Blog

The restaurant industry is showing signs of change. We knew the businesses required high startup costs and costly compliance, keeping out many entrepreneurs who are at the bottom of the financial pyramid. The COVID-19 pandemic that hit the world in March 2020 endangered the businesses of all those who had started restaurants based on traditional food business models. Now, a promising solution has emerged.

Cloud Kitchens.

A cloud kitchen is a kitchen space that provides food businesses with the facilities and services needed to prepare food for delivery and takeout. Unlike traditional brick-and-mortar locations, cloud kitchens allow entrepreneurs to cook and deliver food without having to pay for an equivalent dining-in space and service staff.

The low startup costs and fewer administrative hassles make it affordable for entrepreneurs who want to enter the industry but did not have the means to transform their culinary acumen into business. With the growing popularity of food delivery apps, business owners can now focus on turning out delicious meals. Marketing costs are low as the transparent rating system guides the consumer even to those who have low or no brand recall.

I feel this is a perfect opportunity for microfinance customers. The initial capital requirement is low and can be provided by microfinance, opening new doors for women entrepreneurs.

Gitanjali Behera from Purusottampur village approached the VFS branch at Panikoli, Odisha, with a similar idea. She loved to cook traditional local snacks that people consume at home. But food delivery apps do not get orders from rural areas so Gitanjali decided to move to the capital Bhubaneswar, where her brother lived in a rented flat.

After less than a year of running a cloud kitchen, Gitanjali has gained the traction to expand. She is yet to decide whether to start a dine-in restaurant or stick to the delivery apps and her cloud kitchen. But her story shows that the food industry is no longer out of reach of the financially less fortunate.

The food ordering market is expanding at a CAGR of 16 per cent and could reach $17 billion by 2023, according to projections by DataLabs by Inc42 in December 2019, just before the COVID19 pandemic hit us. If anything, the lockdowns have made food ordering apps even more popular.

The market size of cloud kitchens is expected to reach $1.05 billion by 2023.

It is my opinion that the cloud kitchen revolution is just starting, and if microfinance customers adapt to the model, the business volumes may turn out to be many times the projections.