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As COVID-19 continued to disrupt the hospitality industry and restaurants shuttered down overnight, food delivery soared like never before. Although the food delivery trend had already started to disrupt the global food industry before the onset of COVID-19, the ongoing global pandemic seems to be the final death knell for local restaurants.
According to KPMG’s 2018 Food and Beverage Report, “deliverution” or delivery-led revolution, which was identified as a strong market trend has become the need of the hour in times of forced quarantines and social distancing. The pandemic accelerated the food delivery trend globally and many of these deliveries originated from what we call “cloud kitchens”.
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With an assortment of different names such as virtual kitchens, ghost kitchens, dark kitchens or shadow kitchens, cloud kitchens are the new flavor of the season. Though they have existed for a while, the global pandemic has made them more popular than ever before with most of the restaurants becoming cloud kitchens, literally overnight.
A move away from the traditional brick-and-mortar restaurants, cloud kitchens are built around the concept of food delivery rather than a typical dine-in or sit-down experience. They focus only on delivering food, whereby a consumer has to use third-party apps such as Zomato, Uber Eats or Deliveroo to order food.
A major upside of this model is the savings on infrastructure. With a cloud kitchen, you only need a space to operate your kitchen. There is no need for a floor space for dine-in customers and neither the need for a prime location because you typically do not have any walk-in customers.
Furthermore, cloud kitchens need to hire only limited staff such as chefs, as there is no need for customer-facing staff such as hosts or servers. The concept of cloud kitchens came into the spotlight with former Uber chief Travis Kalanick’s startup venture CloudKitchens.
In recent times, other startups closer home such as Kitopi and Food To Go have also received significant funding. In such Kitchen as a Service (KaaS) models, restaurant owners need to hire only culinary staff whereas the cloud kitchen provider typically offers shared services such as cleaning, maintenance and security. However, like all businesses, even cloud kitchens have their own share of pitfalls.
There is no face-to-face interaction with the customer, which makes it difficult to establish any kind of emotional connect with them and customer satisfaction relies entirely on how optimally you can deliver their order. Moreover, since the cloud kitchen relies entirely on online customers, a positive word of mouth and good reviews on food delivery apps are critical to increase sales.
Also, competition is intense in a crowded online marketplace, which can be a challenge for cloud kitchens that are entirely reliant on these third-party apps for customers.
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COVID-19 has had a devastating effect especially on small local restaurant owners, with many of them questioning if they can sustain through the crisis. Plenty of restaurants never had a need to rethink their business models before.
Although delivery services are not new for restaurants, shifting to a cloud kitchen model has become a necessity for many. With consumers preferring to stay away from crowded places, the growth of cloud kitchens is inevitable in today’s scenario.
Furthermore, experts suggest that cloud kitchens are a more effective expansion strategy for restaurateurs. Nonetheless, cloud kitchens have shown us how we can leverage crisis situations to focus on innovative ways of doing business and create new opportunities and jobs.
REFERENCES:
https://home.kpmg/ae/en/home/insights/2019/01/uae-food-and-beverage-report18.html
https://medium.com/eatos/can-cloud-kitchens-save-the-restaurant-industry-aed85a1e8a0e
