US fast food chain Wendy’s is ramping up its presence in India, saying it plans to have 400 cloud kitchens and traditional restaurants across the country in the next decade.
Wendy (WEN)’s and its franchise partner Sierra Nevada Restaurants are teaming up with Mumbai-based Rebel Foods to develop and operate 250 cloud kitchens in India as the coronavirus drives up demand for food delivery. Wendy (WEN)’s and Sierra Nevada also plan to open 150 traditional restaurants across the country.
The moves represent a huge expansion for the American burger chain. Wendy’s and Sierra Nevada currently operate four brick-and-mortar restaurants and five cloud kitchens in India.
That’s far fewer than McDonald’s (MCD) and its local franchise partners, which operate more than 400 restaurants across the country. McDonald’s (MCD) entered India in 1996.
Growth in India has been slow for Wendy’s, which entered the market in 2015, according to Satish Meena, analyst with market research firm Forrester.
“Wendy’s wants to use the multiplier effect of cloud kitchens and physical restaurants to tap into the Indian market,” Meena said.
Wendy’s said partnering with Rebel Foods will help grow its business in India through digital innovation.
By plugging into a network of existing cloud kitchens in India, “Wendy’s will get immediate access to rapid scale across the country, at far lower levels of capital,” Kallol Banerjee, co-founder of Rebel Foods, said in a statement. Rebel Foods, which is backed by Goldman Sachs (GS) and Sequoia Capital, operates more than 300 cloud kitchens, mostly in India.
Cloud kitchens — also known as ghost kitchens or dark kitchens — are facilities that produce food solely for home delivery. Because they don’t need to attract passing dine-in customers, they are often located in buildings that charge lower rents than restaurants.
The global cloud kitchen market will be worth an estimated $71.4 billion by 2027, growing 12% from 2021 to 2027, according to a report published last month by market research firm Valuates Reports.