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Kouzina | Hyperlocal Cloud Kitchen Food Services

Running a business in the food services space is not for the faint of heart, with varied challenges rearing up every single day. Most restaurants fail due to lack of processes, training and high attrition, among other reasons. Though the barriers to entry are low in this industry, but the barriers to scale are high and daunting. And then, delivering consistent customer experience every single day across multiple outlets cannot be possible without operational and analytical rigour, backed by robust data.

There are very few players in the food services industry that have a strong data-backed view of their business. Kouzina Food Tech, which operates multiple cloud kitchens across Bengaluru, claims it as one of its strengths, backed by its strong focus on operational excellence.

From a single brand single kitchen in December 2013 run by a handful of friends as a pastime to more than 40 multi-brand cloud kitchens across ten cities including Bengaluru, Pune, Hyderabad, Mangaluru, Bhubaneswar, Nashik, Vizag and other cities across the country today and employing more than 300, Kouzina has come a long way.

The cloud kitchen startup offers a digitally powered platform that delivers quality food from a network of hyperlocal cloud kitchens. A B2C/D2C company, Kouzina serves thousands of customers every single day.

“Food Services (or restaurants) is a $100 billion opportunity in India. Good quality, delivery-friendly food is not easily available in India. While the food delivery space has become big, providing a great experience through delivery entails a lot more than what a regular restaurant does. The consumer is eating the food 30 minutes after the preparation and is 4-5km away from the place of preparation. We do spend a lot of bandwidth in finding the best consumption experience for the consumer,” says Gautam Balijepalli, co-founder & CEO at Kouzina Food Tech. 

Kouzina brands are available online for consumers in every 5km radius and the startup leverages the distribution capabilities of Swiggy, Zomato, Dunzo or Amazon. Any consumer can order from their restaurant brands from these platforms, as well as Kouzina’s own ecommerce website. The brands don’t have any offline store presence and are all co-located in the same kitchen (network of cloud kitchens).  “All Kouzina kitchens are FSSAI certified and maintain high hygiene standards,” stresses Balijepalli.

Kouzina has defied all conventional norms of what a start-up was meant to be.

“We were a side business to start with, had limited or no domain expertise — the closest to cooking or food we came to was making Maggi noodles that too with instructions, no vanity metrics — only NPS (net promoter score) and cash flows and no fancy ads or media spends — pure word-of-mouth,” says Balijepalli.

HOW IT ALL MESHED TOGETHER

What started as a side project is now a real business and soon set to become a national brand.

Balijepalli founded Kouzina Food Tech, which runs the WarmOven brand, along with Mahesh Madiyala, Sumit Gupta, and Rohan Rao in 2013, to deliver fresh cakes and desserts. Kouzina also caters to fast food and snacking through Indiana Burgers and KaatiZone that are co-located in the same kitchens.

WarmOven was started in December 2013 as an experiment. “We used to run franchises of other bakeries and food brands. We started delivering cakes to customers next to the store and customers used to love it. That was the moment of epiphany and we decided to experiment with a brand that we called WarmOven,” recalls Balijepalli.

WarmOven started as a side project for the founders. “Sumit, Mahesh and I were on the sidelines for six years, but we spent almost every single weekend since December 2013 on our favourite side project. In fact, during the early days, Mahesh and I would man the phone while Sumit was busy setting up the website to the extent that Truecaller started to suggest our names as Gautam Cakewala and Mahesh Bakerywala (with all due respect to my Parsi friends),” recalls Balijepalli.

This continued for the next five years with Rohan ably leading the operations and an exceptional team singularly focussed on delighting every customer. “We focused only on things that mattered the most — customer delight and cash flows. We were not just delivering a cake, but we were part of an emotional and happy moment in our customer’s life. Our customers had the most wonderful things to say about our service which was indeed encouraging,” he adds.

This customer delight led to a strong word of mouth across Bengaluru city. Increasing WarmOven sales proved that they were heading in the right direction. Over time, they started to expand into other categories such as burgers and rolls. “We acquired one of the oldest rolls and wraps brands, Kaatizone, to launch that category,” says Balijepalli.

“We couldn’t rest on our laurels. The requirements of the business were starting to stretch us in every possible way. This coupled with the fact that we nursed the dream to give wings to the business and it would only materialise if the three of us (Sumit, Mahesh and I) took the plunge and we finally did it in 2019,” says Balijepalli. 

From this humble start Kouzina has now managed to raise a sizeable seed round (that is an oxymoron in itself) at a relatively mature stage of the business on all metrics that matter.

“We have grown organically till late 2019 when we raised a seed round,” says Balijepalli.  Kouzina announced a funding round in June 2020 and is backed by leading entrepreneurs such as Jyoti Bansal, Anuj Srivastava, Harpreet Grover and others. The company plans to continue aggressive expansion into additional cities and is also exploring a technology enabled franchising model for its expansion.

RECIPE FOR SUCCESS

Coming from corporate backgrounds, the founders have applied years of their experience in building a strong foundation and as they started to scale, they created strong processes and technology to manage the business.

“Our business had its own unique requirements. We focussed on streamlining processes in the kitchen, improving food quality, adding to our product range and further enhancing customer experience which in a way was our collective strength as a team. We also rebranded and changed our logo,” says Balijepalli.

“We believe our strength lies in 3As (Academy, Analytics & Automation). We have a strong emphasis on training (academy) and leverage a lot of data (analytics) for our business decisions. There are very few players in this industry that have a strong data backed view of their business. That is one of our strengths, backed by our strong focus on operational excellence,” he adds.

CONVERTING COVID-19 CRISIS INTO OPPORTUNITY

Covid-19 has been very hard on traditional restaurants. As per some reports, it is estimated that around 40 per cent of the traditional offline restaurants would shut down. “Consumption is almost back to normal largely driven by delivery – this creates an opportunity for businesses like ours which are running multiple cloud kitchen brands. Globally, food delivery has become more popular now than it was before Covid and India is on a similar trajectory,” says Balijepalli.

FULL STEAM AHEAD

The Cloud Kitchen-based business model is the future of the restaurant industry and our timing could not have been any better, Balijepalli says.

“While offline players are struggling, unfortunately, we are relatively unscathed. We plan to expand nationally to capture the opportunity. The overall spend of food services is around $100B in India – we are a small part of that industry today. As the shift happens from offline to online platforms, we believe we are well-positioned to capture that,” he says.

Kouzina intends to expand to 100 plus locations in the next 12 months. “We will leverage our technology-powered asset-light expansion model through franchising partners to expand our footprint into various cities,” he says.

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