How Cloud Kitchen is Helping Start-Ups Grow into a Brand

What is a Cloud Kitchen?

A cloud kitchen, also named a ghost kitchen, satellite kitchen, virtual restaurant, is a delivery-only restaurant. These restaurants do not offer dine-in services. Cloud kitchen enables users to place their order online or via telephone and have their food delivered at home. Various renowned cloud-kitchen start-ups, such as Swiggy, Zomato, Door Dash, Kitchen United, have emerged from just a basic startups to renowned brands. The concept has helped the companies grow within a lesser time as expected. Here is how cloud kitchen has helped start-ups grow into a brand.

Low Investments, High Profits:

Cloud kitchen is considered a suitable option as it requires low investment and has low risk. In addition, the profit margins are considerably high as compared to a traditional dine-in or takeaway restaurant. It does not require proper dine-in locations and interior to attract the audience. Cloud kitchen business also offers an opportunity to experiment with different concepts and formats.

Various prominent businesses have gained significant popularity in just a few years. For instance, Dahmakan, one of the renowned cloud kitchen platforms, started its journey in 2015. The restaurant was founded by the former executives of Foodpanda. The restaurant became the first Malaysian start-up business to participate in Y Combinator’s start-up accelerator program. Dahmakan also raised $18m in Series B funding in Feb 2020 to support the development of its end-to-end operating system. Later in the same year, this Malaysian food delivery start-up unveiled an online restaurant called Pop Meals in Thailand.

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Another prominent brand, Swiggy, started off its journey in 2014. This Indian food delivery platform has reached miles after that. As of now, Swiggy has established more than 1000 cloud kitchens for its restaurant partners across India.

Low Risks:

The wake of the COVID-19 pandemic has significantly changed the view of the people. Various businesses witnessed an abrupt downfall. However, the cloud kitchen platforms, such as Doordash, registered a significant acceleration in terms of revenue. This global health crisis abruptly surged the demand for online services as it reduces the risk of infection. As a result, it has been opportunistic for the cloud kitchen platforms.

DoorDash, one of the emerging cloud kitchens in the industry, became the fastest-growing meal delivery business even during the COVID-19 pandemic. Due to this global health emergency, various restaurants have registered significant losses. However, that was not the case for DoorDash. The brand extended its lead during the current lockdown. Moreover, it registered an increment of nearly 21 percent in terms of revenue.

Digital Presence Driving Businesses Forward

Social Media plays a significant role in popularizing any start-up. Almost every brand uses social media to reach a wide range of audiences. In addition to that, consumers also turn to social media to find the best restaurants and food delivery platforms. Thus, the combination of search engines and online reviews has helped many businesses grow rapidly. According to Statista, nearly 3.6 billion people were using social media globally in 2020. The numbers are expected to grow to nearly 4.41 billion by 2025. Thus, the availability of a wide range of audiences raises the need for brands for their digital presence.

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Abrupt Growth

The sole aim of every start-up is to grow into a renowned brand. However, various cloud kitchen brands have reached this goal within years. For instance, Rebel Foods turned into a pure-play cloud kitchen model from a quick-service restaurant (QSR) chain in 2016. Today, the company operates nearly 45 brands in India, including Ovenstory, Faasos, Behrouz Biryani, etc. The company is focused on expanding its presence globally. The brand has also expanded its presence across 10 countries, including India, the Philippines, Indonesia, Hong Kong, the United Kingdom, Singapore, Malaysia, United Arab Emirates, Thailand, and Bangladesh. In addition to that, it operates nearly 4000+ internet restaurants.

Another preeminent startup, Dahmakan, started off its journey in 2015. The brand acquired Polpa as a part of its overseas expansion in 2018. It also unveiled its three-city plan in Southeast Asia. Moreover, the brand unveiled its first online restaurant, Pop Meals, in Thailand in the same year. The story of these platforms clearly depicts the scope of ever-growing cloud kitchens.

Some Recent Successful Strategies:

Unlike traditional restaurants, cloud kitchens offer a wide scope of experiments. Prominent brands have been unveiling innovative strategies to branch out. For instance, in Feb 2022, DoorDash unveiled its express grocery delivery service with Albertsons Companies. According to the information, the brand will deliver groceries within 30 minutes to the consumers. Furthermore, the brand also launched Storefront on Feb 22, 2022. It is a customizable and commission-free online ordering product to help restaurants expand their digital presence.

In October 2021, Kitchen United acquired all stakes of Ghost Kitchen Developer Zuul. This agreement marked Kitchen United’s first acquisition. Moreover, the strategy aims to strengthen its position as a prominent restaurant delivery and take-out technology company.

Giants Turning Towards Cloud Kitchen

Recognizing the potential scope of the market, various e-commerce giants are also turning towards cloud kitchens. Food is among the largest internet business opportunities. Thus, the potential of these kitchens is driving the interest of a large audience. According to a study by Astute Analytica, the global cloud kitchen market is forecast to grow at a compound annual growth rate (CAGR) of 13.4% during the forecast period from 2021 to 2027.

Travis Kalanick, the ex-Uber cofounder, also opened a San Francisco location for CloudKitchens in 2019. Furthermore, e-commerce giant Amazon made headlines in the past as the brand introduced its plan to foray into the cloud kitchen domain.

Ola Foods (earlier Foodpanda), a food delivery service also started offering cloud kitchen services.

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