Zomato looks for rent space out space by recently shut restaurants

Food discovery platform Zomato is using its data repository of restaurants that have recently shut down to build a new business unit that will rent out kitchen space to restaurants for increasing their ability to deliver food.

Dubbed "cloud kitchens", Zomato is investing in setting up infrastructure which existing restaurants will be able to use to fulfill online orders. These mini-kitchens will be located in off-premium locations and house up to four restaurants helping them expand their service affordably.

Deepinder Goyal outlined in his blog that, "To acquire cooking equipment, we are using Zomato data to identify restaurants which have recently shut down in the vicinity and are acquiring this (almost new) equipment at a discounted value."

The technology company says it will provide the real estate, build the kitchen and supply all the equipment restaurants will need to just "walk in" and start doing business.

These kitchens will not offer a take-out or dine-out option, allowing the company to pick locations not on main roads but that are strategically placed to service areas where online food ordering demand is high.

Restaurants will have to share a percentage of the revenue they earn out of the kitchen with Zomato, apart from the charges the company already levies on a regular online food order. However, restaurants will not have any sort of lock in charges, allowing them to walk away if they don't see value.

To run the new business unit, Zomato roped in Arvind Dixit, former India chief operating officer of American fast food chain Wendy's, last November. Prior to working at Wendy's, Dixit had spent nearly 19 years at McDonald's, leaving the company in the position of Director of Operations.

Goyal added, "Our initial estimates tell us that with some hard work, we can have a 100 locations by the end of 2018."

The pilot for the project will come up in Dwarka in early March. By outsourcing most of the non-technology work, it plans to have a team of just five people along with Dixit to hit its 100 kitchen goal.

For customers, Zomato says it will begin offering a front where they will be able to select dishes from multiple brands and have them delivered in the same order.

The kitchens will improve efficiency of online food ordering while lowering the cost of deliveries, something that has plagued the industry since its inception in India. Rival Swiggy has a similar model of restaurants partnering to set up cloud kitchens, while Bengaluru-based FreshMenu controls the entire experience from preparing the food to delivery from a far away kitchen.