A ‘ghost’, ‘virtual’ or ‘dark’ kitchen, briefly defined, is a facility that has the equipment to prepare delivery-only food. The kitchens are designed with equipment capable of producing restaurant-quality food, but without there being a physical restaurant in which to serve it.

In essence, a cloud kitchen is a delivery-only outlet that accepts orders online, with no dine-in or takes away facility.

In the past, adopting a delivery-only model may have been economically unsustainable. Now, the ability to order food for delivery or pick up has become the norm.

Fast food is becoming a major trend in the online food delivery business due to two key aspects: convenience and affordability. The pizza industry has practically built its business around optimizing for delivery.

These kitchens rely on online food aggregators as well as their websites or mobile apps to generate orders. They may have their delivery fleet or tie-up with delivery partners for the last mile delivery. Delivery apps like uber eats, Grubhub, DoorDash, Jumia, Glovo and delivery roo have aided in the rise of this phenomenon.

The market opportunity for cloud kitchens is immense as people are choosing to stay in and under instead of going out. The growth of the delivery-only food prep establishment is inevitable – covid or no covid.  According to the Goldstein market intelligence report, the global cloud kitchen market was valued at USD 700 million in 2018 and it is further expected to grow at a CAGR of 17.25% through the forecast period of 2017-2030.

Why Cloud Kitchens?

• Requires low investment
• Lesser time to achieve breakeven – under a year.
• High rentals and thinning margins.
• Ease in experimentation
• Ease in scaling operations.

Essential characteristics of cloud kitchens

• No physical presence
• Minimal wastage
• Leaser risk
• Adjustable menu

Advantages

• Low infrastructure cost
• Scalability
• Low overhead cost
• One-time investment
• Capturing a wider audience

Multiple shades of the cloud kitchen business

• Standalone/ Single Brand Cloud Kitchen
• Shared Space Cloud Kitchen
• Virtual Restaurant
• Multi-Brand Cloud Kitchen
• Aggregator Managed Cloud Kitchen
• The Operator Managed Cloud Kitchen

Challenges of the cloud kitchen business

• Delivery errors
• Maintaining consistency over
• Customer retention
• No option to serve alcohol
• Masked customer information
• Dependence on food aggregators