What is a cloud kitchen?
Does it mean that cloud kitchens have no brick-and-mortar premises to call their own? Not necessarily. The pandemic has been a game-changer for many restaurants. Indeed, they have been encouraged to move their activities online to survive, offering on-demand online delivery rather than in premises. Forced to shut down to physical customers, restaurants still used their existing kitchens to maintain revenues.
It is worth mentioning that cloud kitchens are not a novelty, as they were originally introduced by many entrepreneurs, including Travis Kalanick. Yet, COVID-19 has been a catalyst to drive dark kitchen operations for online-only restaurants, which can save significant costs from startup to upscaling.
How the cloud kitchens are changing the F&B industry
By eliminating the dining area, the ghost kitchen brings a wind of renewal to the restaurant sector. Perhaps, the biggest change is the costs of creating a restaurant’s brand. Established, traditional restaurateurs face high costs to set up a branded dine-in presence. On the other hand, the cloud kitchen model removes the physical facilities, without affecting the branding. It makes building a brand more affordable using existing marketplaces.
Additionally, consumers also praise cloud kitchens for their convenience, making it easy to enjoy a restaurant-quality meal without leaving your home. Customers can use a service such as Uber Eats to order from a local on-demand online delivery restaurant without missing their favorite TV shows.
Cloud Kitchens' multi-models
In the past years, we have noticed many different models of cloud kitchens seeing the light. Even though new concepts are introduced very often, we highlighted three of them:
- The Brand-Owned Cloud Kitchen: the one where you create your own kitchen for your own brand. The kitchen’s location will determine the delivery radius, usually close to crowded neighborhoods. It is not a novelty, as many Asian and pizza takeaway kitchens have been operating like this for several decades.
- The Real-Estate Cloud Kitchen: the one where you build the real estate but rent the space to third parties. This ghost kitchen consists of having multiple brands using the same facility. For instance, the platform Kitopi Kitchen in Dubai provides end-to-end operations on behalf of restaurants, using shared kitchens in every city they operate in to prepare the food. This model is also referred to as an aggregator cloud kitchen or a coworking cloud kitchen.
- The Hybrid Cloud Kitchen: the one that is a combination of the above two. In this model, you create your own cloud kitchen brand and facility, but also rent a percentage of it to third parties to share the space. With this model, since you own the cloud kitchen you control the margins.
Foodtech pioneering growth
Businesses can also expand their operations by combining multiple cloud kitchen models simultaneously. For example, a Chinese takeaway restaurant in NYC owns a brand-owned cloud kitchen with food preparation facilities in one specific location. But it can reach out to a broader audience with rented ghost kitchens in surrounding areas and cities. Unlike a physical setting, this model allows for additional scalability, such as multiplying kitchen rentals to cover more demands and reach out to new delivery locations.
For ambitious entrepreneurs, there can be a lot of growth potential with ghost kitchen rentals to third parties. Indeed, aggregator-managed models run by major players, such as Kitchen United and Rebel Foods, are growing in popularity. Basically, cloud kitchen adoption is expected to grow by more than $1 billion by 2024 according to FoodServiceEquipmentJournal.com. Shared kitchens drive the trend, offering again better scalability and returns for entrepreneurs.
Besides, for restaurants, it's the first time businesses gain digital data insight into users’ preferences in real-time, creating an adaptable model to grow customer satisfaction.
