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A cloud kitchen utilizes a commercial kitchen for the purpose of preparing food for delivery or takeout only, with no dine-in customers. Cloud kitchens usually enable restauranteurs to expand an existing restaurant or start a virtual brand at minimum cost. It also provides restauranteurs with the opportunity to scale, explore new markets, or trial new concepts. Many restaurants use cloud kitchens as an experimental space, for optimizing staff and for inventory, while testing new ideas.

The global cloud kitchen market size was valued at USD 51.96 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 12.4% during the forecast period i.e., 2021 to 2030 and achieve revenues of $148.7.

Cloud kitchens are much more affordable to run as compared to conventional kitchens in dine-in restaurants. These do not require dine-in facilities or account for costs related to property and location. Cloud kitchens also have higher profit margins than dine-in restaurants.

The flexibility of operating cloud kitchens from any location, ranging from parking spaces and warehouses to basements, is another key factor which adds to their popularity. As, customer acquisition is achieved through digital platforms, cloud kitchens heavily invest in technology that benefits the entire business operation. Apart from technology, major investments include well-equipped kitchen infrastructure and trained manpower, such as chefs and delivery drivers. Some cloud restaurants depend on their own delivery fleet to personalize their service, while others depend on aggregators for delivery.

Market Dynamics

Technology plays a crucial role in cloud kitchens, as most of the orders are made online through a website, app, or delivery aggregators. It is seen that cloud kitchens require an integrated technology system for accepting online orders, processing payments, and efficient kitchen management.

The key requirement for a cloud kitchen is a point of sale (POS) system which accepts orders from various channels, such as delivery aggregators and online ordering platforms. Having access to sales data is critical to developing strategies which can maximise the sales. Thus, technology plays a critical role in the smooth functioning of a cloud kitchen business and also ensures operational efficiency.

Cloud kitchens eliminate several expensive elements that don’t apply to virtual restaurants, such as, decor, signage, dinnerware, and additional staff members as servers or hosts. This helps in the lower financial investment.

When we talk about the flexible menu, as it is app or web-based, it means that there can be a change in menu focusing on whenever it is feasible without having to worry about updating signage or printed materials. If an ingredient becomes too expensive or is no longer accessible in a particular area, one can easily take it out of the menu items to suit what is available.

COVID Impact

Due to COVID-19 pandemic, dine-in facilities were shut as a precautionary measure to stop the spread of the virus. During that time, online food ordering and delivery services gained popularity among consumers. The rising demand for online food delivery service encouraged several restaurateurs to open cloud kitchen outlets to serve customers and generate orders. The COVID-19 pandemic brought several difficult challenges before the food industry. Dine-in businesses, that contributed to nearly two-third of the food industry were severely affected and faced intense financial crunch because of the lack of regular customer orders. But, as cloud kitchens work entirely on the delivery-only model, restaurateurs easily worked on their businesses and served customers efficiently.

By Type

• Independent Cloud Kitchen
• Commissary/shared Kitchen
• Kitchen Pods

The independent cloud kitchen segment held the largest revenue share accounting for around 60% of the overall market. Independent cloud kitchens target consumers that prefer a single cuisine type and mostly depend on third-party channels for delivery. The increasing consumer preference for international cuisines, fast foods, and online ordering is expected to drive the growth of this segment.

The commissary or the shared kitchen segment is expected to register a CAGR exceeding 13.0% over the forecast period. The increase in popularity of the shared kitchen concept among restaurateurs and its several benefits contribute to the rise in the number of commissary kitchens. An increase in the number of food trucks and caterers that use storage space and free time slots of restaurant facilities is expected to drive the segment growth.

By Product Type

• Burger/Sandwich
• Pizza/Pasta
• Chicken
• Seafood
• Mexican Food
• Asian Food
• Others

The burger/sandwich segment held a revenue share of 23.7% in 2019 and is anticipated to register notable gains over the forecast duration ascribing to escalating demand for fast food among the younger generation.

By Nature

• Franchised
• Stand-alone

The franchised nature segment dominated the cloud kitchen market and accounted for more than 60% of the revenue share. The growing number of franchised restaurants across the globe is behind the growth of the segment. The popularity of international cuisines and tailored foods among consumers is encouraging operators to invest in popular brands.

The standalone segment is expected to grow over the forecast period. This growth can be attributed to the minimum investment involved that ensures complete control over kitchen operations. Establishing a standalone kitchen as a brand requires time and therefore, the adoption is less in comparison to franchise stores. On establishing as a brand, the increase in rich customers demanding quality food delivery services is encouraging restaurateurs to opt for standalone kitchens.

The cloud kitchens’ popularity is more prominent in the Asia Pacific region, that accounts for more than 60% of the global market. The increase in trend of cloud kitchens across countries, such as China and India is driving the regional markets.

North America is expected to register a CAGR of around 10%. Factors, such as the increasing buying power of consumers, access to several digital touch-points, and a rise in demand for fast foods are encouraging the development of cloud kitchens in the region. Other regions where the cloud kitchen is growing are Europe, Latin America, and Middle East and Africa.

• Cloud Kitchen Market Forecast Year: 2023-2031
• Cloud Kitchen Market 2021: USD 51.96 billion
• Cloud Kitchen Market CAGR: 12.4%
• Key Regions: North America; Europe; Asia Pacific; Latin America; Middle East and Africa
• Key segments: Type; Product Type, Nature; Region
• Key Players: Dahmakan (Pop Meals); DoorDash; Kitchen United; Kitopi; Rebel Foods; Zuul Kitchens, Inc; Starbucks Coffee Company; Ghost Kitchen Orlando; CloudKitchens; Swiggy.”