Can you believe that all this food comes from one kitchen? But the truth is that Rebel Foods is a movement consisting of cloud kitchens that cook all kinds of food. Rebel Foods is a start-up company based in Bangalore. The startup is a unicorn startup with a turnover of Rs 900 crore last year. Since 2011, they have dominated the cloud kitchen market in India. This has led to four major changes. Let's take a look at these four things.

Their first turn was to switch to the cloud kitchen model. Sometimes you don't hear the name Rebel Foods because it's a very late name. Because it was the first one. The brand was started by two IIM alumni, Jaideep Burman and Kalol Banerjee. It was a venture to run quick service restaurants on high streets for premium customers. But high rents in high-street locations and slow income did not take them far. The two entrepreneurs figured out how to solve this problem. When they examined the data in detail, they realized one thing. Only 70% to 80% of the delivery orders are going from their stores. Then they took a survey from their customers. How many people have seen the restaurant? The answer surprised them. Because in this survey, 74% of the people said that they had never seen Faasos' restaurant in person. It is from here that they started dreaming of creating the largest internet kitchen network in India.

Before discussing how Rebel Foods has achieved such tremendous success in the cloud kitchen sector, let’s first evaluate the earlier situation in India. The tradition of dining out at restaurants has been around in India for a long time. Before Swiggy came along, if you wanted to order food, you would call the restaurant directly, and someone from there would deliver your meal. This method had many limitations. When ordering this way, you had to pay delivery charges, received no discounts, couldn’t track your order, and overall, it was a costly and inconvenient process. Swiggy entered the market as a solution to these problems around 2014, during the peak of urbanization. People were flocking to major cities like Delhi, Mumbai, Bombay, and Bangalore. For these newcomers, there was no easy way to get home-cooked meals. This is where Swiggy and Zomato transformed the food delivery business into a lifestyle business. This generation, deeply connected with technology, also used platforms like Instagram, which helped accelerate this change. For businesses that rely heavily on such supply chains to succeed, there are some challenges. The only way for food delivery businesses to increase profits is to increase the number of deliveries per month. Therefore, the same customer needs to order repeatedly. Likewise, these apps show many restaurants in our city, so people who used to dine out near their homes once a month started ordering two to three times a month from different restaurants. The idea behind offering 40 options is that if someone orders twice a month, giving 80 options might encourage them to order four times. This strategy led people to order from outside up to four times a month, addressing the challenge of sustaining supply. Ordering food became part of a lifestyle. Thus, the solution to the problem of profitability through repeat orders became clearer: by offering more options, people would order more frequently. The next step was to open as many restaurants as possible to meet this demand. However, starting numerous restaurants involves very high initial costs, and this is where cloud kitchens entered the scene. Most people in India dream of starting their own restaurant, café, hotel, or food truck. So, solving Swiggy’s supply problem greatly encouraged the growth of cloud kitchens. Yet one question remained: Why would restaurant owners start cloud kitchens instead of running a fully equipped restaurant? The answer was simple: opening a restaurant is expensive. You have to pay rent, salaries for kitchen and service staff, and you depend on a large team. For example, chefs work with their own teams. Keeping the whole team satisfied is essential; if the chef leaves for any reason, the entire team may leave. Cloud kitchens have lower costs than restaurants, leading to significant differences in various aspects. Let’s look at the details: in restaurants, food costs range from 25% to 28%, packaging costs 5% to 7%, staff salaries 15% to 20%, rent 10% to 15%, and other expenses around 5%. This results in a gross margin of 25% to 30%. Now, for cloud kitchens, food costs remain the same at 25% to 28%. Packaging costs are slightly higher, about 7% to 10%. However, staff salary expenses are much lower because there’s no need for service staff, resulting in only about 10% cost. Rent is also much lower since prime locations are not required, typically around 8% to 10%. Therefore, gross margins can reach up to 50%. Even after paying Swiggy a commission of about 20%, the gross margin remains around 30%. The key advantage here is that cloud kitchens are easier to manage, and menus can be updated as often as needed. However, these benefits apply when a cloud kitchen produces only one branded food line. If a cloud kitchen produces two food brands under the same cost structure, the gross margin can reach 60%, effectively doubling the profit. If there are three brands, the margin triples. This is exactly what Rebel Foods has done. Under their cloud kitchens, Rebel Foods operates around 20 different brands.

Realizing that they would not get enough revenue from the rolls alone, the founders of Rebel Foods brought pizza under Fasos and thought that you would also get a share of the Indian pizza market with a market value of Rs 1500 crore. But no one ordered them. Because it's simple, let's look at an example, when we hear burger, we remember McDon's, when we hear pizza, we remember Domino's, when we hear coffee, we remember Starbucks. Now, if the same shops start serving Chinese food, it will not only confuse the identity of the shop, but also whether someone will buy it or not. That's why the founders of Rebel Foods launched a new pizza brand called Owen Storey. It's been very successful. A pizza brand that only sells pizzas is what people really like. Today, the value of Owen Storey alone is 140 crores.

Do you remember Swiggy’s strategy of increasing orders by expanding supply? Because of this, in 2017, Swiggy introduced a major innovation in the market called Swiggy Access. The idea was that every big brand wanted to deliver their food to all people across India, and similarly, as previously mentioned, many Indians wanted to have their own restaurant. Combining these two desires, Swiggy launched a new initiative called Swiggy Access. This was designed for those who didn’t have the capital to start a restaurant or cloud kitchen, as well as for brands aiming to reach customers all over India. Swiggy began providing cloud kitchens directly to these brands. In other words, anyone could start delivering food from a fully equipped kitchen right away. For any entrepreneur in the food market, this was a golden opportunity. Why? Because these entrepreneurs didn’t have to worry about expanding their reach, connecting with customers, or managing deliveries. Let’s take an example from Koramangala, Bangalore. Swiggy currently has about 200,000 customers there. If even 1% of those customers order food from you, that translates to 2,000 food deliveries per day. Starting a restaurant and serving 2,000 meals daily is very challenging. Likewise, if two brands operate from the same cloud kitchen and each captures a 1% share of the market, they could receive around 4,000 orders daily without extra marketing costs. Additionally, with access to Swiggy’s data, these entrepreneurs could learn valuable information, such as when biryani demand peaks during lunchtime. This led to the emergence of around 20 brands operating from a single kitchen. However, this model was not very profitable for Swiggy. Why? Because it involved heavy logistics. Swiggy already had around 300,000 delivery executives, and managing cloud kitchens alongside this was a demanding task. Moreover, Swiggy earned profit from only a small percentage of the orders coming from cloud kitchens, as they didn’t charge rent for the kitchens. That’s how Swiggy ended up selling Swiggy Access kitchens. But this did not affect Rebel Foods, because their primary goal was to become a cloud kitchen company. They didn’t have to deal with the headaches of delivery logistics. Also, they had a clear understanding of the food industry. Rebel Foods’ plug-in model is very attractive: any brand can quickly start food delivery by using Rebel Foods’ cloud kitchen. Rebel Foods has cloud kitchens all across India. Furthermore, they have partnerships with brands like Naturals, Vents, and Slay Coffee.

In India, the average person orders food from outside about four to eight times a month, whereas in the US, this number ranges from 20 to 30 times. Looking at Singapore, there are even small homes without kitchens because it is more profitable to order food from outside than to buy ingredients and cook at home. For India to reach a similar situation, two things need to change: first, the workforce, and second, the food supply. That is, paying salaries to workers living in urban homes and having them cook at home is cheaper than always ordering from outside. However, there is little chance of significant change in this regard anytime soon. To increase food supply, there needs to be more restaurants and cloud kitchens; only then will the food supply sector improve. For that to happen, the cost of starting food brands must decrease from what it is now. Only when the food supply increases will food delivery become a large market. Swiggy and Zomato are addressing this by optimizing their logistics. Rebel Foods is doing this by providing brands with the necessary facilities to cook food through a consumer-centric model. Cure Foods is doing something similar, bringing more brands under a single cloud kitchen. Overall, all of them are trying to achieve the same goal: offering people more options. Most companies aim to turn this into a huge market by reducing operational difficulties and reliance on staff. In other words, Rebel Foods has replaced chefs with machines, thereby reducing human dependency and preventing problems before they arise. This is how Rebel Foods built an empire worth 9 billion rupees.