Rising FoodTech industry impacts restaurant dynamics
Priya Wadhwa
10x Industry

Rising FoodTech industry impacts restaurant dynamics

More than 60% of smartphone users in the Middle East have at least one food-related app on their devices.

A walk down the road in a street full of restaurants will often show you dining areas devoid of people. Yet these restaurants are open and doing business, contrary to what a passerby might think.

With the emergence of technology, the food and beverage industry has changed drastically. While you were required to open a phonebook and call the restaurant to make reservations or have food delivered just a few decades ago, nowadays food is just a tap of your finger away.

Food delivery apps like Zomato, Deliveroo and Uber Eats have completely upturned the food and beverage industry, and restaurants have to adapt in order to remain relevant.

According to KPMG, more than 60 percent of smartphone users in the Middle East have at least one food-related app on their devices, and 50 per cent of those who do, use it to order food online.

With more deliveries on the line, restaurants have to dedicate more time to the delivery applications, causing a change in priorities. Location and footfall, two variables that have historically significantly driven operational costs and are major influences on locations and layouts of restaurants, are becoming less important, as delivery apps make kitchen location less and less important.

There have been a few restaurants that have closed down, only to open "dark" kitchens, also known as "delivery-only" restaurants—something you might have noticed on Zomato when you search for Barsalata or Right Bite.

Kitopi is one such dubai-based startup that operates a "cloud kitchen" which essentially prepares food from the menu of multiple restaurants from a single kitchen. Thereby helping small and medium-sized restaurants to expand their operations and reach, while reducing their order processing and delivery times, as well as offering customers a wider range of food options.

Considering there are a growing number of people ordering food compared to cooking at home, and looking for cheaper deals that delivery-only restaurants can provide, these "dark" and "cloud" kitchens are a great solution catering to the changing market dynamics. No wonder they're getting investor attention and millions of dollars in funding.

Kitopi for instance, launched just 1.5 years ago in January 2018, and have already raised $29 million in funding over three rounds.