Dubai: Want to take a rough guess on the number of cloud kitchen brands operating in the UAE, with Dubai hosting the majority of these?
If you said 400 of them, give yourself a treat. And these 400 brands operate out of 80 locations, again the majority being based in Dubai. It won’t stop there as more F&B operators do away with the need to have a restaurant or smaller physical location and just rely on orders streaming in from apps or booked through their websites.
The kitchens will do the rest – these days, there are even restaurant operators that have transformed themselves into full-fledged cloud – or ‘dark’ – kitchens to serve neighbourhoods. (Jumeirah Lakes Towers cluster has got a handful of them.)
These serve all manner of taste buds – whether it’s Indian cuisine or Italian, there’s a cloud kitchen somewhere who can muster the ingredients and serve you fresh.
“The food aggregator Deliveroo launched Deliveroo Editions, its cloud kitchen model to help restaurants reach a wider audience through the platform,” said Sandeep Ganediwalla, Senior Partner at RedSeer Consulting. “Sweetheart Kitchen is backed by Delivery Hero.
“However, most of the cloud kitchens here are independent and work with food delivery aggregators.”
More signing up
The interesting aspect is that more are entering this space, no doubt thinking of the appetizing double-digit growth rates it has been putting up since January 2020.
There are funds that are backing up the business model to the hilt, more so as cloud kitchens spread to the other Gulf states. Sweetheart Kitchen has raised a combined $34 million as it adds more bases, while Dubai based iKcon, which launched in 2019, has to date picked up $20 million for its Series A funding. iKcon, which has Khalid Baareh as co-founder and CEO, will use this for its Saudi and other regional expansion plans. Among the brands it is associated with are Pinza, German Doner & Kebab, Wingsters, Salmontini, and Monkey Cookies.
“The cloud kitchen space is an exciting industry that is poised for growth alongside the food delivery market which continues to benefit from COVID-19 tailwinds,” said Abdallah Yafi, Managing Partner at B&Y Venture Partners, which was one of the investors in iKcon.
New F&B realities
For a majority of F&B operators, the present and near future is about trying to recover from the body blows suffered last year. Many of them are still reliant on takeaways or catering to a limited number of dine-in patrons.
“Restaurants are wary of heavy investments to increase their operations,” according to a report from RedSeer. “Kitchen-as-a-Service enables a cost-efficient method to test out new geographies and brands for the restaurants. “This serves the aspiration of restaurants that may not be able to afford the real estate and other associated costs if they follow the traditional route.”
It's about real estate
That’s exactly what some of the former restaurant operators are doing. They have repurposed their existing facilities, done away with space assigned for dine-ins and created bigger kitchens to serve the online food delivery market. Or they have scaled down and use independent cloud kitchen operators to serve their customers.
This year could see more restaurant operators taking this route. Anyone with multiple outlets are particularly vulnerable.
For them, cloud kitchens thus come as a solution. “The majority of cloud kitchen operators enable existing restaurants to get closer to the consumers,” said Ganediwalla. “But there are virtual restaurant players such as Rebel Foods, which have created consumer brands and deal directly with retail consumers.
“Yet, the UAE/Gulf cloud kitchen market is at its infancy. There are multiple business models that are emerging such as no-frills KaaS (Kitchen-as-a-Service), virtual restaurants, and full-service satellite kitchens. Players such as Kitopi and Talabat have also expanded the ‘dark kitchen’ concept to grocery and created ‘dark stores’ to be closer to consumers.”