Is Dubai's cloud kitchen business getting too crowded?
Illustrative image: Cloud kitchens have become one of the hottest new business categories in Dubai after coronavirus showed up in March last year. Image Credit: Ahmed Ramzan/Gulf News

Dubai: Online food delivery has exponentially grown over the past decade, and more so in the last two years, owing to the pandemic. As more and more people preferred to order in, the food delivery business boomed. Statista reports show that revenue in the online food delivery segment is projected to reach US$306,808m in 2021.

This growth has also catapulted another sector of the food business – cloud kitchens.

Cloud kitchens are disrupting the F&B scene across the world, and the industry in the UAE is in stride with this trend. A cloud kitchen is basically a space to cook, pack and deliver. There is no dining space or front-facing staff, the sole idea is to get orders in and get those orders fulfilled.

Benefits of cloud kitchens

The major advantage of cloud kitchens is reduction in costs. Saving on real estate space or rent and front-facing personnel costs, savings on décor, and easier expansion are just some of the benefits of operating through cloud kitchens.

Stock - Dubai Cloud Kitchen (Kitopi)
Cloud kitchen business ranks right alongside online grocery app launches and the ‘Buy Now Pay Later’ platforms as the trends to keep watching out for.

Not all cloud kitchens are the same though – there are different models that restauranteurs and entrepreneurs find success in, depending on the market. For example, some brands go for an independent dedicated kitchen with no storefront or physical dining, and where all orders come through an online source. Some cloud kitchens may, on the other hand, service orders for multiple brands.

Dubai-based AWJ Investments is one of the latter models, and is a UAE-home-grown cloud kitchen business. Dabbling in different Middle Eastern and Levant cuisines, the group is behind successful food brands such as Operation Falafel, Awani, Catch 22, Surf Bite, Yalseh and Murjan Cafe. Showcasing how cloud kitchen can help expand the business across markets and brands, the group’s latest venture is a technology-driven cloud kitchen christened DKitchen which can host and serve over 25 brands.

We spoke to Manhal Naser, Group CEO of AWJ Investments about the business model and the new venture.

The pandemic spurred a growth spurt in the cloud kitchen industry – comments?

Manhal Naser, Group CEO of AWJ Investments

I agree. The cloud kitchen industry always had potential within this market due to the growing appetite for food delivery, however the pandemic acted like a catalyst, accelerating the growth as businesses simply could not operate due to closures and restrictions.

Many restauranteurs adapted their operations to focus on delivery to keep going during the pandemic. This has proven to have a long-term success, even as we recover, as the cloud kitchen model can reap generous profits versus retail outlets which are still burdened with high real estate costs and restrictions. In addition, consumers are continuing to be reluctant to dine out as often as they previously did and are enjoying the affordability, speed and convenience of the current delivery market.

Starting a cloud-kitchen business in the UAE – what are the things to consider?

There are many important things to consider. To ensure your operations and production are efficient and really fit for purpose, you should plan your kitchen design as promptly as possible, as 85% of current kitchens in the market were planned incorrectly and are not set up effectively operationally or in terms of capacity.

Location, operation expenditure

The location of your kitchen is critical. You need to understand the area well and ensure that the brands that the kitchen will host and cater within that particular zone are in demand for the potential target audience. Some kitchens have not considered this and now suffer from poor brand performance simply because they are not being offered to the appropriate demographic.

Operational expenditure must be studied very extensively. Most failures are coming from additional unnecessary OPEX. The business and operations must be lean and fine-tuned to ensure profitability.

Finally, it is imperative that all brands in the kitchen have detailed Standard Operating Procedures and manuals to ensure that staff are thoroughly trained and the consistency and quality delivered is as per the brand standard.

While most cloud kitchens use existing delivery apps or food aggregators, AWJ Investments is focusing on being independent from start to finish. Would you say this was a natural step for you, and if so, why?

This was certainly a natural step for us, as we have always looked at how we can amplify our offerings and ensure we deliver quality and efficiency to our customers.

Contactless dispatch

By introducing a special ‘first-to-market’ smart technology, with contactless dispatch at its core, DKitchen sets itself apart from other dark kitchens in the market.

By introducing a special ‘first-to-market’ smart technology, with contactless dispatch at its core, DKitchen sets itself apart from other dark kitchens in the market. Image Credit: Supplied

Our unique system is designed to create a lean and performance driven operation which fosters strict hygiene and safety monitoring processes, with a contactless dispatching smart software exclusively created for DKitchen. With this model, all orders transit through a production line where they are sorted automatically, eliminating the need for multiple dispatchers, and resulting in less wait time, reduced cost and a decrease in human error.

The DKitchen technology also acts as a quality assurance check, filtering orders and dispatching only once completed, whilst also alerting operators when orders are behind schedule, allowing us to fully optimize performance. To enhance safety, the automated dispatch system entirely removes the human interaction of delivery drivers and dispatchers in line with social distancing expectations.

From concept creation to delivery

Finally, AWJ Investments takes full responsibility for the homegrown concepts within DKitchen, from concept creation to the delivery of our food to our customers. We have our own DKitchen delivery fleet, though we do still have relationships with aggregators who we work very closely with to ensure that customers are getting the best possible experience.

What is the process for selecting a brand to work with – what is the process that AWJ Investments uses to select brands?

All of the brands operating out of our DKitchen are AWJ Investments homegrown concepts- we create brands ourselves.

New virtual brands

With the smart technology we have introduced, it allows us to deliver up to 3,000 meals per day and can host up to 25 brands.

To fulfill this capacity, we have developed numerous new virtual brands, offering highly competitive and affordable prices, perfectly positioned for the delivery market and covering a range of cuisines; from international cuisine including SushiDo, which serves classic and fusion sushi, ChixFix, a competitively positioned American style fried chicken brand, Pizzaza offering pizza, District8 serving up burgers and TikiMiki delivering the best of Asian food, to Arabic concepts such as Awani Express, which dishes out Levant cuisine with a twist, Habibi Kitchen, a Lebanese food market-style concept and Tabkha, focusing on Arabic comfort food.