Do you know which restaurant cooked your delivery meal?
Delivery-only restaurant brands are seeing huge pandemic-fueled growth in the US. In India, cloud kitchens have seen a similar boom. But are local restaurants losing out?
Do you know which restaurant cooked your meal delivery? Increasingly, it can be hard to tell.
Delivery-only brands, cooked in another brand's kitchen and often delivered by third parties like Uber Eats, were proliferating even before the pandemic. They’re an inexpensive way for restaurants to try a new concept or fill a need in the community; a burger place might try making tacos under a different name, for example.
But over the last year, delivery-only brands have seen explosive growth as the pandemic made delivery a more popular option. Big restaurant chains are now joining the fray, hoping to win new customers as traffic in their dining rooms dwindles.
In India, Cloud kitchens — commercial cooking facilities that have no physical dining space and cater only to delivery orders placed online — are projected to become a $2 billion industry in India by 2024, according to RedSeer Management Consulting. That’s up from $400 million in 2019, Mint reported in July 2020. According to another report, DataLabs by Inc42, the Indian food delivery market is expanding by 16% year on year and will be worth $17 billion by 2023, with cloud kitchens being worth $1.05 billion by the same year.
It appears to be a global phenomenon. In the US, Quick Service Restaurant (QSR) chain Applebee’s is launching Cosmic Wings, a delivery-only brand that specializes in chicken wings and Cheetos-flavored dipping sauce. It’s joining a crowded market. Another QSR chain Denny’s is rolling out two virtual brands, The Burger Den and The Meltdown, in the first half of this year. Chuck E. Cheese started delivery-only Pasqually’s Pizza and Wings last March. In the last few months, Chili’s launched It’s Just Wings, TGI Fridays cooked up Conviction Chicken and Carrabba’s Italian Grill began delivering Tender Shack chicken sandwiches.
American QSR biggie Wendy's Co. has struck a deal with India's Rebel Foods to open 250 cloud kitchens across the country.
In some cases, delivery-only brands have become big businesses of their own. Brinker International, which owns Chili’s, says It’s Just Wings is on track to bring in $150 million in annual sales.
Rick Camac, the dean of restaurant and hospitality management at the Institute of Culinary Education in New York, thinks demand for delivery will only grow. More restaurants now offer it, packaging has gotten better and delivery companies are getting faster, he said.
“Our habits have changed, and I don’t think they are going back very easily or quickly,” he said.
Still, he said, restaurants should put some thought into their delivery-only brands. A pizza restaurant can’t necessarily make good burgers, he said. And without a storefront, marketing can also be a challenge.
“The ones that don’t do it well will ultimately fail,” he said.
There has also been some blowback on social media when customers find out that the place they thought was a new local restaurant was actually a big chain. DoorDash says it encourages restaurant chains to disclose their virtual brands, but it's not always clear where meals are being cooked.
This is an issue in India as well, with delivery companies like Swiggy launching their own cloud kitchens, which are not clearly marked as belonging to the food delivery leader. Customers who want to patronise locally owned eateries may feel cheated when they find out that their money is going into corporate coffers and not to the local mom-and-pop dhaba.
FIRST PUBLISHED18.02.2021 | 02:00 PM IST