Once opening a restaurant in every major market of the city was considered the biggest identity of food business, but now this mathematics is changing rapidly. The dominance of cloud kitchens in India’s food delivery economy is continuously increasing and their share has reached more than 35 percent. Amid rising rents, expensive real estate and staff costs, thousands of entrepreneurs are adopting the kitchen model without tables, without waiters and without dine-in spaces. On the other hand, Indian families are ordering food online more than ever, due to which platforms like Zomato and Swiggy have come to the center of the entire business. The result is that traditional restaurants are now being replaced by small ‘ghost kitchens’, which are offering a new formula for more orders and more earnings at lower costs. After all, how cloud kitchens are giving a new shape to India’s food delivery economy, this is the biggest question of this report.
What is cloud kitchen?
Cloud kitchen, also known as ghost kitchen or dark kitchen, is a restaurant where customers do not have the facility to eat while sitting. Here only food is prepared and delivered to customers through online food delivery platforms like Zomato, Swiggy. That means no tables, no waiters, no parking and no expensive interiors. Just a network of kitchens, chefs and delivery. For this reason, the cost of cloud kitchen is much lower than that of a traditional restaurant. For example, if a brand in your city is visible only on Zomato or Swiggy but does not have any restaurant or seating area, then it could be a cloud kitchen.
5 big things
- The annual growth rate of cloud kitchens is 25-30%, while that of traditional restaurants is only 5-7%.
- A cloud kitchen can be started with Rs 2-5 lakh, whereas a restaurant may require Rs 20 lakh to Rs 1 crore.
- Indian families are now ordering food online an average of 5-8 times a month.
- Zomato and Swiggy charge 22-30% commission on every order.
- Despite low margins, cloud kitchens can process up to 500-1000 orders a day.
Cloud kitchens are growing faster than restaurants
According to the report of RedSeer Strategy Consultants, the biggest change in the food industry in the last three years has been the emergence of the cloud kitchen model. While the annual growth rate of traditional dine-in restaurants has been only around 5 to 7 percent, cloud kitchens have grown at the rate of 25 to 30 percent. The biggest reason for this is low initial investment. While opening a restaurant may require Rs 20 lakh to Rs 1 crore, a cloud kitchen can be started with only Rs 2 to 5 lakh. This model is becoming increasingly popular due to the need for expensive interiors, large location and heavy staff. The share of cloud kitchens in the Indian food tech market has now exceeded 35 percent.
Eating habits changed, budget also changed
According to NRAI’s ‘India Food Services Report’, the food expenditure of Indian families has completely changed in the last few years. Earlier, ordering food online was limited to special occasions, but now it has become a part of everyday lifestyle. In 2021-22, an average urban family ordered food online only 1 to 2 times a month. This number has increased to 5 to 8 times in 2025-26. According to Zomato’s shareholder letters, this figure has reached 12 to 15 orders per month in many working couples and metro cities. Many people in metro cities are spending 10 to 15 thousand rupees per month just on ordering food online. The effect of this change is also visible on the budget of families. Whereas earlier 3 to 5 percent of the total monthly income was spent on outside food, now it has increased to 12 to 15 percent. The average order value on Zomato and Swiggy has also increased from Rs 420 to Rs 450.
How do Zomato-Swiggy earn money?
Food delivery platforms not only deliver food, but also control the entire ecosystem. Cloud kitchens and restaurants have to pay 22 to 30 percent commission on every order. That means in an order of Rs 100, Rs 25 to 30 go directly to the platform. Apart from this, separate platform fees are charged from the customers. Additional delivery charges are also levied during bad weather or peak times. Not only this, if a cloud kitchen has to appear higher on the app then it also has to spend 5 to 8 percent additional advertising. This is the reason why Zomato and Swiggy have become the most powerful players in the food industry today.
Low margin but high volume game
At first glance it seems that traditional restaurants earn more profits. On an order of Rs 500, a dine-in restaurant can make a net profit of around Rs 190, while a cloud kitchen’s profit is around Rs 125. But the real game is about volume. A dine-in restaurant can only serve a limited number of customers throughout the day due to seating capacity. On the other hand, a cloud kitchen can process 500 to 1000 orders a day from a small room. Despite low margins, his total profit becomes much higher due to large number of orders. This model is determining the direction of the food industry today.
Biryani costs ₹500, how much is left?
| Cost Elements | traditional restaurant | cloud kitchen |
| Food Cost (Raw Material) | ₹150 (30%) | ₹150 (30%) |
| Rent and Electricity (Rent/Utilities) | ₹75 (15%) | ₹20 (4%) |
| Staff Salary (Labour) | ₹75 (15%) | ₹30 (6%) |
| Platform Commission + Advertising | ₹0 | ₹150 (30%) |
| Packaging | ₹10 (2%) | ₹25 (5%) |
| Net Profit Margin (Per Order) | ₹190 (38%) | ₹125 (25%) |
Source: Rebel Foods Investor Declaration and Petpooja F&B Big Data Analysis (2025-2026).
Why are traditional restaurants becoming expensive?
Rising rents, electricity bills, air conditioning, parking and staff expenses have made the restaurant business difficult. In many cities, 50 to 60 percent of a restaurant’s earnings go towards operating expenses alone. In contrast, cloud kitchens can also run from low-rent spaces, basements or small commercial spaces. They do not have to spend money on seating arrangements for customers, decorations or additional employees. Their entire focus is on food quality, packaging and getting better ranking in the algorithms of Zomato-Swiggy. This is the reason why ‘ghost kitchens’ are rapidly replacing big restaurants in many cities of the country.
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