VF Franchise Consulting

How Covid-19 pandemic has given a boost to the delivery biz

Jan 11, 2021

Another factor driving demand for food delivery services is the increased number of restaurants offering home delivery.

cloud kitchen

Globally, the coronavirus pandemic made everyone sitting at home and with more and more people getting stuck at home, the food delivery business has seen a surge in demand. Since customers were unable to move out and dine at their favourite dine-in locations, they turned to delivery to treat themselves during the days of social-distancing. Many delivery services such as Zomato, Swiggy and cloud-kitchen brands like Rebel Foods and FresgMenu responded to the crisis by introducing contactless delivery options to eliminate the risk of spreading the virus between the customer and driver. Many establishments also ventured into the cloud-kitchen space as this was the only option to bring the business back on the platform.

“Burger Singh was always a delivery focused brand. Even before the pandemic our 75% of the sales used to come through home delivery. Post pandemic we see that the dine-in concepts have been taken out of the picture completely. Even after the lockdown is uplifted people are not really willing to go out at shares places, air-conditioned environment. We have moved from 75 to 80-85 % of the delivery revenue,” shared Kabirjeet Singh, Foounder & CEO, Burger Singh that has also seen a 10% uptake in the takeaway business. “Our takeaway number was 5% previously but it has risen to 15% during the pandemic. So, that also tells us that people do want to get out of the house but eat inside their car, either get it ordered from the store or get somebody to deliver at their car,” he added.

Another factor driving demand for food delivery services is the increased number of restaurants offering home delivery. Since social-distancing measures forced restaurants and bars to close, many have switched to delivery to stay afloat during the pandemic. And, even after the lockdown is lifted, delivery is seen as a savior for many.

We recently started our first cloud-kitchen in Sant nagar, East of Kailash wherein we are serving multi-cuisine under one roof. Today people don’t want to go out with fear of the pandemic. Hence, we started the cloud-kitchen model to serve our regular as well as young and affluent customers,” said Deepak Panwar, Brand Head, Lite Bite Foods

Rising on demand

“With young tech-savvy, working women and young crowd people wanting to try too many options under one roof considering the current situation, cloud-kitchen is one of the best model to cater to the customer these days and it is here to stay as we see that this the future and every player is going to have a cloud-kitchen model in near future,” added Panwar.

Commenting on the same Singh shared, “The consumer behavior has obviously changed and it will be like this for a year or 18 months. Similarly, I believe that delivery is going to get a boost. On the biz side we are at 65% of the pre-covid time. Now that the festive season is starting, we are aiming at 75% and I don’t think that more than 75% recovery in the food space is going to happen anytime soon. I think cloud-kitchen format suits really well because rental is lower, staff cost is minimal and people are delivering more.”

Franchising in cloud-kitchen

The problem with cloud-kitchen in franchising is the operational cost and being able to hand-hold the franchisee partner to be able to do a good job at it so that your system and processes has to be really good and your backbone or the management team needs to be really strong to be able to support the franchise. “Running a cloud-kitchen business is not easy because you have to manage the little cost to get the maximum efficiency from the same asset, manpower and workplace. Helping them market, help them in PNL. Also, I feel that a cloud-kitchen format is not phenomenally profitable until and unless you have got two or three brands being rolled out at the same place,” Singh further added.

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