Bengaluru-based food delivery unicorn Swiggy has put its cloud kitchen model on the front burner.
The Naspers-backed company said on Wednesday it has launched a new cloud kitchen brand called BrandWorks, which will partner with fine dining restaurants to co-create new delivery-only brands and menus to serve “unmet consumer demand.”
Swiggy already runs a cloud kitchen brand Swiggy Access that helps its restaurant partners for expansion in different neighborhoods within the city as well as a new city. It provides delivery-only kitchen space that doesn’t require restaurants to spend much to setup and allows a restaurant from one city to expand into another without worrying about finding space.
While Swiggy Access works with its existing restaurant partners, BrandWorks will work with restaurants with superior culinary capabilities such as pubs and fine dining restaurants that have unutilized kitchen capacities. The new delivery-only food brands will work out of the restaurant partners’ existing dine-in facilities.
The company claims this is an asset-light, low investment model which will help restaurants scale rapidly and generate revenue for them from day one with minimal capital investment.
Swiggy said it has partnered with 95 restaurants in 13 cities and has already set up 100 brands under its new BrandWorks cloud kitchen tag. It is working with New Delhi-based Bercos Restaurant, to co-create ‘House of Chow’—a delivery-only brand that serves Thai and Chinese cuisine. Other brands include ‘Kitchens of Punjab’ and ‘Kitchens of China,’ co-created with Bangalore-based Gilly’s Restobar.
“Early signs suggest that BrandWorks has shown great promise in creating another brilliant proposition for restaurant partners who have the aspiration to grow and consumers who are constantly looking for more cuisine options. Our goal is to co-create hundreds of such brands with multiple restaurant partners across the country by the end of 2020,” said Vishal Bhatia, CEO, New Supply at Swiggy.
Cloud kitchens have become a saving grace and a major revenue source for Swiggy as a delivery-only model isn’t working for food delivery companies that want to pursue positive unit economics. In November, it announced it had onboarded 1,000 restaurants on Swiggy Access, its cloud kitchen brand, and will invest INR 250 crore (USD 35 million) in delivery-only kitchens. Swiggy has been rolling out new products in this space for a year now. Last year, it launched its own food brands Homely and The Bowl Company.
A Techcrunch report said that by March 2020, Swiggy would invest another USD 10.5 million in its cloud kitchen business.
It’s not only Swiggy that’s betting big on cloud kitchens. Uber’s former CEO Travis Kalanick is also eyeing India’s soon-to-be USD 1.05 billion cloud kitchen market. Last year, Kalanick invested in Rebel Foods—a cloud kitchen company—through his new venture City Storage Systems. Amazon India is also launching its private food brands in Bengaluru through its cloud kitchens over the next few months under the brand Amazon Restaurants.
Ride-hailing giant Ola that got into the food delivery business by buying beleaguered FoodPanda in 2018, is slowly shutting it down, with an aim to create its own food brand.
In an interaction with local media Economic Times, Pranay Jivrajka, CEO of Ola’s food business, said: “We have taken the shift from a food delivery company to a food-first company. The focus now is to create a portfolio of own brands, which we believe is a prominent opportunity, and a long-term asset.”