Cloud kitchens, also known as dark, virtual or ghost kitchens, are delivery-only restaurants without any dine-in facility. They are commercial spaces dedicated to the preparation and delivery of food within a local community. Cloud kitchen concepts allow existing restaurants to expand their geographic reach and allow new restaurants to open at lower costs without owning a physical dining space. In a post-pandemic world, rapid expansion of online food delivery services has created tremendous opportunities for delivery-only cloud kitchen concepts.
The global Cloud Kitchen Market is estimated to be valued at US$ 100.46 Bn in 2023 and is expected to exhibit a CAGR of 12% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The opportunity of delivery-only restaurants through cloud kitchen models allows existing restaurants to not only expand their geographic reach but also launch new cuisine options at much lower costs without owning a physical dining space. This allows kitchen operators to launch multiple delivery-only brands through a single commercial kitchen space and expand their consumer base rapidly. Delivery-only cloud kitchen models have gained immense popularity in both developed and developing regions, driven by the convenience of online food delivery apps. As online food delivery continues to gain traction globally in the post-pandemic era, cloud kitchen market is expected to witness high growth over the forecast period driven by opportunities arising from delivery-only restaurant concepts.
Porter’s Analysis
Threat of new entrants: The threat of new entrants in cloud kitchen market is low as setting up cloud kitchen requires high initial capital investment for infrastructure and equipment. However, firms can leverage technologies like cloud platforms and virtual kitchens to enter at lower costs.
Bargaining power of buyers: The bargaining power of buyers in cloud kitchen market is moderate to high. Buyers have various kitchen brands to choose from and can easily switch between them based on pricing, menu options and delivery timeframe.
Bargaining power of suppliers: The bargaining power of suppliers is low in this market. Major raw material suppliers face pressure on pricing from fragmented demand. Supply chains are well established to serve global cloud kitchen operations.
Threat of new substitutes: The threat of substitutes is moderate. While dine-in restaurants offer similar cuisines, cloud kitchens compete strongly on delivery convenience without any dine-in space overhead.
Competitive rivalry: The competitive rivalry is intense with presence of numerous local and global players competing on various parameters.
SWOT Analysis
Strength: Cloud kitchens offer a flexible operational model with lower overhead costs than brick-and-mortar restaurants. They leverage technology and centralize production to improve efficiencies.
Weakness: Cloud kitchens face challenges in building brand awareness and customer recall without a physical storefront. Dependence on third-party delivery platforms adds to commission costs.
Opportunity: Growing popularity of food delivery driven by frequent ordering habits and time-starved consumers present an opportune market. Adoption of cloud kitchen-exclusive brands can boost revenues.
Threats: Disruptions like pandemic-induced lockdowns severely impact operations and demand scenario. Rising food costs and driver wages increase operating expenditure.
Key Takeaways
The global cloud kitchen market is expected to witness high growth supported by rapid digitalization and changing consumer preferences. The global Cloud Kitchen Market is estimated to be valued at US$ 100.46 Bn in 2023 and is expected to exhibit a CAGR of 12% over the forecast period 2023 to 2030.
The Southeast Asian region represents one of the fastest growing regional markets owing to rising consumption of online food delivery services. Asia Pacific region comprises over 60% of the market share led by China, India, Indonesia and other developing countries. Increasing penetration of smartphones and internet connectivity coupled with rising spending power of populations is driving the demand for online food delivery services in this region. Established network of cloud kitchen operators cater to this growing market through centralized production facilities and hyperlocal delivery models.
Key players operating in the cloud kitchen market are Dahmakan, DoorDash, Ghost Kitchen Orlando, Keatz, Kitchen United, Kitopi Catering Services LLC, Rebel Foods, Starbucks Corporation, Swiggy, and Zuul. Rebel Foods, one of the largest cloud kitchen operators globally, has a strong presence across major Indian cities with over 65 kitchen locations.
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