Cloud kitchens are on the rise across the world, and many of the food delivery startups such as Deliveroo and Zomato are on track to expand to the space. Their current infrastructure and network puts them in a great position to start operating the so called “dark kitchens” where they can prepare multiple cuisines from a centralised location and bag the profits.
However, operating a cloud kitchen is not as easy as one might think. Many of the initial startups who ventured into the space closed down due to high operating costs.
Rebel Foods in India faced a similar problem from expensive rents in the city of Mumbai and Pune along with high employee turnover rates.
This is not a surprise, as many SMEs in India would agree to. Since the labour force in demand to operate restaurants, deliveries and other jobs in the SME sector is majorly unskilled — lower salaries make them desirable — the supply is limited. Moreover, because of the lack of proper paperwork, addresses and contracts, consequences are disputable; which means employees can often up-and-leave without notice. This makes retaining employees a lot harder, because they are in demand.
With the $125 million in new funding from Gojek, Coatue Managament and Goldman Sachs, Rebel Foods plans to open 20 cloud kitchens in the UAE by the end of 2019 and 100 in Indonesia over the next 18 months.
Now, they have received $125 million in funds from Coatue Management, Goldman Sachs, Gojek (the Indonesian delivery service) and other investors. With this new capital, Rebel Foods plans to open 100 new cloud kitchens in Indonesia with the help of Gojek in the next 18 months.
Moreover, it also plans to expand to the UAE with 20 cloud kitchens by the end of the year.
This will come a competition to Kitopi, a cloud kitchen operator in Dubai, UAE, that currently operates out of Al Quoz and serves the popular neighbourhoods. Kitopi currently has 25 partner restaurants, and makes food as per their recipes and delivers to customers. However, not many customers know its name as it allows people to order through Zomato under the “Mix ‘N’ Match” name; often attracting customers with buy-one-get-one free offers, which it can afford to given its lowered operating costs.
The longer work hours and more single people living in the emirates is increasing the demand for affordable food delivery. While restaurants are changing to adapt to customer needs, cloud kitchens are better positioned to cater to increasing demand from centralised kitchens. There is certainly space for Rebel Foods to expand to the UAE. We’ll be tracking the growing market for cloud kitchens and how it plays a role in changing the market dynamics.