Overview
A cloud kitchen is a commercial kitchen that is used for delivery or take-out cooking only, and guests are not allowed to eat in the restaurant. Cloud Kitchen allows restaurateurs to extend their existing restaurants or create virtual brands at a minimal cost. This allows restaurateurs to scale up, reach new markets, and experiment with new concepts. Many restaurants use cloud kitchens as experiment spaces to optimize staff and inventory while testing new ideas.
According to UnivDatos Market Insights, The global kitchen market size was valued at USD 29,418.5 million in 2020 and is estimated to reach USD 112,741.7 million by 2030 with a CAGR of 13.12% from 2021 to 2030.
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There are many types of cloud kitchen business models:
- In the shared space cloud kitchen model, the restaurant owner uses her staff and production, but the space and equipment belong to her third party. The communal kitchen area can be used by multiple businesses wanting to prepare meals at home without the hassle of a restaurant
- A dedicated cloud kitchen model is a space that a brand rents (or buys) exclusively for its use. They may choose one or more different concepts on the site, but they do not operate alongside other brands
- Cloud kitchens can be used to launch an entirely new business or concept. This is also called a virtual restaurant or virtual brand. Virtual brands operate in established kitchens, allowing companies to experiment with new concepts without large investments
Cloud kitchens v/s Ghost kitchens
Whether cloud kitchens, virtual kitchens, shadow kitchens, commissary kitchens, dark kitchens, or ghost kitchens, the centrepiece is a restaurant that primarily processes digital orders. They can be operated in established brand kitchens or independently but are usually accessible online.
Within the ghost kitchen segment, we need to define a few terms. Kitchen-as-a-Service or Dark Kitchens, for example, kitchen-as-a-service, or dark kitchens, are fully built spaces rented out to a concept for their ghost kitchen duties. They offer a full-service kitchen and delivery model, making it easy to start a delivery restaurant with low risk and low capital.
Some ghost kitchens may include a drive-thru or takeout area. But there is no traditional storefront or indoor seating. No matter what you call these digital-only brands, they meet a critical need in the industry.
Advantages of Cloud Kitchens
- Flexible Menus: Being app or web-based, you can change menu focus at any time without worrying about billboards or printed materials updating. If an ingredient is too expensive or no longer available in your area, you can easily swap out menu items to match what’s on offer
- Reduced financial investment: A ghost kitchen or cloud kitchen is a virtual restaurant Eliminate some expensive elements that don’t fit in (decoration, signage, tableware, additional staff acting as servers or hosts)
- Opportunity for the experiment: Cloud kitchens allow restaurateurs to experiment with new concepts and easily discard ideas that fail quickly and don’t work with low exposure
- More efficient: Cloud kitchens can operate very efficiently by leveraging bespoke spaces and streamlining processes dedicated to delivery. Running multiple brands in your kitchen means you can prepare ingredients for multiple different menus in batches
Disadvantages of Cloud Kitchens
Competition in the cloud kitchen can be fierce. You’re competing in a crowded online marketplace, and customers can use a delivery app to scroll through multiple brands from the comfort of their homes.
Running a cloud kitchen means missing out on store-provided walking traffic. The reason you pay more to rent a storefront is that people will walk into your restaurant. This is not the case when you activate UberEats or DoorDash.
On top of that, you’re limited by the location of the kitchen you’re running (usually a 3-5-mile delivery radius). While rents can be attractive in low-income areas, you may not be in the right area to find the right customers.
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Cloud Kitchens: Market Size
With technology improvements, changing lifestyle preferences, and value chain upgrades, cloud kitchens are taking off. UBS anticipates that there may be scenarios where most meals currently prepared at home are instead ordered online and delivered from either restaurants or central kitchens.
Bogota, Colombia’s roads (53%) were the third busiest roads in the world in 2020, after Mumbai, India (53%), and Moscow, Russia (54%). It must be stressful to drive when the roads are congested. With 6.648 billion smartphone users worldwide by 2022, it is predicted that 83.72% of the world’s population will own smartphones. A total of 7.26 billion people worldwide. i.e., 91.54% of the world population, smartphones, and feature phones. Demand for cloud kitchens is expected to increase due to rising smartphone adoption and increasingly congested highways, which is expected to further propel the global cloud kitchen market.
Conclusion
The cloud kitchen is a technological invention that has truly revolutionized the food industry. For now, this is the new normal and is wide-ranging given any future pandemic threat.
Because cloud kitchens are easy to maintain, operate at low cost, and easy to scale, and are the optimal choice for homeowners. At the same time, the food is delivered on time at a relatively low price, making it a convenient option for customers and restaurants. Therefore, it is much better and easier to manage a kitchen in the cloud than in a restaurant.
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