The restaurant industry is seeing a rough and unprecedented era, but cloud kitchens are offering a way out. JustKitchen is capitalizing on a blooming food delivery ecosystem with its own cloud technology.
- Cloud kitchens can see a CAGR of 12% through 2027.
- Market size will grow from $43B to $71B by 2027.
- Cloud kitchens enable remote production of food for delivery in optimized regions.
- JustKitchen facilitates business entry into the food delivery market on a wider scale.
- JustKitchen was founded in 2019 but expects to open 15 satellites hubs in Taiwan by 2021.
- JustKitchen charges brand restaurants royalties for prepping, producing, and handing food over to delivery workers in under 20 minutes.
- JustKitchen uses data to analyze consumer preferences, market demand, and risk.
The cloud kitchen market
Covid-19 has spurred innovation in areas most effected by lockdowns such as the restaurant business segment. Restaurants have been challenged by the pandemic as seen in the McKinsey graphic below and their recoveries are only expected to occur in early 2024, assuming the virus is fully contained by that time. This is a long time to wait, and small businesses will have to bite the bullet in the meantime. Or maybe not:
Cloud kitchens could ease the recovery for some players. Cloud kitchens are centralized food production facilities, like a shared workspace, where a restaurant can work from at the different stages of food production. The central hub is the first piece, where raw materials are prepared. The spokes, the distributions outlets, are the second piece where the prepped food is finalized, packaged, and handed off to delivery workers.
This enables flexibility for businesses to access more neighborhoods and even cities belonging to different countries. Through the cloud, upload your restaurant and menu, and you can pretty much license your business to a company like JustKitchen to run operations while receiving royalties from you.
The global cloud kitchen market generated $43.1 billion in 2019, and estimates suggest that by 2027 this figure could rise to $71.4 billion for a CAGR of 12%. The increased demand for online food delivery was clearly driven by lockdowns and the fear of contracting the virus, and this has spurred a whole ecosystem of e-commerce and online payments, which the cloud kitchen business has capitalized on. If food delivery is healthy, cloud kitchens are healthy. Seafood is estimated to reach a CAGR of no less than 15% by 2027 while burgers and sandwiches accounted for 25% of the global cloud kitchen market in 2019.
Leading players are Kitchen United, Rebel Foods, DoorDash Kitchen, Zuul Kitchen, Keatz, Kitopi, Ghost Kitchen Orlando, Dahmakan, Foodpanda, Deliveroo, Starbucks with Star Kitchen, and JustKitchen who we will dive into now.
JustKitchen uses cloud technology to facilitate food preparation and delivery.
JustKitchen is a Taiwanese startup founded in June 2019 that facilitates the creation and curation of food for the food delivery sector. By increasing their access to many locations in their city, owners can increase their consumer base because of JustKitchen. Instead of cooking out of their brick-and-mortar property, businesses pay JustKitchen royalty fees to gain access to their facilities. Workers in the central hub prepare ingredients, which are then sent to satellite kitchens or spokes where the food is refined and handed off to delivery workers. The process from order to delivery can be as quick as 20 minutes, almost faster than an actual restaurant.
The central hub is really the key piece of the cloud kitchen puzzle for JustKitchen because it offers owners the chance to increase their product offering. Instead of being limited to a certain number of dishes, the business can access the increased resources of the central hub to meet a certain demand they could not reach before. Consumers enjoy a wider range of options, owners can access more points in their geographic regions, and delivery platform demand goes up benefiting their bottom line. This enables for a greater revenue to square footage ratio in that reducing the distance between the satellite kitchens and the buyers will increase business efficiency.
JustKitchen operates six virtual home brands and teams, and seven chain stores. This is but the beginning for them. They seek to increase their foothold and enter other areas like kitchenware suppliers. This means small businesses can pretty much operate fully remotely, via cloud, and not have to clean, store, do the purchasing or even the cooking of their recipes. JustKitchen will attempt to open its second central kitchen and push for 15 satellite hubs in total and 12 restaurant brands by 2021.
The startup’s focus on operations and content in addition to kitchen infrastructure is what differentiates them from their competition. They work directly with businesses one on one to design and curate their cloud menus, menus best tailored for delivery companies according to their data analysis. The startup thinks it can cut delivery times in half, and that their partners have seen a 40% month to month growth. Instead of multiple orders a single delivery worker must deliver in four different neighborhoods, their model enables more efficiency in location optimization delivery.
JustKitchen generates a lot of data on consumer preferences, size of meals, meals by time of day and year, and cuisine type. This helps them produce their own brands and enter the market as a restaurant themselves. This also gives them great power in determining business risk since they know what foods are hot and which are cold per region.