What is a Food Industry?

Production of food items from milk to alcohol, comes under this segment.

Most Promising segments:

• Food Processing
• Food Export ( includes raw/packed)
• E-Commerce ( our interest)

Growth of Food industry:

• In 2017 contributes around $39.71 bn
• In 2018 grows to $65.4 bn
• Compound growth of 11%
• Food and grocery accounts around 31% of Indian consumption basket.
• In 2013 market value was $490 bn
• By 2020 the value anticipated to have a growth of $ 895 bn.(roughly 14% of India’s
GDP)
• 70% of Food and Grocery market is from Retail ( according to a report, 2017)
• Indian Government release gives the value of Food market as $1.3 bn
@ Compound Annual Growth Rate of 20%
As per report from 2017,
• Restaurant market value is around $48 bn.
• Food delivery ( online platform) market value is nearly $15 bn.

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 E-COMMERCE IN ONLINE FOOD DELIVERY

1. Aggregator ( Zomato, Swiggy, Uber eats)

2. Cloud kitchen
3. Online ordering platform
App based, Web-order, Call-In

Report from US based surveying company ( Statista) declares,

• In Indian market, delivery of food leads the sector in growth.
• Projected food delivery market value will be $5bn by 2023.
• Bengaluru leads the chart followed by Mumbai, Hyderabad, Pune etc.,
• Online food delivery segment contributed around $7700 mn in 2019(till September)
• Expected to have a CAGR of 12.8% between 2019-2023, making a market value of $12,500Mn by 2023.

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 Restaurant segment is further classified into two based on their operation.
• Restaurant to consumer delivery.
• Platform to consumer delivery.

Year Platform to Consumer Restaurant to Consumer

Trend of Platform based Vs Restaurant based ( in $ Delivery (in $ mn) Delivery (in $ mn)
Mn)
2019 76.2 106.1
160
140
120
2020 92.8 116.1
100
80 2021 107.9 124.5
60
40 2022 120.8 131.6
20
0 2023 131.1 137.4
2019 2020 2021 2022 2023

P-CD R-CD

• The growth of Platform based restaurants is expected to double by 2023.

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 Usage of E-commerce is identified and studied by the following segments,
• By Age
• By Income
• By Gender

Percentage of users by Age (in years) Percentage of users by Income ( in ₹) Percentage of users by Gender)
40 40 80
35 35 70
30 30 60
25 25 50
20 20 40
15 15 30
10 10 20
5 5 10
0 0 0
18-24 25-34 35-44 45-54 Low Income Medium High Male Female
Percentage of users (>40k) Income (40k-... Income(<70k)
Percentage of users Percentage of users

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 Global Comparison of E-Commerce Market

BY USER PENETRATION RATE

BY REVENUE Sr No Country Value
Sr No Country Value (in mn)
01 Hong Kong 31.1%
01 China $40,200
02 Singapore 30.9%
02 USA $ 22,000
03 India $ 7,700 03 Netherlands 30.7%

04 UK $ 4,800 04 UK 30.6%
05 Japan $ 2,570 05 USA 29.1%
Somewhere India 11.8%
down

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 So far, we have covered and obtained insight on,
• What is a Function of Ecommerce in a Restaurant business.
• Potentiality of the Online platform Business.
• Difference between Online and restaurant model

Why Cloud Kitchen and its various models.

•  A cloud kitchen is a restaurant with no dine-in space. It relies on takeaway facility or home delivery orders placed on call or
through a website.

• It helps a restaurateur to create a new brand rather than introducing new menu to existing brand, as customers prefer to
order from a different restaurant if they think it specializes in that particular cuisine.

• Simply, the strength of cloud kitchens are based on data intelligence such as area wise demographics of residents, popular
cuisines and hyperlocal demand-supply.

Ex: Restaurateur who owns a delivery kitchen and delivers South Indian food, decides that he should start delivering Mexican food as well, but
instead of adding Mexican to the menu of his current band, he can start operating a different brand that sells Mexican from the same delivery
kitchen. Customers are most likely order pasta from a restaurant named “La Italiana“ instead of “Punjabi Delight” even if the same chef is
preparing the pasta.

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Various models of Cloud kitchen.
1. Independent Cloud 2. Multi-Brand Cloud 3. Hybrid Kitchen

Independent Cloud Kitchen Model:

- Single brand, single kitchen, no storefront.
- Orders come from online sources
- Kitchen only (Size: 500-600 ft2)
- Specialized in a cuisine
- Delivery only
- A mix of aggregator dependency and self-reliance for orders and deliveries

Multi-Brand Cloud: (refer: Rebel Foods)

• Concept is to cater the demand for the most ordered cuisine in a neighborhood (a 5-6 km radius) with
relatively lesser restaurant options that serve these dishes (through data intelligence).

• Real ease of expansion under cloud restaurant as it all shares the same kitchen.

-  Multi-brand (cuisine), single kitchen, multiple outlets, no storefront.

- Orders come from online sources
- Single kitchen, multiple brands
- Each brand specialized in a cuisine
- Delivery only
- A mix of aggregator dependency and self-reliance for orders and deliveries

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The Fresh menu business model:
• Resembles a cloud kitchen business model but also has a storefront. The storefront is to allow customers to walk in and see how their
food is prepared and can have take way.
- Orders come from online sources
- Single kitchen, single brand (Size:1200-2000 ft2 )
- Changing menu that has a mix of seasonal dishes and bestsellers
- Delivery and take away
- A mix of aggregator dependency and self-reliance for orders and deliveries
Swiggy Access Business Model:
• Can be called as “shell” in food business industry.
• Aggregator owned, multi (restaurant) brand, rented co-working kitchens, no storefront.
• In a established or new restaurant businesses rent that kitchen space, make use of Swiggy’s online ordering, delivery fleet and menu
intelligence to set-up a restaurant. The restaurant brings the equipment, staff, raw materials and recipes. In simple, the restaurant does
the cooking and Swiggy does the rest.
- Orders come from Swiggy
- Kitchen Size ( 100-500 ft2)
- Single kitchen, multiple restaurant “partner” brand
- The Restaurant takes care of the menu, kitchen equipment, and staff
- Delivery and fulfillment, by Swiggy
Zomato Infrastructure Services business model:
• Aggregator owned, multi-restaurant brand, rented kitchens, with a storefront.
• Under this model, zomato idea is to use rented kitchens with built-in kitchen equipment and comprehensive processes. Zomato also
shares its
know-how on order demand management.
- Orders come from Zomato
- Kitchen size (250-500 ft2)
- Single kitchen, multiple restaurant “partner” brand
- The Restaurant takes care of the menu
- Zomato does everything else
- Customers have the option of walking into physical storefronts BV FOODS
 OVERALL VIEW OF COSTING (ROUGH IDEA)

Pros and Cons of Cloud Kitchen: Sr. No Operations Costing

01 Rent ( 800 sqft) ₹28,000 to ₹40,000
Pros: 02 Licenses ₹15,000 to ₹20,000
• Streamlined order process. • FSSAI
• Health Trade License
• Low Capital/operational cost. • Tax Registration
• Easy expansion. • Municipal crop
• Data Intelligence. 03 Kitchen & Equipment ₹5 lakhs to ₹10 lakhs
• Instant reviews/ Easy error identification
04 Staff ₹40,000 to ₹70,000
because of data intelligence. • Head chef-25k to 35k
• Sous chef-20k to 25k
• Commie-15k
Cons:
• No personal touch/No business to customer 05 Online Customer Acquisition ₹40,000 to ₹1,50,000
(includes ₹4000 for online
direct relationship. ordering, website and CRM)
• Limited to tech-users.
06 Social Media ₹20,000 to ₹40,000
• High marketing required online compared to
07 Branding & Packaging ₹50,000 to ₹60,000
conventional restaurant.
• Have to be aggressive on virtual world to keep 08 PoS & Inventory ₹4,000 to ₹5,000
our menu upfront.
Note: The above table is from LIMETRAY and the costing is
based on Delhi location.

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