Cloud Kitchens is Estimated to Witness High Growth Owing to Opportunity of Providing Convenience to Consumers

Cloud kitchens, also known as ghost kitchens, are commercial cooking facilities that prepare food specifically for delivery and take-out, without the dining area or traditional customer-facing service widely seen in restaurants. Cloud kitchens focus solely on online ordering and delivery platforms, allowing restaurants and food brands to operate kitchens solely devoted to delivery and takeout orders received through various online platforms. The need for cloud kitchens has been rising as consumers are increasingly adopting food delivery apps and services for convenience.

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 providing convenience to consumers is driving the growth of cloud kitchen market. With rising urbanization and busy lifestyle, consumers prefer ordering food online from various restaurants and food joints due to convenience. Moreover, the ongoing pandemic has further accelerated the adoption of food delivery services as consumers wish to avoid dining out. As cloud kitchens are specifically designed to cater to delivery orders only without dine-in facility, they can fulfill the demand of online delivery more efficiently. Hence, cloud kitchens are well positioned to gain from the opportunity of providing utmost convenience to the convenience seeking consumer base, thereby supporting the market growth over the forecast period.

Porter's Analysis

• Threat of new entrants: Cloud kitchen operators face moderate threat of new entrants entering the market as setting up a cloud kitchen requires relatively low investment compared to brick and mortar restaurants. However, established operators have scale advantages and brand loyalty that deter new players.
  
• Bargaining power of buyers: Buyers have high bargaining power in the cloud kitchen market due to the availability of numerous options. Operators need to offer competitive prices, good quality of food, fast delivery times to retain customers.
  
• Bargaining power of suppliers: Operators face moderate bargaining power of suppliers as key raw materials like food ingredients have many supplier options. However, specialised items may have few alternatives.
  
• Threat of new substitutes: Threat of substitutes is moderate as online food delivery from brick and mortar restaurants and rise of home-made meal kits present alternatives to some extent.
  
• Competitive rivalry: Intense as the market sees numerous regional and national players competing on parameters like pricing, variety of menus, and delivery networks.
  
  SWOT Analysis

Strengths: Lower setup and operational costs. Flexible business model. Ability to operate multiple virtual brands from one kitchen.
Weaknesses: Reliance on third-party delivery platforms. Constraints regarding scaling up due to reliance on centralised kitchens.
Opportunities: Untapped urban and suburban areas. Growth in working population and demand for convenience.
Threats: Commoditization of offerings. Rising food costs and inflationary pressures. Dependence on a few major food aggregators.

Key Takeaways

The global cloud kitchen market is expected to witness high growth over the forecast period of 2023 to 2030. The market size for cloud kitchens reached US$ 100.46 billion in 2023 and is estimated to grow at a CAGR of 12%.

Regional analysis indicates that the Asia Pacific region dominates the cloud kitchen market currently accounting for over 35% share globally in 2023. Countries like India and China are witnessing rapid growth in cloud kitchens led by rising internet penetration, growing middle class and preference for convenience. North America and Europe follow as major regions in terms of market size for cloud kitchens.

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. Major players are focusing on expanding their delivery reach and virtual restaurant brands to cater to diverse target segments. New strategic partnerships between players are also being witnessed to bolster network strength and service offerings.