Cloud kitchens have certainly managed to disrupt the food industry, even though they rely entirely on online orders and have no-dine in facility. They are also known as virtual kitchen, ghost kitchen, dark kitchen or commissary kitchen.
The ease of operations & experimenting with multiple concepts along with low investment and an expanse market opportunity makes it a viable option for many aspiring or existing restaurateurs.
Being, delivery-only restaurants, restaurateurs don’t have to worry about high rental costs, large capital investments, restaurant interiors etc. although they invest heavily on their website and/or aggregators for their brand visibility.
With the ongoing pandemic, which impacted majority of the restaurateurs adversely, low overhead and east of operations migrated many restaurateurs to shift to economically viable cloud kitchens.
According to Allied Market Search, the global Cloud Kitchen market size is estimated to reach USD 71.4 Billion by 2027, with a CAGR of 12.0% from 2021 to 2027.
In Dubai the current market size of food deliveries and cloud kitchens are estimated at Dh2.73 billion, out of which online deliveries account for 91% and cloud kitchens account for about 9%,
Dubai is also home to some big brands like Kitopi, Kitch, Kitchen Nation, iKcon etc. As of April 2021, there are 400+ cloud kitchens in Dubai and about 1536 restaurants have opened between Jan and Sept 2021, according to Khaleej times. With the ongoing EXPO 2020, the opportunities have further accelerated the demand for the cloud kitchen industry in the F&B sector.
Primarily there are 6 main operating models for a cloud kitchen.
Standalone/Single-brand Cloud kitchens, which offers 1-2 cuisines and has an avg. space of 300 sq. feet.
Virtual restaurants utilize infrastructure of an existing restaurant & has a unique brand name on online aggregator platforms.
Multi-brand cloud kitchens host multiple brands under one roof and each brand offers unique cuisine and has multiple listings on aggregators.
Co-working Kitchen has many kitchens under one roof and any brand can rent out their space.
Aggregator Managed cloud kitchens invite top restaurant partners to launch & prepare food for delivery-only from these kitchen spaces.
Operator Managed cloud kitchen runs the operations of an existing or upcoming restaurant brand on their behalf and work on a revenue-sharing model.
Here are some important factors that will give you an approximate estimation of the capital for your cloud kitchen business.
Once you’ve done a detailed market study, then chose a location & property. Typical size of cloud kitchen varies from 300 sq. feet to 1200 sq.
Based on whether you plan to start in the mainland or free zone plan your licensing process. The main license required to start a restaurant in the UAE is the Trade License and Food License.
Finally, plan your kitchen equipment and packaging; ensure a good packaging for good customer experience.
According to the industry estimates shared by restaurant times, restaurant rentals account for 10% of the overall monthly costs, food costs for about 30% of food sales while overhead costs for labor and maintenance takes another 10-20% off the top line.
As a cloud kitchen you should have a dynamic marketing strategy, which is why you tend to spend heavily on marketing your food delivery brand in the initial days as you rely only on online and telephonic food orders.
Lastly as a cloud kitchen is a virtual restaurant it requires an extremely efficient integrated technology; online restaurant ordering system (which accurately keeps tracks POS) and inventory management system.
While the cloud kitchen market boasts a bright future with heavy competition it is important to optimize technology to monitor operations and delivery.
Additional factors that small cloud kitchens miss out on are rewarding loyal customers, optimising the website, and harnessing the power of social media.
Some grave mistakes due to which most cloud kitchens fail is:
- Due to lack of efficient kitchen structure
- Inefficient system that tracks opening and closing inventory stock
- Poor financial planning
- Ineffective menu pricing and planning.
Also, most cloud kitchens forget to interact with the customers, and overlook the idea of customer survey and feedback.
While cloud kitchens possess the ability to shun the competition and fuel the market, it is crucial to keep a close watch on the operations, access the financial needs accurately, and plan a well thought out marketing strategy to thrive and grow in the cloud kitchen market.
You can visit our website https://jupiterbusinessmentors.com/ to book a FREE CALL with our industry expert for any queries regarding your restaurant business plan.
