Cloud Kitchens and their Talent Complexities : Technology in the Frontline
The following is an amalgamation of multiple conversations that I’ve had with the (now ex) VP HR of Rebel Foods India, Col Ranjan Prabhu. Col. Prabhu is a seasoned Army veteran with nearly 23 years of experience leading men and women in the Indian Army. He is everything you'd expect in a military man - tough, decisive, and on all counts, he puts his people first.
We all know about the Rebel Foods that has become the world’s largest cloud kitchen company. But behind the scenes is a people organisation which marches efficiently to well coordinated execution SOPs. Managing this talent pool is mission critical for Rebel. In the conversation, we understand the challenges of running a cloud kitchen and how technology helps mitigate some of these challenges.
PS - I have summarised multiple threads of the conversation in the form of a Q&A blog to make it easier to read.
Q) Can you shed light on Rebel Foods' journey in India and elaborate on the current talent ecosystem in a Rebel Kitchen?
Rebel's history can be divided into two phases - an initial Quick Service Restaurant (QSR) phase primarily led by Faasos and a transformative pivot in 2015 towards a hyper-scalable cloud and delivery-only kitchen model, which I'll focus on.
Rebel pioneered the internet restaurant concept globally, driven by the insight that 74% of their customers had never physically visited a Faasos store. We realised early that this was scaleable not just geographically but also across complementary brands that maximised fixed cost leverage. Each brand complements customer “missions” of food and beverage consumption. Think of us as replicating a food court experience - multiple brands in one location, but only online.
Presently, Rebel operates 365 physical stores, including experimental dine-in concepts. Each kitchen operates under an "entrepreneur in residence" responsible for ensuring customer satisfaction, aptly titled as a Customer Delight Officer (CDO). The staff ranges from kitchen personnel to riders ensuring seamless last-mile delivery. Our workforce includes Full Timers, Freelancers, Gig workers, and Part Timers, reflecting diverse classifications.
Q) How did operations and talent management evolve with the shift in the business model?
Initially, as a QSR, our operations were typical—Standardised Procedures, High street locations, managing dine-in and last-mile operations. Like any dine-in we managed everything from housekeeping, to the kitchen, server teams to the operational staff, security - there are multiple profiles involved. Do you see how this all adds to the complexity of talent management?
However, transitioning to a cloud kitchen model transformed all this. The pivotal shift occurred when we streamlined complex items like Biryani into a quick-service model, making it one of the most ordered items nationwide. This gave Rebel the confidence to scale and institute what we now call the Rebel Operating System.
Cloud kitchens are not easy businesses to run, but Rebel has made it more science than art. The Rebel Operating System is really the secret sauce to making the business scalable across geographies, across cuisines and across talent pools. Since everything is put down into an SOP, you really don't need skilled workers the way you’d need at a Dine-in - but what you actually need is willing workers who have the ability to learn quickly. Rebel invests a lot into training them, and making sure that our customers have a world class experience despite not having a dine-in interaction.
The surge in Third Party Aggregators (TPAs) like Swiggy and Zomato further popularized in-home dining, fortifying the demand-supply cycle—a perfect fit for our cloud kitchen thesis..
Q) What necessitates the employment of various worker types like Full Timers, Part Timers, and Gig workers? How does this vary across locations?
The nature of employment is intricately tied to demand maturity in a specific area - and it varies with time as the demand density rises.
Let me break that down a bit more :
Let’s say when we are entering a new area, we have only a few stores. This necessitates reliance on TPAs and hence higher cost to serve. As demand matures, gig workers, active across multiple players with some minimum guarantee, become feasible. Eventually, as demand saturates at a city level, full-time employees become viable. This strategy involves entering select areas, saturating supply with relevant brands, and implementing local marketing for economic viability.
But today gig workers are all the vogue and it all comes down to one thing - Freedom. With Swiggy and Zomato it is actually easier for a gig rider to earn more than someone in a fixed pay model. On the surface there is a trade-off between surety of income and flexibility - and what I've seen is that flexibility wins. The freedom that comes with being a platform worker is irreplaceable - you are your own boss and you work when you want to. That is liberating to someone who is doing a very repetitive job.
Q) How does Attrition play a role with this talent - how does it impact business?
Our Attrition would be about 7-8% on a monthly basis! With gig workers you’re not really sure if the associate has just gone dormant or if he has actually quit. But these numbers are consistent with the National Restaurant Association of India Report - ie about 75% to 80% annual attrition.
My mandate was also to keep projections ready as to what would be the likely attrition. The effective cost per hire at Rebel is actually about 3500 INR per hire - including the cost of sourcing, onboarding and training them.
And such levels of attrition is a BIG problem. You cannot afford to have untrained staff in the kitchen, and so we need our staff to be completely onboarded with the SOP training before they actually serve our customers. Attrition just makes it more difficult for any QSR model to succeed.
See, attrition cannot become zero. That is a utopian world. It won't happen especially when the wages have so much downward pressure.
Q) Wow! It is amazing how attrition is actually such a headwind to business! What is being done at Rebel to minimise attrition?
One of the biggest reasons that frontline workers leave is for a slightly better pay, but to be honest you have to make the employee feel comfortable working for you. E.g. One way that we augment incomes is the All-Rounder Program where kitchen staff can also deliver for us in their free time. So if some has time after a day shift at work and wants to earn a little extra - Rebel’s ecosystem enables that.
Other small things like aligning payment cycles to demand cycles are tactical fixes. E.g. We make payments for the previous week just before the weekend arrives. Our cycle is in such a manner that every Thursday we make the payment for the work they did the previous week. And hence going into the weekend - the worker is motivated. A happy worker is an engaged worker, and an engaged worker is the only way attrition can be controlled.
Q) How does technology aid in mitigating attrition?
Efficient onboarding and accurate payment cycles are critical for us to be perceived as a responsible employer. We were onboarding our associates manually via Google Sheets - Our document collection was decentralised but the document verification was centralised. And just our verification process took 24 hours. And now with Hunar.ai - now it’s near instantaneous. This actually reduces our drop-offs and reduces effort, time taken for an end to end onboarding.
Once the payout is ready to be disbursed, we need it to hit the right bank accounts 100% of the time. Again bank account verifications which were manually done before - are now electronically done via real time penny-drop validation. The improvement has been nearly 1000 bps in accuracy.
I’d mentioned that the effective cost per hire is actually INR 3500 - this actually works out to ~2% of your monthly cost of payroll. Technology should bring this cost down logically with smarter hiring, automated onboarding and verification.
But cost and cost saving is not everything, of course.
Picture this - imagine you onboard a worker before the weekend and he works the entire weekend and when it’s payday on Thursday, the salary is disbursed to an incorrect account. The entire feedback loop, figuring out what went wrong and correcting it could take a couple of weeks - and by then the damage is done. There is just no way this person would trust us ever again. Like I said - Attrition would never come to zero - you have to manage it, mitigate it and that’s where technology changes the game.
Thank you Col Prabhu for this chat - it has been very insightful indeed. All the best to you for your future endeavours!
