Swiggy doubles down on cloud kitchen model

Almost one year after it launched its cloud kitchenbusiness, food delivery firm Swiggyis looking to aggressively expand the vertical under Swiggy Accesstaking it to upto 40 cities over the next 2 years. The business which launched only in Bangalore last year, has expanded to include 30 restaurants with 36 kitchens in 4 new cities including Delhi, Mumbai, Kolkata and Hyderabad.

Swiggy, which is investing significantly in this business is looking to bring onboard over 300 restaurants in the next 6-9 months itself. The aggressive expansion is in line with Swiggy’s aim to enable a 20-25% revenue contribution from Swiggy Access alone in about 2 years.

“The large thing that we are trying to do is galvanise supply in a supply starved industry. So we are looking to rapidly expand that supply through our Access model. We aren’t looking at just expansion within cities but also inter-city expansion for national brands. A few sizeable national brands will help with the rapid expansion of the overall model,” outlined Vishal Bhatia, chief executive of New Supply at Swiggy who leads the Access business for the firm.

For its inter-city expansion of restaurants, The DST Global and Naspers backed firm is starting with Bengaluru’s Vasudev Adiga’s which will launch operations in Delhi through the Access model. This inter-city model, Bhatia believes will be a game changer as Swiggy launches cloud kitchen operations in tier II-III cities going forward adding a fillip to the business’ current impact on order volumes.
Currently, depending on the density of the restaurants in specific areas, about 8-25% of the overall order volume on Swiggy’s platform comes via Access kitchens in those areas. Swiggy expects the contribution to the order value too will be similar going forward.

“In the areas where Access will be operational I expect that 20-25% of our order value to come from that in the next 2 years. As we expand wider, that number should get closer to reality on the overall platform as well,” said Bhatia.

The Bengaluru-headquartered firm which clocks almost 20 million orders each month has been able to churn anywhere between 20-50% higher orders for restaurants through this model, according to restaurant partners ET spoke with.

For Swiggy, its cloud kitchen operations under Access and its private brands under The Bowl Company and Homely, together form under 15% of the overall order volume, in the areas it is available in, currently.

While Swiggy declined to comment on the commissions for the model, restaurants on Access have to pay higher commissions than the 16-19% that the platform charges for delivery only. For those restaurants that lead the bulk of order volume on the Access model, the commissions are lower.

National restaurant brands such as Paradise Biryani, Krispy Kreme as also local Bengaluru brands such as Vasudev Adigas, Truffles, and Leon Grill are some of the partners on Swiggy Access.

Source:-https://retail.economictimes.indiatimes.com/news/food-entertainment/food-services/swiggy-expands-ready-only-kitchens-access-in-4-cities/65964597

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