Dubai (March 5, 2023) Over time, food delivery has become a vast, booming and thriving market with advanced technology and a unified supply chain in UAE, where this sector has been projected to grow at an exponential rate.
Given the high cost of rentals, shifting customer trends and thin profit margins of traditional restaurants, many foodservice operators are now pivoting towards online delivery or cloud kitchen model for food enthusiasts, according to a report by Ascent Partners.
Unlike a traditional restaurant, a cloud kitchen is a commercial kitchen that specializes in preparing food for delivery without a dine-in option where customers place orders via an online app or a phone number. Besides being less expensive, cloud kitchen is considered to be a low-risk, low-investment and good profit margin business.
According to a survey, food delivery sector in Dubai is forecast to grow at an annual rate of 6 per cent, and is likely to outperform during peak tourist season. With the growing prominence of cloud kitchens, many restaurant operators have already repurposed facilities into cloud kitchens because of their lower premises costs and multiple revenue possibilities.
There are over 400 cloud kitchens in various locations across the UAE. Roughly 70 per cent of the restaurants in the UAE expressed interest in expanding their business to cloud kitchen setup. Entrepreneurs can also use cloud kitchen setup to test the market before starting a full-fledged restaurant.
Cloud Kitchen: Business models in the UAE
As cloud kitchens do not require a storefront at a prime location or front-of-house staff to serve customers, it only takes one-third of the resources to establish a cloud kitchen business.
“Cloud kitchen can operate in multiple models: online B2B and B2C delivery via apps, kitchen-as-a-service (KaaS) operators, virtual restaurants of food or restaurant brands and full-fledged order-to-delivery food and beverage (F&B) service providers,” said Ketaki Kulkarni, Compliance Officer at Ascent Partners.
She said these cloud kitchen models help reach an extensive customer base, streamlining operations with low investment.
Cloud kitchens perfectly fit the cosmopolitan culture of Dubai and meet the demand for quality, quick and easy access to F&B delivery. With individuals opting for daily meal delivery and food concepts such as vegan, diet and organic meal plans, cloud kitchens create perfect niche menus to attract more customers.
“The emerging growth of cloud kitchens establishes an attractive investment opportunity for entrepreneurs in the UAE,” Kulkarni said.
How can Ascent Partners help?
Ascent Partners is a boutique consultancy providing bespoke, end-to-end corporate services ranging from company formation to accounting and bookkeeping and compliance services for entrepreneurs looking to set up their next venture in the UAE. We work alongside to strategise, startup, and scale businesses in the UAE and the broader region.
With a combined experience of 50+ years, our expert consultants provide reliable and unparalleled guidance throughout all strategic phases of a business’ evolution.