The food and beverage industry has seen a tremendous growth since the 2019 pandemic. According to a webinar the cloud kitchen industry is expected to become a $1 trillion market by 2030.
Due to the easy of setup and profitability cloud kitchens have become popular in Saudi Arabia. More and more restaurants are launching through this model in the industry.
Cloud kitchens/ghost kitchens/virtual kitchen models are here to stay and expand but there are some things that you need to consider before choosing a cloud kitchen in Saudi Arabia. Let’s dive deep into those things and see what they are.
What exactly is a Cloud Kitchen?
Cloud kitchens use a commercial kitchen space for the purpose of food preparation and delivery. The restaurants that use this model do not provide any dine in experience. They offer food delivery, takeaways and some of them offer catering services too.
The primary source of revenue for restaurant owners is through only delivery platforms. With this model the restaurant owners are able to reduce their overhead costs while choosing a location where majority of their customers are present.
Cloud kitchens in Saudi Arabia help you reduce the risks that are associated with running a traditional restaurant such as High investments, hiring staff and renting or buying a large space.
Why are Cloud Kitchens Successful?
Cloud kitchens in Saudi Arabia have seen great success due to several reason. The first and most important one is cost savings. If you own a restaurant or if you are planning to open one you will be trying to minimize your costs. That is where cloud kitchens come in.
Launching a restaurant requires many things like choosing a good location, making your place aesthetically pleasing, Hiring waiters and buying dine in furniture. With cloud kitchens you require non of these.
The next reason for the success of cloud kitchens in Saudi Arabia is that you can operate several brands from a single location. Cloud kitchen facilities have many restaurant kitchens operating under one roof. So if you have several brands you can group them all in just one facility. This allows you to increase your efficiency and manage everything from one location.
Many cloud kitchens such as Capital Food cloud kitchens offer additional support to restaurants. They help them in setting up their restaurants and also support them in marketing their businesses.
Cloud kitchens in Saudi Arabia are usually located in strategic locations which can help you reach more customers. They will also help you connect with online food delivery platforms such as Jahez and thechefz.
When you choose a cloud kitchen you are basically only focusing on cooking the best food while the rest of the things are all handled by the kitchen owners.
How Does a Cloud Kitchen Work?
Cloud kitchens are also known as delivery only restaurants. This is because they do not have to maintain a physical store front like a traditional will have to. This allows them to efficiently deliver orders to their customers.
Restaurants inside cloud kitchens partner up with different delivery apps such as Hunger station and Jahez. The restaurant menus are displayed on these food delivery platforms. Once an order is placed by the customers it is received by the cloud kitchen restaurant through the delivery app.
The order is prepared and delivered to the customers via the delivery partner. These restaurants are highly dependent on customer reviews so they have to maintain a good online presence and should encourage customers to leave positive reviews.
The Saudi Arabian cloud kitchen market is expected to reach $335.7 million by 2030. Early adopters of the cloud kitchen are likely to see more success as they will be familiar with the strategies to make the most out of their delivery only restaurants.
Benefits of Cloud Kitchens
The benefits of cloud kitchens are probably going to outweigh the drawbacks. This model has helped hundreds of restaurants in Saudi Arabia to find success. Here are some core benefits of cloud kitchens:
- If you own any business not necessarily a restaurant your biggest challenge or fear is spending high amount of money on your business. With cloud kitchens you can reduce your costs by more than 60% compared to a traditional restaurant.
- While you may need to comply with the laws and regulations of Saudi Arabia but you will not need as much of a paper work as you will with a traditional restaurant.
- Cloud kitchens allow you to keep your focus on the most important thing which is marketing your restaurant and serving your customers. If there are any repairs or maintenance required that will be taken care of by the cloud kitchen’s own staff.
Disadvantages of Cloud Kitchen
Let’s be honest nothing comes without disadvantages but we have to compare the advantages with the disadvantages to see which are more important to us. Here are some drawbacks of cloud kitchens in Saudi Arabia.
- With a traditional restaurant you have the ability to physically meet your customers and provide them a good experience. With cloud kitchens you have very limited interaction with your customers. This is why it is important to have a strong social media presence where you can foster relations with your current and future customers.
- When using third party delivery services they will charge you a certain amount of fee. If you are just starting out this fee can sometimes be too much for you.
- Your food can sometimes be delivered late and can become cold. While this may not be a mistake on your end it can still create a negative image for your restaurant.
Things to Consider When Choosing a Cloud Kitchen in Saudi Arabia
If you are a new startup or an established business you still need to consider some things before choosing a cloud kitchen in Saudi Arabia. We have compiled a list of some of the most important things that you need to consider before opting for a virtual restaurant.
Location
Before choosing any cloud kitchen it is important that you know where your customers are present. If you choose a location without studying your customers you will not be able to scale your restaurant. Once you know where your customers are present you can then take a step further and look for cloud kitchens in those locations.
We will suggest you to look for locations that are close to both residential and work places. This will allow you to serve multiple segments of customers at the same time.
Kitchen Equipment
If you are just starting out you should know that cloud kitchens will not provide you with any equipment. You will have to invest in quality equipment according to your menu offerings.
With a new startup the best thing you can do is to only buy the essential cloud kitchen equipment. Once you start getting orders and build up customers you can further invest in things that will provide you efficiency.
Terms of Contract
Contracts create a relationship between the cloud kitchen owners and the restaurant. Having clear contract terms and conditions are important for restaurant owners to have their work going on smoothly.
Contracts mention important things such as the rent for the cloud kitchens and any additional charges that the owner may be required to pay. Having these cleared beforehand will help you to make a financial budget for your restaurant.
The contract should also include the start and end dates of the lease. This will allow you to plan for long term and adjust your performance and budgets wherever needed.
Contracts also should mention the exit terms. These are those terms that specify the conditions under which any part can terminate the contract. This will save you from any undue charges or obligations that are placed by the cloud kitchen owner.
The contract should also mention other important things like who can have access to your space and who will be responsible for any damages caused.
Licenses
Licenses are important to ensure that you are conducting your business legally. There are two important licenses that you need to acquire in Saudi Arabia before choosing a cloud kitchen.
Trade License
This will allow your restaurant to carry out it’s activities such as getting onto the food delivery platforms.
Food License
This license is essential for you if you want to sell any food products. If you do not have this license your restaurant will be considered illegal.
Technology
Having the right technology in your cloud kitchen restaurant will not only give you a competitive advantage but will also boost your efficiency.
If the cloud kitchen has their own software you need to make sure that the software accepts orders from all the food delivery companies that are used by your customers. Make sure that the software is well integrated with all the delivery apps.
If you want to take this one step further then you can introduce your own mobile app or can accept orders through your website.
Conclusion
Cloud kitchen technology has completely changed the food and beverage industry in Saudi Arabia.
If you want to start your own restaurant without breaking the bank or do not have the budget to do so then starting with a cloud kitchen in Saudi Arabia will be the best option for you.
Cloud kitchens can decrease your costs significantly and can help you reach more customers.
Capital food offers cloud kitchens in Al Wadi and Al Olaya regions of Riyadh. Capital Food doesn’t just rent out kitchens but also supports businesses with full scale brand development, marketing and scale up. If you are thinking of getting into the F&B business in Riyadh, we highly recommend that you visit any of our facilities either in Al Wadi or Al Olaya. Our experienced staff would be happy to not only give you a tour of the facility but also guide you on how to carry your brand from scratch. Let’s roll together!