American fast-food restaurant chain operator Wendy's is planning to expand its presence in India through a new partnership with Mumbai-based Rebel Foods.
Through its India franchise partner Sierra Nevada Restaurants, Wendy's plans to open up to 400 cloud kitchens and brick-and-mortar restaurants nationwide over the next decade.
Wendy's said that Rebel Foods will help it develop and operate 250 cloud kitchens while Sierra will be in charge of opening 150 new restaurants. Wendy's currently only has five cloud kitchens in India, which are mainly focused on serving online orders. It also has only four brick-and-mortar restaurants with Sierra Nevada.
The plan to open hundreds of new restaurants is a massive expansion for the company given its current exposure in the India market. Analysts said that Wendy's growth in the India market has been slow since it entered in 2015.
Compared to McDonald's, Wendy's has been struggling to expand its operations. McDonald's, which entered the India market in 1996, currently has more than 400 restaurants across the country.
"Wendy's wants to use the multiplier effect of cloud kitchens and physical restaurants to tap into the India market," analysts at market research firm Forrester said in a statement.
Instead of directly competing with McDonald's physical presence, Wendy's said that it will be fighting for market share through digital innovation. Rebel Foods co-founder, Kallol Banerjee, said that by accessing India's network of existing cloud kitchens, Wendy's should be able to gain more exposure at "far lower levels of capital."
Rebel Foods is one of the largest cloud kitchen operators in India. The company is backed by both Goldman Sachs and Sequoia Capital. Cloud kitchens - also known as ghost kitchens - operate mainly to produce foods for home deliveries. As these types of facilities do not need to cater to dine-in customers, they can be located in nonprime areas that charge lower rents.
According to a report published by market research firm Valuates Reports, the global cloud kitchen market could be worth more than $70 billion by 2027 as the world shifts to online deliveries.
