Cloud kitchens

FOODSERVICE

A new foodservice business model to weather the pandemic storm

Cloud kitchens are also known as ghost kitchens, commissary kitchens, and virtual kitchens.

There are several types of cloud kitchen business models:

1. In a shared space cloud kitchen model, restaurant owners use their own staff and produce, but the space and equipment are owned by a third party. The shared kitchen space may be used by several businesses, each looking to prepare dine-at-home food without the overhead of a restaurant.

2. A dedicated space cloud kitchen model is a space rented (or purchased) by a brand solely for their own use. They may decide to use one or more different concepts in the location, but do not have other brands operating with them.

Unlike traditional restaurant business model that requires a physical space in a prime location to conduct operations, Cloud kitchens lease spaces (in places with relatively low rent) to produce food, then sell and deliver foods to customers through online food delivery platforms like Deliveroo, Foodpanda, Grab, and Uber Eats.

When the consumer-facing side of a kitchen is exclusively in the cloud (i.e. when it doesn’t have any physical storefront), it is a true cloud kitchen and basically a delivery-only restaurant.

Cloud kitchens - advantages

Cost savings—there’s no need to invest in real estate or pay high rents (they can be housed in industrial buildings versus pricey street-facing locations) or overspend on interior design, furniture or equipment.

Greater flexibility and scalability—with lower financial investment, lower overhead with only kitchen staff is required, you can start small but expand fast.

More competitive—the restaurateurs can use their resources to utilize new ingredients on their menus, set more competitive prices, produce and deliver food in a manner that is reasonable for what they can realistically handle.

Wider market—cloud kitchens allow your brand to expand its focus on food delivery and reach a larger audience. Delivery-optimized restaurants advertise their business through delivery apps and social media rather than more narrow marketing channels. Cloud kitchens can strengthen your brand by fortifying new marketing channels and gaining greater exposure.

Cloud kitchen start-ups are seeing the potential and investors are jumping on board. Singapore property tycoon Kishin RK will create a network of 1,000 cloud kitchens across Asia, Europe and the US; CloudKitchens Co, founded by former Uber CEO Travis Kalanick, has raised roughly US$400 million from Saudi Arabia’s Public Investment Fund since last year.