Friday, June 14, 2024

Swiggy shutters its NCR cloud kitchens to focus on South

Online food delivery platform Swiggy has shut down its cloud kitchen outlets such as The Bowl Company in Delhi NCR, as it looks to shift focus of its private label entities in southern cities.

Swiggy confirmed the shuttering of The Bowl Company, which had outlets in parts of Delhi and Noida, calling the initial launch an “experiment”. The entity was operational until at least the first week of November this year. Apart from The Bowl Company, some of Swiggy’s other cloud kitchens in Delhi NCR such as Breakfast Express and Goodness Kitchen also appear to have shut down.

“The expansion of The Bowl Company in Delhi/ NCR was an experiment we ran to bring new food experiences to users. This experiment has led to its due learnings, even as we focus on operational excellence for the brand. We will continue to invest and grow The Bowl Company in cities like Bangalore, Chennai, and Hyderabad…” a Swiggy spokesperson told The Indian Express.

According to a source, Swiggy is now looking at focusing on its cloud kitchen business in southern cities like Bengaluru and Chennai where the adoption of these operations has been higher compared to northern cities. In these cities, the firm is also adding some new private labels such as Soul Rasa and Stuffed in cities like Bengaluru and Chennai.

Cloud kitchens are a phenomenon popularised by food delivery platforms. They utilise a commercial kitchen for the purpose of preparing food for delivery or takeout only, with no dine-in customers, and typically allow the delivery companies to offer services at a higher margin compared to other restaurants listed on their platform. The segment initially took off in India, but with the onset of the Covid-19 pandemic, their novelty waned given every restaurant essentially became a cloud kitchen.

This is not the first time that Swiggy has decided to shut down some of its cloud kitchens. In 2020, the firm had shut down a number of its cloud kitchens in the wake of the coronavirus pandemic as it laid off more than 1,000 employees.

“We are choosing to scale down or shut down adjacent businesses that are either going to be highly volatile or will not be highly relevant for the next 18 months. The biggest impact here is on the cloud kitchens business, with many unknowns about volumes through the year,” Swiggy co-founder and chief executive Sriharsha Majety had written in an email to employees at the time.

As per its regulatory filings, the sale of food from Swiggy’s private brands dropped by more than 60 per cent to Rs 83.3 crore during FY21 from Rs 237.1 crore in FY20.

Majety has previously emphasised the impact that the pandemic had on Swiggy’s cloud kitchen business. “We had just completed a rollout of the 120th kitchen. These things take a fair amount of CapEx (capital expenditure) and then boom, bang, smack, we landed in the middle of Covid in February-March. And, that absolutely looked like the worst decision in investment history,” he had said last year during a tech conference.

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