The cloud kitchen to see 5x growth in GMV to USD $2-3B by 2025
Dine-In and cloud kitchens, cloud kitchens are growing largely as they have higher EBITDA profitability along with a significantly lower capex.
In one of our earlier editions we saw how India’s food services still remain unorganized and underpenetrated when compared to markets like US and China. Here we are taking a deeper dive to see how the organised market which comprises QSR, Dine-In and cloud kitchens, are faring against each other and how likely is that Cloud kitchen will supersede others.
The Indian food market which is slowly seeing a shift from unorganized to organized is expected to be driven by the organized segment in the near future. The demand for the organized segment, which includes QSR, Dine-in and Cloud Kitchen, is growing due to increasing internet penetration, safety and hygiene standards maintained by the players.
1. Food services market will be 110 billion
The growth drivers for this market are favourable demographics including young population and urbanization, higher disposable income, better supply of new restaurants with online delivery and increasing cloud kitchens with higher quality standards.
2. In the organised sector, cloud kitchens have higher EBITDA profitability and lower capex
Among the types of supply in the organised sector that is QSR, Dine-In and cloud kitchens, cloud kitchens are growing largely as they have higher EBITDA profitability along with a significantly lower capex.
3. Cloud kitchen have been able to drive customer satisfaction as well
In our consumer study, we have seen that a lot of new brands have emerged via cloud kitchen models and have been able to get comparable customer experience as the long established QSR brands. Across cities cloud kitchens enjoy a higher preference.
4. As a result, cloud kitchen are likely to see 5-6x growth in GMV to USD 2-3B by 2025
With the right tailwinds and the growth pace, we expect the cloud kitchens to see 5-6x growth in cloud kitchens GMV and to become $2-3 billion by 2025 according to Pre-Covid estimates. As the cloud kitchens expand to Tier 2+ towns and cities, average order value is likely to drop as the volume increases.
In the last few years, cloud kitchens have brought in a new paradigm shift as it creates a win-win situation for both consumers and restaurants. With factors like low capex, high EBITDA margins combined with customer satisfaction, cloud kitchens have more advantage in the organised sector.