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Impact of COVID-19 on cloud kitchens


As the nation continues to grapple with the effects of COVID-19, the economic repercussions of the pandemic have been widespread. You would have to look far and wide to find an industry that has not been negatively impacted. The foodservice industry has been particularly hard hit with most restaurants shut and delivery aggregators reporting large declines in order volumes. Counter-intuitive as it may seem, cloud-kitchen based brands have also been negatively impacted, especially in the initial stages of the pandemic.

Impact of COVID-19 on cloud kitchens

Uncertainty at local government levels about the designation of cloud kitchens as an essential business, meaningful supply chain disruptions, coupled with confusion and misinformation regarding the spread of the disease led to significant declines in order volume.

While online food ordering and deliveries have started to pick back up, it is undeniable that consumer behavior has been significantly altered. Extended lockdowns and work from home practices have allowed customers the time to cook at home.

Hygiene and safety have replaced discounting as the primary factor in most food purchasing decisions. Major aggregators like Zomato and Swiggy have strongly impressed upon their restaurant partners the need for strict safety measures in both the preparation and delivery of food and continue to help highlight those partners that follow these measures. There has been a clear shift away from deals and discounts to safety and hygiene.

Established and trusted brands that have had safety and hygiene as a core value from the outset have top of the mind awareness for customers who are making food purchasing decision.

Cloud-kitchen based brands have had to quickly adapt to these new realities or risk running out of business. Below are some of the highlighted impacts of COVID-19 and the necessitated shifts in process and operations for cloud kitchens.

A shift to safety and hygiene as the first priority: From daily and hourly temperature checks for all kitchen and delivery staff, to regular cleaning and sanitization of kitchens and work stations, to the advent of contact-less delivery – every possible step that enhances the safety of customers and staff has taken precedence. For us at Cross Border Kitchens and all our brands, cleanliness and hygiene have been a core value from the outset. Hairnets and gloves for staff and the regular cleaning and sanitization of our kitchens have been a regular feature from the outset. So, the additional steps of temperature checks and contactless delivery were seamlessly integrated into our operational procedures. We have also temporarily removed COD options because of going contactless with our deliveries.

A move away from discounting as a sales strategy: While discounting will continue to be an omnipresent sales strategy, the call of the hour is to build trust with your customers, and this cannot be faked. Customer do not want to be bombarded with coupons and discounting. They want to know that you are doing everything you can to keep them safe and are being transparent. Communicate genuinely with Brands that can back their safety and hygiene communication by showcasing their backend operations will decidedly gain the trust of their customers more than brands that do not. At Cross Border Kitchens we not only showcase our operations but also introduce our customers to our kitchen team that makes and delivers their food, in turn allowing our customers to make an informed decision when placing an order with us.

A perceptible change in the types of food that is getting ordered: With work from home practices and families living together, there has been a significant uptick in family combo type orders. In addition, DIY kits that provide ingredients and instructions and allow customers to make easy meals at home are also seeing a rise. Further, there has been a rise in orders of fitness and healthy foods. Cloud kitchen brands that are unable to shift their production and menu items towards these and other similar trends will lose out on order revenue for the foreseeable future.

Cloud-kitchen brands that emphasize safety and hygiene in their operations will continue to be a safe-bet during the COVID-19 pandemic. And those brands that understand and adapt to the changing shift in consumer demands and behavior and are genuinely able to build trust with their customers will likely come out thriving at the end of the pandemic.