Growing Market for Cloud Kitchens in Tier 2 & 3 Cities

Unprecedented times since past two years, which has disrupted the Hospitality Sector, gave rise to the cloud kitchen segment of the F&B industry. Bigger Restaurant player shifted their focus to the Takeaway / Delivery Modules for the business survival.

During the early stage of the Pandemic many people moved back to their hometowns due to various reasons, and Cloud Kitchen set up being a Low Capital-Intensive Opportunity, gave hope to the new entrepreneurs wishing to foray into the F&B Business.

The people returning from Metros were widely exposed to the culture of Food Ordering Apps from the ease of their Home / Office. Hence the Online Food Aggregators saw a steep rise in their online food ordering trends from Tier 2&3 Cities.

Reasons impacting the growth of the Cloud Kitchen in Tier 2 & 3 Cities – Comparative to Metros, are, Less Investment , Lower Rentals, Smaller City Radius giving access to Food Aggregators to Cover most of the City, Lower Cost of Manpower, Increasing Culture of Food Ordering rather than Dine in, Higher Disposable Income, Comparatively Less Competition, Less entertainment options, job opportunities, and the aspirational mindset of the people in Tier 2 & 3 cities are a big plus for the Cloud Kitchen business.

Increased reach of the Internet & usage of Smart Phones, has also acted as catalyst to the Food Ordering / Delivery Modules.

Remote Location Rentals for Cloud Kitchens work as advantage and contributes towards a lower operating cost & maintaining a healthy GOP (Gross Operating Profit). Tier 2 & 3 Cities being a great Opportunity for Passionate Entrepreneurs wishing to enter the Food Busines.

Existing Home Kitchens/Chefs have turned their business into Cloud Kitchen and growing their business day by day. Opportunity to scale the Operations / Business and generate funding always will be the Key motivator for the Cloud Kitchen Operators.

Newer Cloud Kitchen Concepts for Tier 2 & Tier 3 Cities have given options to the end users to choose from in turn increasing the ordering pattern. Specially between the young college going millennials the Cloud Kitchens are a big hit, as they are able to decide from where they would like to order depending Upon the Ratings on the Food Aggregators.

Summing up Cloud Kitchens are the new trend and going to stay here for good.

Pankaj Giroti is the Chief Advisory Mentor of TallOak Hospitality