‘They appear to be here to stay. Cloud kitchens have emerged out of fierce competition and have struggled to satisfy the needs of dining and delivery services.’
In the age of convenience and digitalization, Bangladesh's culinary landscape is witnessing a delicious revolution - the rise of cloud kitchens. These delivery-only kitchens, also known as ghost kitchens or virtual restaurants, are transforming the way people enjoy their favorite meals.But first, What is a Cloud Kitchen?
A cloud kitchen is a commercial facility set up for the preparation of meals exclusively for food delivery. Unlike traditional restaurants, cloud kitchens do not have a physical dining area for customers to visit. Instead, they rely on online food delivery orders through food delivery platforms and apps. This model allows businesses to reduce overhead costs associated with maintaining a dine-in space and to focus solely on the production and efficiency of their kitchen operations. Cloud kitchens have surged in popularity due to the growing demand for food delivery services and the flexibility they offer restaurateurs to experiment with new culinary concepts without the high initial investment of a traditional restaurant setup.
The cloud kitchen model is gaining traction in the food delivery industry, which is one of the most popular services globally. According to Statista, the global online food delivery industry's market size is projected to exceed $182 billion in 2024. In Bangladesh, a country with a population of 161.4 million, the demand for fast food with competitive prices is increasing. This demand is driven by urbanization, changes in lifestyle, and the rising need for quality time with nuclear families.
Most urban households in Bangladesh now have two working parents, and the new generation sees two bread earners in the family. This shift has changed their way of life, routines, and food choices. Working women, who spend a significant portion of their income on dining out or ordering takeouts, have little time for cooking due to their commute and work. As a result, home delivery services and takeaways have gained many customers.
According to a 2023 report by Onnow, a Bangladeshi online business platform, the cloud kitchen market in Bangladesh is expected to reach USD 500 million by 2025. This rapid growth can be attributed to several factors:
Increasing smartphone penetration and internet usage: With over 180 million mobile phone users in Bangladesh, online food ordering platforms have become increasingly accessible.
Shifting consumer preferences: Busy lifestyles and a growing fondness for convenience have fueled the demand for quick and easy access to diverse food options.
Lower operational costs: Compared to traditional restaurants, cloud kitchens require less investment in physical space and staff, making them an attractive option for new businesses.
The global cloud kitchen market has been expanding significantly. In 2020, the market size was valued at USD 51.96 billion, and it is projected to grow at a compound annual growth rate (CAGR) of 12.4% from 2021 to 2028, published in Grand View Research. Another report by IMARC Group mentioned that in 2023 the global cloud kitchen market valued USD 71 billion.
Factors contributing to this growth include:
i. Consumer Preference: Increasing consumer preference for online food delivery services over dining experiences.
ii. COVID-19 Impact: During the pandemic, dine-in facilities were closed, leading to a surge in online food ordering and delivery services.
iii. Cost Efficiency: Cloud kitchens are more affordable to run compared to traditional dine-in restaurants, as they don’t require dine-in facilities or expensive locations.
iv. Higher Profit Margins: Cloud kitchens offer comparatively higher profit margins than dine-in restaurants.
v. Flexibility: Cloud kitchens can operate from various locations, such as parking spaces, warehouses, or basements.
vi. Digital Ordering Solutions: Individual ghost kitchens with their online ordering solutions are witnessing increased adoption.
Cloud kitchens are still relatively new in Bangladesh, having gained significant momentum in recent years, particularly during the COVID-19 pandemic. As dine-in restrictions became commonplace, these delivery-focused kitchens emerged as a viable solution for restaurants and entrepreneurs to continue serving customers and adapt to changing consumer habits. Cloud kitchens offer several opportunities. They can serve various types of cuisine using the same kitchen facility. Multi-brand cloud kitchens can operate different brands through the same kitchen facility. Since they don't require extensive space, cloud kitchens can be built anywhere.
While cloud kitchens offer numerous advantages, they also encounter specific hurdles. Here are some underlying challenges:
Lack of a Proper Structure: Neglecting to create Standard Operating Procedures (SOPs) can lead to poor management and operational chaos.
Improper Food Costing: Inflated food costs due to poor inventory management, lack of standardization during food preparation, and excessive wastage.
Lack of Consistency: Failing to maintain consistency across multiple orders, food quality and deliveries.
Ineffective Menu Pricing and Planning: Poorly planned menu pricing can impact profitability.
Poor Financial Planning: Ignoring financial aspects such as budgeting, cash flow management, and cost projections.
No Customer Interaction: Overlooking customer engagement and feedback.
No Safety Standards for Equipment: Ignoring equipment maintenance and safety.
Cloud kitchens are increasingly embracing the integration of machine learning-based prediction tools and robotic chefs to prepare customized, high-quality meals with unparalleled efficiency and speed. This technological advancement has led to the emergence of lightning-fast delivery times, thereby enhancing customer satisfaction and operational productivity.
Despite the challenges, the future of cloud kitchens in Bangladesh appears promising. As the online food delivery market continues to flourish, these innovative kitchens are likely to play a significant role in shaping the culinary landscape. By focusing on quality, innovation, and strategic partnerships, cloud kitchens have the potential to offer even greater convenience, variety, and value to Bangladeshi consumers.
Furthermore, sustainability has emerged as a critical consideration that will shape the future trajectory of cloud kitchens. With environmental consciousness gaining prominence, these establishments are expected to adopt sustainable practices, such as minimizing food waste, utilizing eco-friendly packaging solutions, and sourcing locally. Consumers are increasingly demonstrating a preference for brands that prioritize sustainability, making it an imperative for cloud kitchens to align their operations with these values to maintain a competitive edge.
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