Cloud Kitchen Market Size, Share, Opportunities, COVID-19 Impact, And Trends By Business Model (Standalone Cloud Kitchen, Multi-Brand Cloud Kitchen, Commissary (Aggregator) Kitchen, Outsourced Cloud Kitchen, Co-Working Cloud Kitchen), By Order Source (Customer Call-In, Delivery App), And By Geography - Forecasts From 2022 To 2027

The cloud kitchen market was valued at US$38.926 billion in 2020 and is expected to grow at a CAGR of 12.52% over the forecast period to reach a total market size of US$88.889 billion by 2027.

A cloud kitchen, also known as a ”ghost kitchen”, is a place where food is made and delivered to customers' doorsteps by taking orders over the phone or through online ordering systems. They primarily do not provide dine-in services. They are mostly involved in food preparation and delivery, or have partnerships with food ordering websites such as Swiggy, Zomato, Dine Out, and others.

Cloud kitchens are built for speed, efficiency, and scale, making it simple to operate a delivery restaurant with little risk and investment. They enable an entrepreneur to collaborate with multiple brands from a single location, increasing the likelihood of improved cost management in existing infrastructure. It also provides greater flexibility. Cloud kitchens can continuously review what they provide by assessing what works and what doesn't. All of this results in cheaper costs, more efficiency, and reduced risks.

However, with each consecutive shutdown, there has been a significant increase in the number of cloud kitchens. Many home businesses and cloud kitchens have launched and have listed themselves as food aggregators, which increases the competition in the market. Due to the lack of a physical storefront, it is difficult to cultivate a loyal and regular fanbase for the brand. The curator's aim to offer an experience in a box is also a hurdle because it is dependent not just on the packaging but also on the care with which the food is delivered.

In India, well-known brands such as Punjab Grill, Pino's Pizza, and Zambar, as well as international fried chicken giant Kentucky Fried Chicken, aim to establish cloud kitchens in order to expand in the country. Furthermore, in China, Starbucks has partnered with Alibaba to run its Star Kitchen cloud kitchen brand out of the latter's Hema supermarkets in Hangzhou, Shanghai, and Beijing.

Kitopi, founded in Dubai in 2018, operates 30 cloud kitchens across the United States, the United Kingdom, and the Middle East. Its metropolitan locations exclusively use delivery apps like DoorDash, Uber Eats, and Deliveroo to prepare meals for consumers.

Growth Factors

• Low risk and low capital requirements:

The most significant benefit of the cloud kitchen model is the removal of costs related to restaurant space, ambience, furniture, costly silverware, electrical fixtures, and so on. All of them are eliminated, which leaves just a bare minimum of expenses for culinary personnel, cooking supplies, kitchen equipment, and some maintenance expenses such as power bills[SD1]. Cloud kitchens can easily invest in new menus and ingredients by effectively utilizing their resources. Restaurant owners and operators can change their menu ingredients, establish competitive prices, and operate their businesses much more efficiently if they use real-time consumer data. Cloud kitchens also provide customers with the convenience of ordering from anywhere at any time. According to the National Restaurant Association’s, consumer trends 2020, 52% of customers believe that ordering takeaway or delivery meals is essential to their way of life.

Restraints:

• Technological expenses, Hygiene, and lack of customer interaction

The biggest challenge faced by the cloud kitchen market is high technological costs. Cloud kitchen models have replaced real estate costs with large technological costs. The reason behind this is that these kitchens have to communicate with a lot of food delivery apps like Zomato, and Swiggy for which the kitchen has to pay an aggregator tax on the commissions that food delivery apps charge to operate on their platforms. High technological costs involved in the dependency on food aggregator platforms for delivery are expected to act as a major restraint for the market growth during the forecast period. Additionally, hygiene is another factor that is hindering the overall market growth for small players. The Cloud kitchen model is difficult to operate, the major problem is that many times companies build their kitchen in unhygienic conditions in order to lower the expenses as much as possible and serves food to their customers in unhygienic conditions many instances have been seen on social media where the food serves by cloud kitchen to customers were unhygienic. Players operating in the market should keep their kitchens hygienic, so the food served to them is edible. Lack of customer interaction is another factor that is expected to act as a major restraint in the overall market growth. People are more attached to dine-in restaurants because of the ambience and their interaction with the staff whereas, this particular factor is absent in cloud kitchens.

 COVID-19's Impact: The Covid-19 pandemic has negatively affected the food industry but presented an opportunity for cloud kitchens. According to the National Restaurant Association, the restaurant sector lost an estimated $25 billion in revenue and more than 3 million jobs during the first 22 days of March 2020. The demand for cloud kitchens has risen substantially in the last year or so, as restaurants were forced to close down due to lockdowns. With consumer footfall virtually disappearing overnight, restaurants were able to operate by implementing a cloud kitchen approach. The research conducted by the National Restaurant Association found that 54% of restaurant operators have made the shift to completely off-premises services, while 44% have been forced to temporarily close down. While the initial idea was to provide takeout or delivery, many operators are discovering how this approach can add value to their business in a variety of ways.

Key Developments

• Franklin Junction established a partnership with EAT in May 2021 to target the MENA Region for global expansion.  Through the partnership, existing kitchens in the MENA region will be able to become Franklin Junction Host Kitchens®, and restaurant brands headquartered in the MENA region or the United States will be able to establish a global reach. In September 2021, Mad Grass, a Jakarta-based start-up, opened the world's first brick-and-mortar vegan dining and cloud kitchen collaborative space.
• Cloud Kitchens, a shared kitchen business launched in 2015 and backed by Uber co-founder Travis Kalanick, was planned to be launched in Brazil in the first half of 2020. Earlier that year, the Saudi Arabian sovereign wealth fund granted the company $400 million.

Cloud Kitchen Market Scope:

Report Metric	Details
Market Size Value in 2020	US$38.926 billion
Market Size Value in 2027	US$88.889 billion
Growth Rate	CAGR of 12.52% from 2020 to 2027
Base Year	2020
Forecast Period	2022–2027
Forecast Unit (Value)	USD Billion
Segments Covered	Business Model, Order Source, And Geography
Regions Covered	North America, South America, Europe, Middle East and Africa, Asia Pacific
Companies covered	KLC Virtual Restaurants, The Food Corridor (Fort Collins, CO), Kitopi, CloudKitchen,   Muy, Mimic, Franklin Junction, Zullu, Virturant, Keatz, Travis Kalanick, Karma Kitchen,   Deliveroo
Customization scope	Free report customization with purchase

 

Market Segmentation

• By business model
  • Standalone Cloud Kitchen
  • Multi-brand Cloud Kitchen
  • Commissary (Aggregator) Kitchen
  • Outsourced Cloud Kitchen
  • Co-Working Cloud Kitchen
• By order source
  • Customer call-in
  • Delivery App
  • Firm’s App
  • Aggregate App
• By geography
  • North America
    • United States
    • Canada
    • Mexico
  • South America
    • Brazil
    • Argentina
    • Others
  • Europe
    • Germany
    • France
    • United Kingdom
    • Spain
    • Others
  • Middle East and Africa
    • Saudi Arabia
    • UAE
    • Israel
    • Others
  • Asia Pacific
    • China
    • India
    • South Korea
    • Taiwan
    • Thailand
    • Indonesia
    • Japan
    • Others

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Frequently Asked Questions (FAQs)

Q1. What will be the cloud kitchen market size by 2027?
A1. The cloud kitchen market is expected to reach a total market size of US$88.889 billion by 2027.

Q2. What is the size of the global cloud kitchen market?
A2. Cloud Kitchen Market was valued at US$38.926 billion in 2020. 

Q3. What are the growth prospects for the cloud kitchen market?
A3. The global cloud kitchen market is expected to grow at a CAGR of 12.52% during the forecast period.

Q4. How is the global cloud kitchen market segmented?
A4. The cloud kitchen market has been segmented by business model, order source, and geography.

Q5. Who are the major players in the cloud kitchen market?
A5. Prominent key market players in the cloud kitchen market include 3KLC Virtual Restaurants, The Food Corridor (Fort Collins, CO), Kitopi, CloudKitchen, Muy, Mimic, Franklin Junction, Zullu, Virturant, among others.

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