Online food aggregator Swiggy has launched its cloud kitchen, in select areas in Bengaluru, pitting it against listed businesses on its site such as FreshMenu.
Swiggy has started offering a limited menu in Koramangala from its cloud kitchen model, as part of which it is collaborating with popular restaurants in a joint venture to offer a selection where the restaurant does not have a physical presence. The Swiggy platform facilitates lead generation, payment and delivery of orders for its partner restaurants.
‘We are looking at extending the food tech and delivery continuum by creating a platform where multiple brands can work from a single kitchen (external or Swiggy) to meet consumer demand in certain pockets of the city,’ said a Swiggy spokesperson .
‘This, along with our other initiatives like the single kitchen initiative with partner restaurants, is primarily aimed at creating a basket of options to meet consumer demand.’ The company will scale up the pilot programme in due course, according to the spokesperson.
‘These experiments are conducted at a small scale to ensure all problems are fixed in the test phase itself. We have been testing cloud kitchens for three months now. We hope to use this initiative to provide consumers in all areas with the best possible options for them to order from,’ the spokesperson said.
The company raised Rs 100 crore from investors led by Bessemer Venture Partners in September last year and delivered nearly 45,000 orders per day across eight cities during the month, with a target of delivering one lakh orders by December 2016.
It competes with restaurant discovery and aggregation platform Zomato, which reached 10 lakh orders per month in July 2016. Zomato mostly helps in discovery and transaction of orders, with 80% of its orders being fulfilled by restaurants themselves, according to data provided in June last year.
Zomato said that it will help partner-restaurants set up kitchens instead of competing with them. ‘The biggest focus area for an end-to end food platform is the quality of food. Aggregation business, on the other hand, is about the customer experience. Our mission is to empower people to building successful F&B businesses. We feel running our own kitchens puts us in direct competition with them, which we do not want,’ said a Zomato spokesperson.
The spokesperson further said, ‘Even as part of Zomato Infrastructure Services, we are working on providing the necessary infrastructure to restaurants to make it easy for them to set up a delivery business.’ With a focus on unit economics, Swiggy last year made strategic changes to its business including charging convenience fee on orders of less than a minimum value and surge charges of Rs 20 during peak delivery hours.
The company has partnered third party last-mile delivery company Shadowfax for peak volumes. The food technology sector saw consolidation and pivots as a strategy for survival for the companies last year. Food ordering platform TinyOwl merged with Runnr to form a food ordering platform focused on corporates, offering limited menu from restaurants around the location.