Restaurants aggregator Zomato probably wants to take a leaf out of traditional Indian customs of the communal tandoor. Once pretty popular, particularly in Punjab, the communal tandoors allowed folks to bring bread dough from home and use the common tandoor for baking. Zomato has launched its ‘cloud kitchens’ service, dubbed as Zomato Infrastructure Service (ZIS), where it plans to lend out infrastructure to restaurant brands to deliver food from a common front house.
The project is being led by Arvind Dixit, formerly a COO of Wendy’s India and has a huge experience of over 18 years working with quick service restaurants. The team’s plan, according to the company is to stay lean and only grow up to a maximum of five people until it reaches up to 100 locations.
Together we cook, together we deliver
The infrastructure includes real estate owned or run by Zomato, the entire tech-stack including Zomato Base (POS) and Zomato Trace (Delivery Dispatching and Routing). Zomato will not be cooking food by itself in these kitchens. It will use its data to help partner restaurant brands create the right menu, and have the right pricing. It hopes that restaurant brands can just ‘walk in’ and start their business in few hours.
The common kitchen, for example, can be used by a pizza brand during the day and by a burger brand at night.
Deepinder Goyal, Founder & CEO of Zomato said in a blog post, “Think of these infrastructure services as delivery only food courts in locations slightly off the premium locations (think much lower rentals, but accessible); we will not have take-out or dine-in at these locations. Each location that we create for ZIS will have four or more restaurant brands co-located with each other, leading to shared (and thus lower) costs; each restaurant brand will have its own space of roughly 300 sq ft. These restaurants can choose to have owned/shared/outsourced delivery personnel – thus increasing delivery efficiencies.”
Scaling to 100 locations by year-end
The pilot kitchen is currently based in Dwarka, in New Delhi, which will start cooking by next week. . Starting to cook in the first/second week of March. The business model will be expanded to five locations only after two to three months — post the learnings from the pilot project. The locations will selected based on Zomato data, where the brand knows that the demand is high, and good quality (highly rated) supply is relatively low. Most of these locations are densely populated mid-income areas in large cities, and second tier cities in India.
“Post that, after one more big iteration of the business model, we will scale in second tier cities. We think we can really help expand the restaurant industry beyond the top 7 metros with ZIS – and that’s where the real opportunity for ZIS lies,” Goyal said.
He hopes that, the ZIS model can be expanded to 100 locations by the end of 2018.
Where’s the money?
To acquire cooking equipment, Zomato would use its data to identify restaurants which have recently shut down in the vicinity and will acquire the equipments — only the best quality — at a discounted value. The aggregator will charge a nominal percentage of their revenue. Restaurants will also pay on top of this nominal fee for any other services that they use – e.g. Order Lead Generation, Advertising, etc.
The brands using ZIS are free to list themselves on any other aggregator platforms.
Users have more choice
Noting that “front of the house” in these kitchens will be common, a user can select dishes from multiple brands to build a single food order. “So if you want to eat shawarma, and your friends want to eat pizza, that can be done in a single order. How about also including a frappuccino, and an ice cream with your order? This is something that’s very new, and is probably the first time in the world that this is being introduced at scale. We are very excited about how our users will use this power feature which will only be available on Zomato,” says Goyal.