The restaurant sector is undergoing a significant shift with the emergence of delivery-only outlets, commonly referred to as cloud kitchens, virtual kitchens, or ghost kitchens. This innovative approach is transforming the preparation, delivery, and consumption of food, posing a challenge to the conventional dining model.
A report by Redseer suggests that the cloud kitchen market is projected to expand to $3 billion by 2024, up from $400 million in 2019. Furthermore, leading startups in this space have attracted approximately $600 million in investment over the last three years, totaling nearly $1 billion since their inception, as per data from startup intelligence platform TheKredible.
In the Indian context, Rebel Foods leads the cloud kitchen startups, boasting a revenue of about Rs 1,200 crore in FY23. Other notable players include Curefoods, EatClub, Biryani By Kilo, FreshMenu, Biryani Blues, Kitchens@, Bigspoon, Dil Foods, Ghost Kitchens India, and HOI Foods.
Rebel Foods, which manages various brands and is the sector’s only unicorn, has raised over $535 million to date. Curefoods follows with a fundraising total of about $170 million from notable investors. In a significant development, Kitchens@ secured $65 million in funding and acquired Swiggy’s cloud kitchen business in a strategic move. EatClub and Biryani By Kilo have also made significant strides in fundraising and brand development.
Rebel Foods leads in revenue generation within the sector, with notable growth and profitability challenges persisting across the industry. The financial health of these startups reveals significant expenditures in materials and employee benefits, with Rebel Foods experiencing the highest losses despite revenue growth.
The unit economics of these brands indicate the cost challenges in earning revenue, underscoring the struggle for profitability amidst rising costs and competitive pressures. The landscape suggests that for these startups to move towards profitability, there will need to be continual improvement in operational efficiencies and cost management. As the market evolves, these companies face the challenge of adapting to structural changes and growth opportunities to ensure their long-term viability.
