COVID-19: UAE’S CLOUD KITCHENS CAN STAND THE HEAT
Industrial units that traditionally prepared made-to-order meals for restaurants and corporates are now going direct to clients as many eateries are scrambling to find ways to survive
The UAE’s restaurant business is still reeling from the worst effects of the Covid-19. Some have shut down, and others are trying to find ways to make some money from whatever orders come their way. But with no guarantee they can survive long-term.
It’s one sector that will have a lot of adjusting to do postpandemic.
And then there are the UAE’s kitchens. Whether you know them as ‘industrial’, ‘cloud, ‘dark’ or ‘ghost’, these kitchens that make-and-pack meals by the thousands each day are showing a lot more resilience to the virus and its aftermath. It does seem these kitchens can take the heat … and they have done so through some swift adjustments in their offerings.
What these kitchens have traditionally done is prepare meals for restaurants that do not operate their own cooking areas; corporate clients who need meals to be delivered daily to their workforce; food “aggregator” portals who pass on the meal orders they receive; and even individual clients who sign up for all their dining needs on monthly contracts.
But now, these kitchen operators are doing a whole lot more. Need to order grocery? Just dial the “kitchen”. Need to order a meal kit and warm it up when you need it? Again, just dial.
“We are seeing three types of strategies kitchen operators are using to sustain their businesses,” said Sandeep Ganediwalla, Partner at RedSeer Consulting. “One, industrial kitchens expanded into newer categories, as seen by Kitopi launching grocery delivery.
“Two, industrial kitchens are increasingly taking the direct-to-consumer (D2C) route, especially the ones providing semi-cooked/cooked food to restaurants. And three, corporate clients have emerged as more resilient than restaurants.”
Just go direct … and digital
If the pandemic has taught society and its consumers anything, it is about going big on digital. “What the pandemic has done is speed up the digital age by at least five years,” said Jihad Bou Nasr, Country Manager — UAE at Kitopi, which manages one of the biggest networks of kitchens in the country.
“In the Middle East and North Africa, 60 per cent of smartphone users have a foodrelated app on their devices. And 50 per cent of those who do, use it to order food online.
“So, brands and restaurants will see that cloud kitchens are the future. And given the situation we’re in, this just happened sooner than anticipated.”
By now, most in the F&B space have realised that they are not going to get much relief from landlords. Restaurants have already escalated layoffs to try and manage costs. A few would now see doing away with kitchens and outsourcing the meal preparation as another way to save on expenses.
Manohar Lahori, Chairman of Palmon Group and an investor in industrial kitchen facilities, says profitability in the food business is a lot about managing the real estate it’s set up on.
In early February, Kitopi, which operates dual headquarters in New York and Dubai, confirmed it had bagged $60 million in Series B funding, which will be used for expanding the global network of kitchens to 100 by year-end.
Meanwhile, a Dubai-based venture, Sweetheart kitchen, keeps adding to its reach and now has five units in Dubai. It’s business model is built on delivery-only.