Cloud kitchens may soar high

New Delhi: India’s market for cloud kitchens is predicted to reach $1.9 billion by the fiscal year 2026, up from $800 million in fiscal 2022, as the trend of ordering food online continues to evolve, according to a report by consulting firm Wazir Advisors.

In FY22, the cloud kitchen market was estimated at $800 million. While the cloud kitchen market witnessed a slowdown due to the pandemic, it is expected to grow at an annual average pace of 24% during FY22-26 to reach $1.9 billion in FY26.

The pre-pandemic preference for ordering in and takeaways was further accelerated as the pandemic-related restrictions temporarily impacted the dine-in business. In fact, several restaurant chains sharpened their focus on the cloud kitchen model. As a result, food aggregators, as well as restaurants offering delivery services, helped satiate demand for food services during the early days of the pandemic. While out-of-home activity has resumed with consumers showing a greater appetite for dining in, the propensity for ordering in has stuck around too.

“This resulted in driving the growth of the cloud kitchen market both from a demand side and a supply side, and a significant number of dine-in players were seen pivoting to the cloud kitchen model,” said Pakhi Saxena, practice head of retail and consumer packaged goods, Wazir Advisors.

Meanwhile, there is also a shift in consumer habits. Households, in general, are seeking convenient and accessibly priced meals instead of cooking at home.

The Indian food-tech market witnessed a surge in the number of startups, particularly during 2014 and 2016, with more than 2,500 food-tech startups emerging. In the past few years, the industry has also witnessed considerable funding activity from investors with some sizeable deal values. Within food tech, cloud kitchen players have also been attracting significant investment. However, funding in food tech startups slowed down in FY22 to $2.80 billion from $3.40 billion in the previous year. In FY20, food-tech players reported $2.9 billion in funding. The number of startups founded annually in the food-tech ecosystem, too, has been on a decline. Over 150 food-tech startups were founded in FY22; over 1,300 food-tech startups were founded in 2015, according to data by Wazir Advisors.