SquishyWaffle
SquishyWaffle

I went from selling 12 salads/day to 14k salads/day - don't start a cloud kitchen business

Six years ago, I was making 12 salads a day in a basement kitchen in Galleria ggn, barely covering my costs. Last month, we served our 5 millionth order across 78 cloud kitchens. But today, I'm writing this because everything I built is starting to crumble.

Someone has already spoken about their similar journey of selling on platforms here before. Just like them my story isn't about success - it's about how scaling too fast on borrowed money and platform dependency can turn your dream into a literal nightmare.

Here's how it all went down:

Back in 2018, I was working in big tech in Gurgaon, ordering lunch daily, and getting frustrated with the lack of healthy options. Every salad was either wilted lettuce drowning in mayo or overpriced fancy leaves that didn't fill you up. I got a cook and taught her how to make a good salad - she was absolutely brilliant, so good that coworkers began offering to pay for them.

The first kitchen:

  • Put in 8L from my savings
  • Rented a 180 sq ft basement kitchen in Galleria Market (28k monthly rent)
  • Bought basic equipment: 2 fridges, prep tables, blenders (4.2L)
  • Started with just 8 salad varieties
  • Initial daily orders: 12-15 salads at Rs. 250 each

The unit economics were terrible to say the least:

  • Average order value: Rs. 250
  • Food cost: Rs. 85 (34%)
  • Packaging: Rs. 45 (18%) - eco-friendly containers weren't cheap
  • Platform commission: Rs. 75 (30%)
  • Staff cost per order: Rs. 28
  • Net loss per order: Rs. 13 (without counting rent and marketing)

But something clicked. People loved our portions and fresh ingredients. Reviews started pouring in about how we were different - no wilted vegetables, no dry chicken, no drowning in dressings.

The climb (2019-2020)

Within six months:

  • Orders hit 180-200 daily
  • Added smoothie bowls and protein boxes
  • Hired 6 people for the kitchen
  • Finally breaking even

The unit economics improved with scale:

  • Average order value: Rs. 320 (introduced premium items)
  • Food cost: Rs. 92 (28%) - better supplier deals
  • Packaging: Rs. 42 (13%) - bulk ordering
  • Platform commission: Rs. 96 (30%)
  • Staff cost per order: Rs. 22
  • Net profit per order: Rs. 38 (excluding fixed costs)

Then COVID hit. While others shut down, we exploded:

  • Orders jumped to 600+ daily
  • Opened second kitchen in Cybercity
  • Started getting corporate bulk orders (this was the time when companies were doing everything to keep team morales up - we started partnering with companies to deliver food to team directly)
  • Revenue hit 1.2 crores monthly
  • Investors started calling

In 2021, raised our first round - $5M+ at a $xxM valuation. The pitch was simple: "Healthy food at scale, targeting 100 kitchens across 8 cities."

The expansion began:

  • 8 kitchens in 3 months
  • 25 in 6 months
  • 78 today across Delhi NCR, Bangalore, Mumbai, Pune, and Hyderabad

Our peak numbers looked insane:

  • 14,000 orders daily
  • Rs. 45L daily revenue
  • 400+ employees
  • 4.4 average rating across platforms
  • Featured as on top restos on both Sw & Zo

But here's what was really happening:

The hidden costs of scale:

  • Training costs shot up (1.2L per kitchen)
  • Food wastage increased to 18% (vs 8% earlier)
  • Cost of consistency: QC teams, SOPs, training manuals
  • Marketing costs: Rs. 12-15 per order just to stay visible
  • Working capital stuck in security deposits (42L)

The real nightmare began when:

  1. Raw material costs exploded
  • Lettuce prices up 80% in 2 years
  • Chicken prices up 40%
  • Avocados became unpredictable
  • Couldn't raise prices due to platform pressure
  1. Competition flooded in
  • Every restaurant launched a salad brand
  • Platforms pushed their own healthy food brands
  • Copy-cats with lower costs undercut us
  • Marketing costs doubled to maintain visibility
  1. The platform squeeze
  • Commission increased to 32% (plus 18% GST)
  • Algorithm changes buried us in searches
  • "Suggested substitutes" pointed to competitors
  • Platform's own brands got prime visibility
  1. Investor pressure vs. Reality
  • They wanted 3x growth year-on-year
  • Pushed for new cities without solid unit economics
  • "Growth at all costs" meant burning cash on marketing
  • Had to maintain GMV targets to raise next round

Where we are today:

  • Burning 80 lakhs monthly
  • 30% of kitchens operating at a loss
  • Staff turnover at 95% annually
  • Platform dependency: 92% of orders
  • Next funding round looking impossible
  • Considering shutting down 40% of kitchens

The lessons I learned:

  1. Your unit economics will make or break you, regardless of how much funding you have. What looks good on a spreadsheet with 200 orders completely falls apart when you hit 2000. We got caught up in growth numbers and ignored the fact that our cost per order kept rising while margins shrank. Fast growth covers up a lot of problems, but those problems catch up eventually.
  2. These platforms are not your partners, they're your landlords. They own the customers, they own the data, and they can change how visible your business is overnight. I've watched our orders drop 40% because of a single algorithm update. Everyone talks about building their own platform, but the hard truth is that customers aren't looking for another app to download.
  3. I pushed for scale when I should have focused on building something sustainable. Running 8 kitchens that made money would have been smarter than operating 78 that burn cash. We got caught up in the startup narrative of hypergrowth and raising more rounds. But at the end of the day, a business needs to make money, not just grow at any cost.
  4. Running this business took more than just money - it took everything. I lost time with my family, gained weight (lol, talk about someone building a healthy food business), stopped sleeping properly, and completely lost the joy of cooking that started this whole thing. Success in numbers doesn't always mean success in life. Looking back, I wish I'd built this business to fit my life, not the other way around.

Looking back, I should have stopped at 8-10 kitchens. We were profitable, manageable, and most importantly, happy. The food was better, the team was closer, and we actually knew our customers' names.

I'm writing this from our Bangalore central kitchen at 3 AM, looking at next month's projections, and for the first time in 6 years, I'm scared. Not just for my business, but for everyone rushing to scale without questioning if they should.

To every entrepreneur (esp F&B founders) reading this: Sometimes the best way to build something big is to stay small enough to survive. The platforms aren't going anywhere, and neither is our dependency on them.

P.S. - My first kitchen in Galleria? Still profitable, still doing 300 orders a day, still has the original team (my ggn cook leads our pan India kitchen operations now!). Maybe that's trying to tell me something.

25d ago
App Promo
SillyMarshmallow
SillyMarshmallow

Bhai kya likte ho.

Why did you choose to write this on Grapevine? I’m sure you can sell this story to a newspaper or write. A novel and make money my man

SquishyWaffle
SquishyWaffle

Paisa apne dhande se banana chahiye, don't see a need to paywall my learnings :)

SquishyWaffle
SquishyWaffle

Also for the love of god, before another person asks "Why did you not try ONDC?"

Everyone talks about ONDC like it's the savior for businesses like mine. We jumped on it the moment we could - invested in integration, rebuilt our tech stack, sab kuch kar liya.

Six months in, here's the reality:

  • Total ONDC orders across all kitchens: 40-50 daily (0.3% of our volume)
  • CAC on ONDC: Rs. 280-320 (vs Rs. 120-150 on Swiggy/Zomato)
  • Integration cost us 18 lakhs in tech development
  • Zero customer retention - everyone's just chasing discounts

The hard truth? Building direct ordering channels is a pipe dream. Even massive brands like Truffles and Social get 85-90% of their delivery orders from platforms. I've seen their numbers - we're all in the same boat.

Why? Because no customer wants to:

  • Download another app
  • Create another account
  • Enter another address
  • Save another payment method
  • Just to order a salad, bc I wouldn't do this shit as a customer.

We tried everything:

  • 25% off on direct orders
  • Exclusive menu items
  • Faster delivery promises
  • Loyalty programs
  • Premium packaging

Result? Barely moved the needle. People want convenience more than discounts. They trust platforms more than individual brands. The harsh reality is that Swiggy and Zomato aren't just delivery apps anymore - they're the default "food button" on people's phones.

PeppyTaco
PeppyTaco

I don't have much idea about unit economics and entrepreneurship. Still I would mention 2 approaches that come to my mind.

  1. For making business sustainable shutdown inefficient branches.
  2. You could offer discounts on your own mobile/web app to push business by attracting more orders. You are already paying a hefty commission to food ordering platforms. Run ads on social apps(facebook/instagram/youtube) with some USP that could attract customers. You would have to figure out delivery via some other third party. The thing about people not wanting to sign up and put address on every new app won't be true for lots of customers. They will do that for discounts. You could keep the signup and address seeking features, minimal and user friendly. Most food brands have their own app on which they offer extra discount on selective days to attract customers.
    I could help you in some of the tech part of needed 😜
FloatingLlama
FloatingLlama

Why not use a whatsapp bot to enable customers to order directly? That way customers don't have to download any app

PrancingPotato
PrancingPotato

Wonderful post. Thanks for writing such a detailed post.

Scaling too fast is often leads to unsustainable unit economics. Same thing happens with Dunzo too.

SquishyWaffle
SquishyWaffle

Life & business is funny that way - whatever you do, the other path seems to be the answer

We'll fare through this also!

ZestyMuffin
ZestyMuffin

Zepto is on the way

SleepyHamster
SleepyHamster
TCS25d

Greediness killed your dream.

SquishyWaffle
SquishyWaffle

Ok sir, thanks for your valuable inputs

BubblySushi
BubblySushi

I disagree with you, anyone would want to grow in a business. Scaling up may never be the right growth in this case. Variables like, platform margins, ingredient cost, manpower etc. The focus on scalability in this case resulted in variables dragging the growth down. A business at times is just an idea away from turning around or a dead horse. I would thank the founder for sharing the learning and hope someone is able to learn and able to implement based on the learnings shared here.

ZestyMuffin
ZestyMuffin

This is amazing. Instead of making your own app, did you thought about dining ?

I still think scale could be achieved if you have moved at medium pace and not super quick. Dunno if it was done bc you had funding & investor pressure.

SquishyWaffle
SquishyWaffle

I won't call it investor pressure, it's what felt right back then

The sad part about all these learnings is that it's all in retrospect - not something unique to me or my company, it's how these things work. The best we can do is run the company better than how you ran it last quarter :)

WigglyBanana
WigglyBanana

Very very helpful read Thank you for writing this

Curious - by any chance is your brand: DND (daily nutritional diet)? Many of the details match and I had a subscription from you guys for almost 1 month

SquishyWaffle
SquishyWaffle

No :)

TwirlyMochi
TwirlyMochi

Looks like salad days

BouncyPanda
BouncyPanda
PWC24d

Finally! Something worth reading on Grapevine!

DancingDonut
DancingDonut

Was waiting for such a comment

GigglyNoodle
GigglyNoodle

Can you elaborate a bit on wastages? How does it occur? Also, do you think had you not taken external funding, you would have taken a slower but profitable route?

Relying on Swiggy etc. is also a huge challenge for any food delivery business. Going offline is a solution but isn't suitable for some businesses and not easy to crack. Tough !!

Nevertheless, Fascinating insights, and waiting for you to write a turnaround story soon 😀

SquishyWaffle
SquishyWaffle

Let me break down the wastage reality. At 8 kitchens, wastage was 8% - about Rs. 4,000 daily. At 78 kitchens, it hit 18%.

The math (sharing a high level example): Each kitchen needs minimum 5kg lettuce prep = 390kg total Wastage at 18% = 70kg daily At Rs. 120/kg = Rs. 8,400 gone, just on lettuce

Premium ingredients hit harder. Avocados: 2-day perfect window, Rs. 140/piece. Every kitchen wastes 2-3 daily = Rs. 21,840 lost across all kitchens.

The real issue wasn't growth - it was that we lost the tight inventory control we had in our first few kitchens where wastage was just 4% because we knew our patterns cold; the problems came with scale.

GoofyQuokka
GoofyQuokka
  1. Do you get yelled at by your investors?
  2. If you shutdown, what's the path ahead looks like.
SquishyWaffle
SquishyWaffle
  1. Haha no man, what do you think investors are - no one yells at anyone (in most scenarios)
  2. There’s no shutting down, the brand will run - either I run it or someone else buys us, that’s the only difference
FloatingJellybean
FloatingJellybean

Richest guy : don't become rich, money isn't anything This guy with 14ksalads / day: don't start business A guy ruined in love: never love focus on career. Guy ruined in career: it's all a trap.

"Fk y'all" is what I would say... 🥳✌🏻

SquishyWaffle
SquishyWaffle

I never said don’t start a business, I’m saying cloud kitchens aren’t sustainable - don’t start there :)

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Cloud kitchen business

Can someone share their business stories of cloud kitchen. Is it profitable? How much initial investment required? How did you chose what to sell among lot of varieties available?