🍴 ITC Cloud Kitchens: Coming to Your City

After a successful pilot in Bengaluru, the cigarette-to-FMCG conglomerate ITC is scaling its cloud kitchen business in four metros: Chennai, Mumbai, Delhi, and Kolkata. Benefitting from the order volumes of food delivery apps, ITC’s 23 cloud kitchens (19 in Bengaluru and 4 in Chennai) have already broken even.

ITC’s cloud kitchen operates 3 brands:

• ITC Aashirvaad Soul Creations - North Indian comfort food
• ITC Master Chef Creations - North Indian gourmet cuisines
• ITC Sunfeast Baked Creations - Bakery products

It is also considering expanding its menu to include breakfast and oriental cuisines.

So then why all the excitement about cloud kitchens?

🧑‍🍳 How does a cloud kitchen work?

Cloud kitchens, also called ‘ghost kitchens’ or ‘virtual restaurants', work on a delivery-only model. There is a well-equipped central kitchen that prepares and packs multiple cuisines in less time. There is no fancy in-dining ambience or serving staff, keeping the cost low. Their major expense is having a trained workforce of chefs and delivery drivers.

The low start-up cost saw a flood of cloud kitchen startups with over 20,000 active cloud kitchens operating in Delhi alone in November 2022. However, overcrowding and limited brand visibility forced even big players like Zomato and Swiggy to exit the cloud kitchen business.

Some players like Kitchens@ and Biggies Burger are expanding in the dine-in space to create an omnichannel brand that provides the convenience of the cloud kitchen and the experience of dine-in.

But things are different for an established brand like ITC.

✨ Many benefits of cloud kitchen excite ITC

Cloud kitchens account for only 10% of the orders in food delivery platforms, and dine-in restaurants 90%, hinting that people order food they like at restaurants. Being a well-known name in the hotel and FMCG space already, ITC has the potential to serve its existing consumer base, online and offline.

Its cloud kitchen business gets the benefit of the brand name, capabilities of the FSSAI-compliant packaged foods business, and culinary expertise of ITC Hotels' chefs. Cloud kitchen allows ITC to take the order volume advantage of the quick service model and diversify its customer base with low overhead costs.

📜 Fun fact : ITC cloud kitchens have delivered over 1 million orders with an average order value of ₹900, double that of the industry.

At the same time, ITC can use this new business to garner consumer feedback for future FMCG products, new menu offerings in its hotels, and industrial ready-to-eat and frozen food products.

There’s potential in the overall market too. According to a report by consulting firm Wazir Advisors, India’s cloud kitchen market is expected to grow at a CAGR of 24% from $800 million in FY22 to $1.9 billion in FY26.