Zomato cracks the whip on cloud kitchens running multiple brands

Representative image.

Food aggregator Zomato said on September 22 that if more than 10 brands are operating out of a single location, it will spot-check the location of such kitchens and also create a “whitelist” of the restaurant partners that “provide a great experience”.

The Gurugram-based company’s crackdown on cloud kitchens comes after a blog post revealed that one such facility in Bengaluru was running nearly 200 different brands.

Cloud kitchens prepare food only for delivery and do not have a dine-in option.

Moneycontrol reported last week that the Food Safety and Standards Authority of India (FSSAI) handed over a memo to the cloud-kitchen owner and directed him to adhere to the standards.

In Zomato’s blog post, the firm said it was engaging with the National Restaurant Association of India (NRAI) and the other restaurants so as to curb these practices.

The blog added that while FSSAI allows a cloud kitchen to run multiple brands, few misuse it.

“Such as some fly-by-night operators, who account for less than ~0.2% of registered kitchens, misuse this flexibility in law by creating innumerable brands from the same kitchen. These brands have little to no differentiation in the product offering; instead they confuse/cheat customers by creating a false perception of choice, while none of it actually exists,” it said.

The post said these kitchens usually have terrible reviews and ratings.

“Most of the brands run by these operators also have terrible reviews and ratings on our platform. Such operators tarnish the reputation of the restaurant industry as a whole, hurting all of us in more ways than one,” the post said.

“While there is no exact science to the right number of brands, we believe that even the most organised outlets in the industry don’t see operational benefits and customer trust in operating too many brands from a single kitchen,” the blog post said.

“We will whitelist the restaurant partners that provide a great experience other than the operators mentioned above from this manual check so that they don’t face delays while expanding the scope of their businesses,” it added.

It is not unusual for cloud kitchens to run multiple brands. For instance, Rebel Foods which became a unicorn last year, is home to brands such as Faasos, Behrouz Biryani, Oven Story Pizza, Lunch Box, Mandarin Oak, The Good Bowl, SLAY Coffee, Sweet Truth, and Wendy's. Experts say it helps in additional revenues and multiple positioning.

During the pandemic, the cloud kitchen business saw a boom, as dine-in restaurants were closed. According to market research firm RedSeer, the market size is expected to be close to $3 billion by 2025, up from $400 million in 2019.