Your last online food order most likely was cooked and delivered from a cloud kitchen. Cloud kitchens have exploded across the globe and projected to reach a size of $71.4 billion by 2027, according to Valuates Reports.
Digital penetration of food delivery has been on a consistent rise over the past 5 years with the proliferation of food aggregators like Talabat, Deliveroo, Careem and, most recently, noon. Traditional restaurants that used to see 5-10 per cent of revenues being generated online as recently as three years ago now get over 50 per cent coming from delivery platforms.
The advances in technology, changes in consumer behavior and increased optionality, affordability and convenience experienced by consumers by having food delivered is here to stay. This in turn has given rise to cloud kitchens, which operate purely as prep-and-delivery fulfillment centers for food.
To leverage demand, restaurant operators began to conceive delivery-only virtual brands utilizing their own fleets and cloud kitchens to accelerate their expansion and growth. According to Statista, global revenue in the online food delivery segment is projected to be $151.5 billion in 2021. Reports suggest that in this region, the UAE is the second-largest market for online food delivery with a market size of $834 million.
Due to razor-thin margins, high wastage and fixed costs, it is essential for restaurateurs to maximize their efficiency, the revenue per square foot, and offer a consistent and expedited delivery experience. The F&B industry has traditionally lagged in adopting tech - this in turn has created data blind spots for operators and handicapping their efficiencies.
But with technology such as GrubTech, operators can bring insights into their customer behaviors and operational vectors. These are mission-critical to cloud kitchen operators to ensure productivity and key performance metrics are measured and improved. Accurate forecasting means more efficient production schedules, improved purchasing, maintenance of proper inventory levels and inventory turnover and a better consumer experience.
Ensuring a successful cloud kitchen operation requires a deep understanding of various first-party and third-party metrics. As an example, detailed analysis of order frequency distribution by day and hour can shed light on demand, inventory requirements, and driver assignment distribution, all of which directly impact on sales.
Location is key
Without the regular footfall at a brick-and-mortar location, cloud kitchens rely entirely on their online presence to generate sales. To do so successfully, thorough research on the competitive density of their brand portfolio, demographics and cuisine preferences are prerequisites for location selection. Choosing the right location is the first principal to the success of a cloud kitchen.
Kitchen management data
Cloud kitchens can effectively reduce their food wastage and in turn improving margins and increase their order throughput for a faster delivery time. Access to real-time data can allow operators to laser focus on bottlenecks, identify opportunity and consistently improve operations. They can also better understand recipe margins, food costing and sales performance by adjusting their pricing and menu for sales optimization.
Analyzing the sales data by date/time, brand and sales channel can allow operators to understand the average order value, Top 10 selling items, lowest selling items, and fastest moving modifiers, which in turn can help determine when to run promotions to drive traffic during an otherwise low demand days/hours.
Solutions are available to make is easy for cloud kitchen operators to understand the process and time it takes for their team to execute an order from origination to doorbell. This information can be extremely useful to ensure food leaves the kitchen fresh and arrives in the shortest possible time to the customer.
By analyzing prep times at recipe level, it potentially can identify new ways to create efficiencies through routing orders within the kitchen - i.e., order decomposition and re-composition - and therefore maximizing utilization of resources and time reduction.
Data-enabled kitchens, if configured and monitored correctly, can offer detailed and layered data to optimize the online ordering process and ensure customers get what they want, the way they want it.