Cloud Kitchen Market - Forecasts from 2021 to 2026

The cloud kitchen market was valued at US$32.460 billion in 2019 and is expected to grow at a CAGR of 12.28% over the forecast period to reach a market size of US$73.024 billion by 2026. A cloud kitchen, also known as a Ghost Kitchen, is a place where food is made and delivered to customers' doorsteps by taking orders over the phone or through online ordering systems. They primarily do not provide dine-in services. They are mostly involved in food preparation and delivery or have partnerships with food ordering websites such as Swiggy, Zomato, Dine Out, and others.



Cloud kitchens are built for speed, efficiency, and scale, making it simple to operate a delivery restaurant with little risk and investment. They allow an entrepreneur to collaborate with many brands from a single location, increasing the chances of improved cost management in the existing infrastructure. It also provides greater flexibility. Cloud kitchens can continuously review what they provide by assessing what works and what doesn't. All of this results in cheaper costs, more efficiency, and reduced risks.

However, with each consecutive shutdown, there has been a significant increase in the number of Cloud kitchens. Many home businesses and cloud kitchens have launched and have listed themselves as food aggregators which increases the competition in the market. Due to the lack of a physical storefront, it is difficult to cultivate a loyal and regular fanbase for the brand. The curator's aim to offer an experience in a box is also a hurdle because it is dependent not just on the packaging but also on the care with which the food is delivered.

In India, well-known brands such as Punjab Grill, Pino's Pizza, and Zambar, as well as international fried chicken giant Kentucky Fried Chicken, aim to establish cloud kitchens in order to expand in the country. Furthermore, In China, Starbucks has partnered with Alibaba to run its Star Kitchen cloud kitchen brand out of the latter's Hema supermarkets in Hangzhou, Shanghai, and Beijing.

Kitopi, founded in Dubai in 2018, operates 30 cloud kitchens across the United States, United Kingdom, and the Middle East. Its metropolitan locations exclusively use delivery apps like DoorDash, Uber Eats, and Deliveroo to prepare meals for consumers.

Driver

Low risk and low capital requirements

The most significant benefit of the cloud kitchen model is the removal of costs such as restaurant space, ambiance, furniture, costly silverware, electrical fixtures, and so on. All of them are eliminated, which leaves just a bare minimum of expenses for culinary personnel, cooking supplies, kitchen equipment, and some maintenance expenses such as power bills. Cloud kitchens can easily invest in new menus and ingredients by effectively utilizing their resources. Restaurant owners and operators can change their menu ingredients, establish competitive prices, and operate their businesses much more efficiently if they use real-time consumer data. Cloud kitchens also provide convenience to customers to order from anywhere at any time. According to the National Restaurant Association consumer trendS 2020, 52% of customers believe that ordering takeaway or delivery meals are essential to their way of life.

Restraint

A high influx of Cloud kitchens

The pandemic has led to an increase in the number of cloud kitchens. Especially after a nationwide lockout and layoffs, the number of home businesses and cloud kitchens has increased since it is one of the most cost-effective ways of generating a profit in the food business. However, this has created the major problem of keeping costs low while attempting to establish a presence in a relatively overcrowded market. The majority of customers so prices sensitive that loyalty takes a back seat. There is a need to get the best bargain which increases the price competition. This in turn starts a loop of providing more and more discounts in order to attract clients.

COVID-19 Impact

The Covid19 pandemic had negatively affected the Food industry but presented an opportunity for Cloud kitchens. According to the National Restaurant Association, the restaurant sector lost an estimated $25 billion in revenue and more than 3 million jobs during the first 22 days of March 2020. The demand for cloud kitchens has risen substantially in the last year or so, as restaurants were forced to close down due to lockdowns. With consumer footfall virtually disappearing overnight, restaurants were able to operate by implementing a cloud kitchen approach. The research conducted by National Restaurant Association found that 54% of restaurant operators have made the shift to completely off-premises services, while 44% have been forced to temporarily close down. While the initial idea was to provide takeout or delivery, many operators are discovering how this approach can add value to their business in a variety of ways.

Key Developments:

• Franklin Junction established a partnership with EAT in May 2021 to target the MENA Region for global expansion. The collaboration will allow current kitchens in the MENA area to become Franklin Junction Host Kitchens®, and restaurant brands headquartered in the MENA region or the United States to establish a global reach through the relationship.
• Mad Grass, a Jakarta-based startup, open the world's first brick-and-mortar vegan dining and cloud kitchen collaborative space in September 2021.
• CloudKitchens, a shared kitchen business launched in 2015 and backed by Uber co-founder Travis Kalanick, was planned to be launched in Brazil in the first half of 2020. Earlier that year, the Saudi Arabian sovereign wealth fund granted the company $400 million.

Market Segmentation:

By Business Model

• Standalone Cloud Kitchen
• Multi-brand Cloud Kitchen
• Commissary (Aggregator) Kitchen
• Outsourced Cloud Kitchen
• Co-Working Cloud Kitchen

By Order Source

• Customer call-in
• Delivery App
• Firm's App
• Aggregate App

By Geography

• North America
• United States
• Canada
• Mexico
• South America
• Brazil
• Argentina
• Others
• Europe
• Germany
• France
• United Kingdom
• Spain
• Others
• Middle East and Africa
• Saudi Arabia
• UAE
• Israel
• Others
• Asia Pacific
• China
• India
• South Korea
• Taiwan
• Thailand
• Indonesia
• Japan
• Others