“How my cloud kitchen business went from 2 lakhs to 135 crores”

Bakingo, an Indian online cake delivery cloud kitchen business, recently made headlines because of its huge revenue success.

The business was started with an initial capital of 2 lakh rupees and now stands at 135 crores.

We caught up with one of the co-founders, Shrey Sehgal and found out about his journey to successs and the challenges that came with it.

Let’s start.

Shrey Sehgal, Himanshu Chawla and Suman Patra, Founders of Bakingo

Shrey started an online flower delivery business with one of his friends, Himanshu, way back in 2010 with just 2 lakh rupees in hand.

He comes from Panipat, a small city in India known for its handloom business.

He is a software engineer by qualification but had decided in college that he would do something of his own.

“My parents always told me that we could not afford doing business, so I have to focus on studies. Studying is fine but studying hard just because you cannot do anything else isn’t acceptable to me. I always wanted to challenge that.”
Shrey Sehgal, Co-founder, Bakingo

The journey begins…

After completing his studies, he started working in a firm. After 6 months, he quit that job and worked with a start-up. And finally, after a year and a half, he started his own online flower delivery business.

On selling flowers, he says, “The main reason for getting into online flower delivery was that it does not require much stock and much capital in the beginning which was our major concern. Also, we wanted to do something in e-commerce.”

But, it was definitely not easy to convince his parents.

He quips, “Entrepreneurship was not so fashionable then. It literally took 3-4 years for my parents to understand that it’s ok to leave your handsome paying job and start a business. People told me things like “why did I study so much, if I had to sell flowers.”

Their first venture Flower Aura earned 10 lakhs in revenue in the first year.

And after 6 years, they decided to come up with an exclusive online brand just for selling cakes.

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Want to be an online florist? Read this first.

Bakingo, the Cloud Kitchen

People used to order cakes from their flower delivery business. And this gave them an idea to start a cake delivery business.

“Cakes go perfectly with flowers and they are a great combination for special occasions. Also, the idea is to have a pan-Indian cake brand just like other countries have.”

So, they came up with Bakingo, a platform exclusively to sell cakes. They started from Delhi-NCR and now have a presence in 11 Indian cities.

It is based on a cloud-kitchen model and earned a revenue of 75 crore rupees last year.

“It has been a great journey. More than the capital, what matters is our efforts and our journey.”

As mentioned in Bakingo’s website, they make and deliver fresh cakes to their customers. They claim that it carries no harmful preservatives.

Apart from a huge variety and premium quality, their USP lies in their delivery. They offer 3-hours delivery, same day delivery and midnight delivery.

Benefits of having a Cloud Kitchen model

1. Low investment cost: The cloud kitchen model dispensed a need for setting up a front. There is no need for expenses such as dinnerware, decor, or signage.

“We were an online first venture and did not want customers to walk-in. So, we opted for a cloud kitchen model due to its low rentals and more space. Though this wasn’t the term used back then. And we were sure that if we delivered a quality product then the customers would definitely come back to us.”

2. Better profit margins and lower overheads: Conventional bakeries normally struggle to be profitable because they are straddled with many overheads such as high-priced utilities, labor costs, and exorbitant property taxes. Cloud kitchens do not have to deal with this problem. It improved the profitability of the company.

3. Greater flexibility in the menu: Having a web-based ordering system allows Bakingo greater flexibility in terms of setting up its menu. It also allows better pricing because a dish can be easily discarded depending on customer feedback without having to bear the printing of menu costs. There is also less wastage of food.

Challenges

Maintaining quality: Cake is a perishable item and cake delivery is a delicate task, especially if it is North India where temperatures go as high as 48 degrees.

Having standard set quality procedures and a take-back policy ensured Bakingo made a name among its customers.

Also Read
How to start a Cloud Kitchen Business

Hiring: In a start-up, hiring can be a real headache. Shrey says, making people believe in me and making them stay was the hardest of it all. Operating from a small room where toilet facilities were pathetic was not an easy task.

But, sticking to providing value and our vision, helped us sail.

Advice for young entrepreneurs

Shrey feels it is great to see more and more people starting their own businesses, that too, at quite an early age.

He says, “As long as you are providing value, age does not matter. But, if you think that starting at 20, you will retire at 25 and that’s why you want to do it, it might not be the right thought.”

Shrey says, being patient and consistent has given him success. For the newbies, knowledge of unit economics is a must before trying your hands out in a baking business, according to him.