivery times + reduction in road congestion, pollution, & costs. Drones are starting to take flight around the world & such evolutions are helping the industry take flight.
Ultimately, successful food delivery operations are all about efficiency & involve solving for 2 sides. On the Kitchen Side– implementing technology that helps a single kitchen operator manage multiple brands (across delivery platforms) would optimize workforce efficiency & food wastage. On the Fulfillment Side– if several brands are concentrated in one location with the right technology to enable effective queuing & batching of orders, this would allow 3PL providers to batch multiple orders from one pick-up location & deliver seamlessly. This will not only boost last-mile efficiency but ensure customers receive the highest-quality product in the fastest time. Ultimately, the delivery kitchens that can consistently deliver high-quality, on-brand products & experiences will emerge as winners in this increasingly competitive marketplace.
As the Indian foodtech landscape matures, additional tools have emerged to aggregate various delivery platforms into 1 portal- while achieving more efficient resource management, kitchen workflows, delivery fulfillment, & attractive unit economics. Going forward, trends such as kitchen automation, drone delivery, the gig economy, & rising urban real estate costs will continue to give cloud kitchens the edge by accelerating cost-savings & margins. When it comes to innovation in this space, we have seen only the tip of the iceberg yet!