Cloud Kitchen is a recently emerging concept that involves merely delivering food & beverage parcels ordered through online apps and websites without any physical space for dine-in. Restaurant businesses have witnessed tremendous growth in the volumes of food parcels delivered along with demanding customer expectations. The purpose of this article was to review the published literature on cloud kitchens. This paper summarized an in-depth study of the various types of cloud kitchens and the benefits offered to food service industries by investing in this innovative cloud kitchen business model. It also highlights the challenges in adopting the cloud kitchen business model. The paper also ascertains the present status of cloud kitchens in Palghar District. It also sheds light on the future prospects of cloud kitchens. It also elucidates consumers’ perception towards cloud kitchens with reference to Palghar District. It would also aid readers in understanding the functioning of the cloud kitchen business model. Methodology: This study's data was collected through primary and secondary sources. The primary data was collected through direct observations, a survey to determine consumers’ perception, Frequency Analysis to determine the demographics and Research articles of high repute and magazines were referred to for understanding the functioning of the cloud kitchen business model
In recent times, the food service industry has witnessed a paradigm shift with the emergence of cloud kitchens. Cloud Kitchens are food outlets without any physical space for dine-in relying solely on online platforms for ordering and delivering food. These commissary kitchens are sometimes also known as ghost kitchens, shared kitchens, or virtual kitchens with the delivery-only food brands operating within them called virtual restaurants (Colpaart A. 2023). These outlets do not have dine-in facilities. They focus on delivering cuisine to the customers' doorstep. The customers can avail food delivery service through apps, or outlet brand websites. This innovative approach aided by technological advancements and the changing consumer behavior has reinvented the dynamics of the food service sector.
Understanding consumer behavior is crucial for the growth of any business. In the context of cloud kitchens, it becomes vitally important to determine how consumers perceive, engage with and make purchase decisions. This research aims to study the various aspects of consumer behavior towards cloud kitchens and will provide valuable insights for both entrepreneurs and overall food industry shareholders. By exploring various factors such as convenience, pricing, variety of food, timely delivery, offers and discounts, perceived quality, etc. this study seeks to provide a holistic view of the consumer mindset with reference to cloud kitchens.
The COVID-19 outbreak has given the internet food delivery sector a boost. Due to how simple it is to have food delivered to your house, these food delivery services are quite popular. Another concept namely cloud kitchen has gained popularity along with online delivery. Thus, cloud kitchens are an attractive area for research as it is an emerging and innovative concept in the food service industry in India. The finding of the research will not only bear significance for cloud kitchen business operators in Palghar District but also for the food service industry as a whole.
Research Objectives
The key objectives of the study are as follows:
• To study the functioning of the cloud kitchen business model
• To understand the challenges in adopting cloud kitchen business model
• Benefits offered to food service industries by investing in cloud kitchen business model
• Ascertain the present status of cloud kitchens in Palghar district
• To determine consumer’s perception towards cloud kitchen in Palghar district
RESEARCH METHODOLOGY
This study's data was collected through primary and secondary sources. A number of databases like ResearchGate, ScienceDirect, International Journal of Current Research, IJARSE, Sambodhi, IJRESM etc. were used using the following keywords: Cloud kitchen, food delivery, online food ordering, history of cloud kitchen, innovations, functioning of cloud kitchen business model. Titles and abstracts were read to review manuscript’s relevance and later the entire article was taken into consideration. It focuses on literature published since 2014 and referred research papers, and articles for the analysis of this study. Chi-square test was used to validate the hypothesis.
Primary Data Collection:
v Collection method- Survey
v Instrument- Questionnaire
v Contact method- Online
v Secondary Data Collection: Reference books, research papers, journals and magazines.
v Sampling Design
v Sample size: 161
v Sampling method: In this study we are using Non-Probability Convenience sampling due to unavailability of sampling frame and the density of the sample population is thin.
v Target sample: Residents of Palghar District
Details of Sample:
Gender- Male, Female
Age- 15 to 65
Research Hypothesis
Association between income level and motivation by offers & discounts
v H0: There is no association between income level and being motivated by offers & discounts.
v H1: There is a significant association between income level and being motivated by offers & discounts.
v Relation between awareness and frequency of order
v H0: Awareness of cloud kitchen brands is not related to the frequency of ordering food.
v H1: Awareness of cloud kitchen brands is related to the frequency of ordering food.
Research Gaps
Existing literature extensively addresses cloud kitchens in major cities, with a focus on business models, efficiency, and customer preferences. However, research into semi-urban locations such as Palghar is limited. There is a lack of understanding of regional consumer behaviour, particularly psychographic characteristics like motivation, trust, and loyalty. There are very few studies that compare cloud kitchens to traditional eateries in smaller districts like Palghar. Furthermore, few studies look into the role and effect of government policies or how successfully local operators use digital tools. These gaps highlight the necessity for research on non-metropolitan areas. This study intends to close these gaps by examining customer views, preferences, and practical issues associated with Palghar's cloud kitchens, providing insights for regional entrepreneurs, politicians, and food service stakeholders.
REVIEW OF LITERATURE
What is a cloud kitchen?
Cloud kitchens, known by the name of Virtual kitchens or Ghost kitchens are food outlets where the business operations are carried out via delivery method only. These outlets do not have dine-in facilities. They focus on delivering cuisine to the customers' doorstep. The customers can avail food delivery service through apps, or outlet brand websites.
How does it work?
The kitchens have functional space only for cooking where these outlets prepare food. They accept orders either through their website, restaurant apps or through food aggregator apps like Swiggy or Zomato, etc. The customers can pay through digital payment apps or can pay through Cash on Delivery. The customers can convey their reviews through the same website or apps they have ordered.
Who are food aggregators?
Food aggregators facilitate ordering by providing customer support. They act as the link between customers and nearby restaurants, giving them access to a range of cuisines through a single website or mobile app. The restaurant owners without a delivery fleet of their own, a meal delivery aggregator platform is a great choice for them. They also aid in boosting the web presence of restaurants that use cloud kitchen models. Swiggy, Zomato, UberEats, etc. are well known examples of the same.
Models of cloud kitchen
Single brand, single kitchen model:
Also known as a standalone cloud kitchen, it is the most basic model of a cloud kitchen focusing on serving a particular cuisine or brand. The restaurant has no dine-in facility or physical outlet unlike the traditional restaurants. Orders are fulfilled online either by the restaurant or food aggregators
Brand owned cloud kitchen model:
A brand owned cloud kitchen is an establishment that exclusively does deliveries and doesn't do takeout or dining. It is the first professional food service model to be devoid of branches, larger facilities, or seating places. It combines various food aggregators to take orders and outsource delivery. Sometimes the kitchen will also provide self-delivery, especially if the brand is well-known.
Multi-brand, one kitchen:
It is one of the most intricate cloud kitchen business models whose objective is to supply the most demanded or desirable cuisines like Chinese, Italian, Continental etc. in an area within 5-6 kms. It functions with a limited number of nearby restaurants. The model manages multiple brands and all of these unique brands and culinary products are produced in the single virtual kitchen.
Model for the Mid-Ground
The Mid-Ground functions similar to the independent model following the same ordering process but the customers drive to the cloud kitchen location to place and pick up their delivery orders rather than having them delivered at their doorstep. In order to save money on rent, these are located in areas with lower population densities and fewer foot traffic.
Business Model with Hub and Spoke
The concept of hub and spoke cloud kitchen is to use a centralized manufacturing facility in a low-income area, where food is made in advance and then supplied to smaller sites. Smaller locations often consist of food trucks or other transient buildings placed in advantageous areas to maximize coverage and take advantage of the concept of last-mile delivery.
Choudhary, N. (2019)
In this study, Choudhary has stated benefits of adopting cloud kitchen business models. Following are the pros of adopting cloud kitchen model:
Lower overheads
Staffing expenses and adhering to more stringent labor standards are a significant barrier for restaurant entrepreneurs. Cloud kitchens may benefit from on-demand labor more readily and don't need to worry about service personnel at all. When comparing ghost kitchens to regular restaurants, the entry barrier is significantly lower. By removing the need for any front-of-house operations, floor space for dining, or expensive rent for storefronts with significant foot traffic in attractive locations, ghost kitchens could theoretically result in lower expenses.Using economies of scale might also result in cost savings on ingredients. For instance, placing bigger orders for several distinct delivery-only companies that are run out of the same kitchen.
Improved efficiency
Cloud kitchens can operate extremely well by using specially designed areas and streamlining their procedures especially for delivery. If you run multiple brands out of the same kitchen, you can batch prepare ingredients for multiple menu items and set up the space so that meal delivery drivers can receive their meals quickly.
Real-time adaptability
Cloud kitchens can optimize ordering, staff scheduling, and processes depending on customer behavior because they are tech-driven. Additionally, the menu can be changed to meet demand and boost profits, gradually improving the model. Being independent of a physical site allows you to adjust the menu and operation hours to meet business requirements without negatively affecting client pleasure. By doing this, you can also reduce food waste by making better ordering and preparation selections. Because virtual restaurants are so flexible, you can even create a brand just for a short period of time.
Reduced marketing expenses with high brand awareness
Delivery apps give cloud kitchen brands rapid exposure without requiring them to do their own marketing. The delivery app business model requires a fresh virtual restaurant concept to pay for visibility, but generally, this can still be less expensive if you are creative in your brand development.
Dr Chetan Panse, Dr Sahilesh Rastogi, Ms Arpita Sharma , Namgay Dorj (2019)
In their study, the researchers had stated the possibility of rise in consumers preferring cloud kitchens for food. The reasons for the possible rise being convenient search, food delivery and ease of payment. Food aggregators are the creators of consumer change among consumers that is going to decrease the propensity of dining out. Convenience is a major contributing factor which also affects significantly to consumer satisfaction and consumer intention to buy the food online.
H.M. Moyeenudin, R. Anandan, ShaikJaveedParvez, Bindu. G (2020)
The study concludes that customer reviews through online apps and food delivery apps form a strong base for cloud kitchen branding. Website reviews, online reviews, social media presence benefit the cloud kitchen branding as they have a positive impact on them.
Ms. KinjalMadhukant Gosai, Dr.Deelip Palsapure (2020)
For people who are working or self-employed and having more disposable income, the cloud kitchen is an appealing concept for online food ordering. Customers between the ages of 20 and 40 constitute a profitable market for cloud kitchens. Ordering from cloud kitchens is influenced by a number of factors, including taste, food quality, and the convenience of using online food delivery applications to place your order.
Mr. Nikhil Devrao Wankhede, Dr. Mayola Fernandes, Mr. Girish Deore (2021)
Cloud kitchens have low operating costs when compared to traditional dine out. This adds scope for more profits. However the cloud kitchens are required to maintain food quality and cleanliness while functioning. The research suggested that cloud kitchens can grow if it focuses on offering unique menu services, maintaining the quality and integrating with online delivery platforms.
Twinkle Beniwal, Dr. Vidhu K. Mathur (2021)
According to their research, while a multi-brand cloud kitchen does present certain obstacles, none of them are impossible if a strong point-of-sale system is implemented and the entrepreneur manages their resources well. The F&B industry's most effective path forward is the Multi-Brand Cloud Kitchen model.
B Deepak, P. Radhika, Md. Ali Baba, Srinivasa Chary (2022)
The research study conducted on financial feasibility of cloud kitchen firms in the Hyderabad region. cost of establishment, variable costs and sales and returns were assessed for analysing the study. The authors can be seen concluding that the cloud kitchen business in the study area is financially feasible.
Rudrani Chatterjee, Animesh Singh, Vikas Singh (2022)
This research conducted and submitted during COVID-19, concludes that cloud kitchens are preferred by customers as they believe it leads to less wastage and hence saves money. Further suggest such money can be utilized in strengthening the brand, and customer utility. This will help add value to the brand name.
Kushagra Kulshreshtha, Gunjan Sharma (2022)
A study was conducted to understand parameters that are likely to affect the kitchen business. The aim was to analyze the parameters through Gen-Z’s choices. They intended to study how food aspects, marketing aspects, marketing aspects, web convenience affected Gen-Z’s choices to opt for cloud Kitchen food. The bases for consumer choices keep on changing with time. There is a constant need to keep tracking and understanding consumer choices to survive in this new cloud kitchen business model.
Mrs Sunindita Pan (2023)
Mrs. Pan in her paper states the basic understanding of cloud kitchens. According to her study, it is observed that post-covid, the reliance on cloud kitchens has increased. Food sales are expected to rise with time. Cloud kitchens largely depend on technology, data systems, and delivery management systems. Cloud kitchens, that way, have given a lot of room for employment. Cloud kitchens have lower operating costs, less investment requirements, and wider market reach which makes it a potential business model. However, the lack of human interaction, direct customer feedback, and customer masking make it difficult for the cloud kitchen to make it customer-oriented. Despite cons like low profit margins, and highly competitive margins, Cloud Kitchen is here to stay.
Archana Sarbhai, Dr. Vivek Khare (2023)
The study conducted in this research attempted to study the aspects of how aspects like price, hygiene, taste, marketing, and aesthetics affect the choices of customers of different generations. The result revealed food [cuisine and quality], price, marketing, technology, hygiene, aesthetics, and a few other miscellaneous aspects to be the significant consumer purchasing sources. Different generations prioritized different aspects but one thing that was found common was interest in purchasing online food. This also underlines how convenience plays a vital role in consumer choices towards cloud kitchens.
Mr. Donald James D’souza, Dr. Anil Kumar (2023)
According to their analysis, which focused on Mangalore City, cloud kitchen technology is still in its infancy there. By incorporating experiences from other cities, such as Bangalore, Delhi, and Chennai, the cloud kitchen that exists in a city like Mangalore can be developed. Entrepreneurs may learn from the experiences of places like Bangalore, Delhi, and Mumbai to create laws that promote Cloud Kitchen-based eateries while also accounting for the benefits of this model over traditional ones.
Mr. Donald James D’souza, Dr. Anil Kumar (2023)
According to their research's findings, operating costs for cloud kitchens are reasonable. Lower overhead costs result in more affordable dish prices. Because cloud kitchen dishes are fairly priced, working class folks who frequently order meals can afford them. Automation has proven beneficial for the cloud kitchen, as orders are placed online and modern technology has made it easier to identify consumers through various online maps and routes. Technology and operating innovation have impacted cloud kitchens positively.
Data Interpretation and Analysis
Table 1. Demographic Profile of Respondents
|
Particulars |
Total respondents (n=161) |
Percentage (%) |
|
Age (in years) |
||
|
Below 20 |
19 |
11.8 |
|
20-30 |
100 |
62.1 |
|
30-40 |
27 |
16.8 |
|
40-50 |
07 |
4.3 |
|
50-60 |
07 |
4.3 |
|
Above 60 |
01 |
0.6 |
|
Gender |
||
|
Male |
92 |
57.1 |
|
Female |
69 |
42.9 |
|
Occupation |
||
|
Student |
56 |
34.8 |
|
Salaried |
76 |
47.2 |
|
Self-employed |
17 |
10.6 |
|
Unemployed |
10 |
6.2 |
|
Retired |
02 |
1.2 |
|
Qualification |
||
|
Under-graduate |
37 |
23 |
|
Graduate |
71 |
44.1 |
|
Post-Graduate |
53 |
32.9 |
|
Income |
||
|
Below 50,000 |
19 |
11.8 |
|
50,000- 1,00,000 |
23 |
14.3 |
|
1,00,000- 2,00,000 |
10 |
6.2 |
|
2,00,000- 3,00,000 |
33 |
20.5 |
|
3,00,000- 4,00,000 |
24 |
14.9 |
|
Above 4,00,000 |
52 |
32.3 |
Source: Authors’ estimation from Survey findings
Fig 1. Awareness of existing cloud kitchens among respondents
Interpretation
Figure 1 shows that Behrouz Biryani is the most popular cloud kitchen, with 102 respondents indicating that they are aware of it. 98 people stated they knew of the Oven story, making it the second most popular cloud kitchen. 80 people stated they knew Lunchbox and 69 people knew about Fassos, making it third and fourth most popular cloud kitchen.Sweet Tooth and The Good Bowl have received the fewest responses, with only 33 each.
Fig 2. Factors perceived as most important while ordering food
Interpretation
51 people said ratings and reviews for cloud kitchens were most significant when ordering food, while 48 thought hygiene was more important. 23 respondents stated that the variety of food and past experience are most significant. 15 participants said recommendations from others are most important, while only one person stated other factors are important.
Fig 3. Perceived importance of delivery speed
Interpretation
72 respondents said delivery speed of food parcels is extremely important to them, 3 people said it was the least important, and 46 respondents said it was somewhat important. 33 participants said that delivery speed of food parcels is neither significant nor unimportant, while the remaining 7 stated it is slightly not important.
Fig 4. Perceived importance of hygiene level of an eatery
Interpretation
132 respondents said the level of hygiene is extremely important to them, 4 people said it was the least important, and 15 respondents said it was somewhat important. 6 participants said that the level of hygiene is neither significant nor unimportant, while the remaining 4 stated it is slightly not important.
Fig 5. Perceived convenience while ordering from cloud kitchen
Interpretation
28 respondents thought it is very convenient to order food from a cloud kitchen, while 36 said it is extremely inconvenient. 14 respondents reported that it is somewhat inconvenient. 40 participants said it's neither very convenient nor inconvenient, while the remaining 43 thought it's slightly handy to order food from a cloud kitchen.
Fig 6. Comparison between cloud kitchen and traditional restaurants
Interpretation
18 respondents claimed that cloud kitchens are superior to traditional regular restaurants in terms of quality, while only 1 person said that they are inferior. Another 78 individuals said that cloud kitchens outperformed traditional kitchens in terms of quality and the remaining 64 persons reacted neutrally.
Fig 7. Factors motivating to order from cloud kitchen
Interpretation
104 respondents said that offers & deals, discounts, and promotional strategies encourage people to order food from cloud kitchens instead of traditional restaurants. 81 individuals reported that having a range of food options motivates them. 74 respondents responded that prompt delivery and tasty food make them want to buy more while remaining 48 respondents said that service experience encourages them to order via cloud kitchen.
Fig 8. Perceived drawbacks of ordering food cloud kitchen
Interpretation
74 respondents said that lack of ambience is the drawback of ordering food from cloud kitchen, another 70 respondents said hygiene aspect is the limitations, 34 people claimed poor service experience, 29 people said poor quality such as taste, texture, and flavor of food is the drawback, and the remaining 55 people said other factors are the drawbacks.
Hypothesis Testing
Table 2. Hypothesis testing using Chi-square test
|
Hypothesis Tested |
Chi-square value |
Degrees of Freedom |
p value |
Significance |
Results |
|
Association between income level and motivation by offers and discounts |
0.186 |
5 |
0.999 |
Not significant (p > 0.05) |
Fail to reject Ho |
|
Relation between awareness and frequency of order |
5.827 |
2 |
0.054 |
Marginally not significant (p ≈ 0.05) |
Fail to reject Ho |
Source: Author’s estimation from survey findings
Fig 9. Motivation by offers & discounts across income levels
The table no. 2 and figure 9 indicate the distribution of respondents across income levels, as well as their desire to order food from cloud kitchens based on special offers and discounts. The majority of respondents from all income levels stated that advertising methods influence their decision to purchase food. The income group above ₹4,00,000 had the highest number of motivated persons (34) followed by the lowest income group (Below ₹50,000) with 12 motivated respondents. However, the Chi-square test results (p = 0.999) show that there is no statistically significant relationship between income level and being motivated by offers and discounts. Thus, it can be concluded that promotional offers are appealing regardless of wealth and have no substantial effect on food ordering behaviour based on incomes.
Fig 10. Order frequency based on cloud kitchen awareness
The table no. 2 and figure 10 compare respondents' awareness of cloud kitchen companies to their frequency of food ordering. A significant proportion of highly informed respondents (35) reported ordering regularly, while those with poor awareness fell primarily into the low frequency category (24). Moderate ordering was also more prevalent in the highly informed group. The Chi-square test yielded a p-value of 0.054, slightly higher than the threshold of 0.05, indicating a weak connection. This shows that, while not statistically significant, there is a link between increased brand recognition and more frequent ordering from cloud kitchens. It implies that brand visibility and recognition may influence consumer behaviour necessitating further exploration in future studies.
FINDINGS AND CONCLUSION
The study reveals a clear shift in consumer behaviour towards cloud kitchens in the Palghar District, particularly since COVID-19. The findings show that hygiene, meal quality, convenience, cost, variety, and prompt delivery all have a substantial impact on consumer perception and ordering decisions. Consumers, particularly those aged 20 to 30, increasingly choose online food delivery due to its convenience, time efficiency, and digital payment alternatives. The substantial association between these parameters and consumer satisfaction underscores cloud kitchens' growing popularity as an alternative to traditional dining options. With the growing exposure and success of companies such as Behrouz Biryani and Oven Story, cloud kitchens have developed as a viable business model. The study indicates that this inventive trend will persist, evolving in response to customer expectations and technological improvements.
Suggestions
v Cloud kitchens should invest in brand exposure, data-driven marketing, and diverse menus to appeal to Gen Z and millennial customers.
v Local governments can promote these businesses by relaxing licensing requirements and encouraging food safety compliance.
v Business should prioritise sanitation and ensure timely delivery to increase consumer satisfaction and retention.
v Businesses should utilize technology and customer information for offering personalised meal alternatives and recommendations.
v Marketing efforts should be customized to the 20-30 age bracket, which makes up the majority of cloud kitchen consumers.
v Offer Discounts and Combos to provide promotional offers to remain competitive and attract price-sensitive customers.
v Introducing different cuisines will help businesses to attract and retain a larger consumer base.
Ethical Considerations
The authors state that the study included human subjects who volunteered. All respondents provided informed consent and were assured of their privacy, confidentiality, and the academic objective of the research. No identifying or sensitive personal information was gathered, and participants had the option to withdraw at any point. As the study used minimal-risk survey data, it followed institutional ethical rules and did not require official clearance from an ethics committee. The authors affirm that all ethical requirements regarding human engagement were rigorously observed.
Author’s Contribution
Ms. Vaishnavi Sankhe conceived the idea, extracted research papers and articles of high repute, and developed a research design to undertake the study. Ms. R.Akshaya along with Ms. Vaishnavi Sankhe formulated the questionnaire and undertook a survey to determine consumer perception. The authors used Pearson correlation technique to test the hypothesis. The authors have contributed equally to analyze the data and draw the conclusion. The manuscript was written and checked for grammar and language using the Grammarly app.
Conflict of Interest
The authors certify that they have no affiliations with or involvement in any organization or entity with any financial interest or non-financial interest in the subject matter or materials discussed in this manuscript.
Funding Acknowledgement
The authors received no financial support for the research, authorship, and/or the publication of this paper.
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