A cloud kitchen founder has shared a brutally honest account of their business journey, from selling 12 salads a day in a small basement to managing 78 cloud kitchens and serving 14,000 daily orders. The rise was meteoric, but the realities of rapid scaling, investor pressure, and platform dependency brought the dream crashing down.
The founder, with the username SquishyWaffle, shared their journey in a post on the social media platform Grapevine.
Humble beginnings to a booming business
Six years ago, the founder began selling fresh salads out of a 180-square-foot basement kitchen in Gurgaon’s Galleria Market. With just ₹8 lakh in savings, the venture started with 12 daily orders priced at ₹250 each. Losses were inevitable, but customers raved about the fresh ingredients and perfect portions. Within six months, orders grew to 200 daily, breaking even as economies of scale kicked in.
By 2021, the business had exploded during the pandemic. Corporate bulk orders and increased demand for healthy food pushed revenues to ₹1.2 crore monthly. A $5 million funding round followed, with a vision to expand to 100 kitchens across India. At its peak, the company boasted 14,000 daily orders, ₹45 lakh daily revenue, and 400 employees.
The hidden costs of scaling
The dream began unravelling as rapid expansion revealed cracks. Rising raw material prices, high platform commissions, and intense competition ate into profits. Wastage jumped from 8% to 18%, training costs surged, and marketing expenses hit ₹12-15 per order. Dependency on platforms like Swiggy and Zomato further strained operations, with algorithm changes slashing visibility and commissions rising to 32%.
Investor demands for 3x growth year-on-year compounded the challenges, pushing the business to burn ₹80 lakh monthly. Today, 30% of the kitchens operate at a loss, and the founder is considering shutting down 40% of operations.
Reflecting on the journey, the founder shared valuable insights:
- Prioritize sustainable unit economics over growth at all costs.
- Avoid over-reliance on third-party platforms that control customer data and visibility.
- Build a business that aligns with your life, not one that consumes it.
“Looking back, I should have stopped at 8-10 kitchens,” the founder admitted. “We were profitable, manageable, and happy. The food was better, and we knew our customers’ names.”
The post, shared on Grapevine, sparked reactions from users offering support, advice, and admiration. One suggested building a direct ordering app to reduce platform fees. Another noted, “Sometimes the best way to build something big is to stay small enough to survive.”