During the pandemic, most of the F&B merchants have to rely on food delivery platforms to continue running their business. It is also during this period when food delivery platforms are mushrooming, similar to what…
Also known as ghost kitchen, virtual kitchen, shared kitchen, and even dark kitchen, cloud kitchen is a buzzword nowadays largely due to the dine-in restrictions amidst the pandemic.
What is cloud kitchen exactly? Even though it sounds like a high-tech, sophisticated term, the concept has in fact, long existed in the market.
Take Domino’s Pizza as an example, it relies heavily on the delivery model versus dine-in, with the outlets functioning as “cloud kitchens” to serve the neighborhood.
You have probably got the idea of cloud kitchen now. In layman’s terms, it is an F&B business focusing on the delivery model, with very light or even zero physical outlets. Customers mainly order online (through the cloud it is), WhatsApp, or even phone calls.
In a nutshell, there are 3 components of a cloud kitchen:
- Kitchen space & facilities: Can be own’s kitchen setup, or co-sharing kitchen (rented).
- Ordering system: Can be own’s system, leverage on 3rd party’s system, or food delivery app.
- Delivery service: Can be own’s delivery team, outsourced, or leverage on food delivery app.
Let’s take a look at who are the industry players of cloud kitchen in Malaysia. We can generally categorize the players into the brands, and the enablers.
Cloud Kitchen Brands in Malaysia
These are the F&B operators adopting the cloud kitchen model.
As mentioned earlier in this article, Domino’s Pizza is the early adopter of the cloud kitchen business model. Everything from kitchen facilities, ordering system to delivery service are developed and handled by Domino’s Pizza itself without relying on third-party enablers.
DahMakan (rebranded to Pop Meals), a “full-stack” food delivery startup based in Malaysia, is a better example of the full cloud kitchen model. Having raised USD 28 million so far, DahMakan doesn’t even have any outlets like Domino’s with its cloud kitchens located in different cities to serve the customers.
As you can imagine, Domino’s or Pop Meals’s cloud kitchen model is crisis-proof amidst the pandemic. It is also during this period that we witness the emergence of a couple of multi-brands cloud kitchen aggregators, namely Epic Food Hall, My Ghost Kitchen (previously known as GF Ghost Kitchen), Kitchen Co.
On another hand, many F&B operators are working on a made-shift model by using their existing setup and resources to transform their business online. They still have to pay for their premises’ rental, headcounts (perhaps on a cut-down scale), and pay significant sales commissions to food delivery apps.
Even though the pandemic will be over in a matter of time, F&B operators might need to anticipate the shift of consumers’ behavior in the long run.
If you own multiple outlets, you might have to consider trimming the outlets (at least temporarily until it’s over) and set up cloud kitchens like MyeongDong Topokki. However, there is no need of overdoing it as if you are running a technology company.
Depending on the nature of the food you are selling (not every food is delivery-friendly like pizza), setting up an end-to-end cloud kitchen model like Domino’s or Pop Meals will require a hefty upfront investment so it makes sense to partner with third-party enablers to test the demand first.
Cloud Kitchen Enablers in Malaysia
As for new F&B entrepreneurs, you can consider renting co-sharing, shared kitchen facilities from enablers like Cookhouse or KitchenConnect. They offer ready-to-move-in kitchen spaces & equipment for you to start easily.
New F&B businesses can also consider cloud kitchen aggregators as mentioned earlier, or seek the opportunity to work with GrabKitchen who offers end-to-end services from the kitchen, ordering to delivery.
Perhaps, it is a matter of time for Foodpanda to offer its cloud kitchen solutions too.
Once you have the cloud kitchen sorted, you need to source the ordering system and delivery service. Obviously, Grab and Foodpanda are the key enablers in the food delivery business, followed by the second-tier players like DeliverEat and Hungry.
To avoid having your blood (margins) sucked by the key enablers above, you can also consider technology enablers like Beep Delivery by StoreHub who offer the ordering system but delivery is outsourced to its partners.
Of course, this can only work if you already have a good customer base, or if you are marketing savvy. Otherwise, it makes sense to continue paying the sales commissions to Grab and Foodpanda.
They have a huge customer base and ready infrastructure so no complaints here.