A cloud kitchen is a professional food preparation and cooking facility set up for the preparation of delivery-only meals. A cloud kitchen contains the kitchen equipment and facilities needed for the preparation of restaurant meals but has no dining area for walk-in customers.
During the COVID-19 pandemic suffered globally, our local diners have adapted into the preference of taking out instead of dining in. The cloud kitchen concept capitalizes on the rising popularity of ordering out instead of dining in. The trend also speaks to the growing power of third-party delivery companies such as FoodPanda, Lalamove and Grab services, which have transformed the way many people find restaurants and raised expectations for speed and convenience.
GrabKitchen, foodpanda, Deliveroo and Smart City Kitchens are gearing up for unprecedented growth in Southeast Asian markets, due to high demand and cost effectiveness. With Covid-19-induced new social behaviours like social distancing, the online food delivery segment of F&B is getting more attention as an all-in-one solution for the struggling restaurant industry.
Key growth drivers for the market segment include an increase in smartphone users, internet penetration and a cashless economy made easy by digital payments. Distribution 4.0 — the upgrade of distribution networks to a more decentralised system — is the newest growth driver.
In the cloud kitchen system, vendors will receive the order virtually through online ordering system, or a third party’s, and the kitchen will prepare the food. When the food has been prepared, we will utilise third party services, will deliver it to hungry customers.
Cloud kitchen is also gaining popularity on the ability to eliminate brick and mortar-related overheads. The start-up cost of a medium sized restaurant in a prime location in Kuala Lumpur is between RM500,000 and RM1 million, covering rent, utility deposits, licences, branding and renovation, equipment, recruitment, and training, opening stock, and others. Conversely in a cloud kitchen scenario, firstly, vendors will only rent a fraction of the usual area, which will drop rent by 20% to 30%, and secondly, reduce cost of construction by eliminating atrociously costly fittings and branding, staffing and training, serving equipment and breakages, high staff turnover, renovations and upkeep costs. With an investment of RM50,000 to RM150,000, vendors can build a cloud kitchen and start your journey in this rapidly growing industry.
That said, Xinn has researched, developed, and launched our first cloud kitchen brand in September 2020 dubbed “Sedap Kaw Kaw” via our marketing arm. Our cloud kitchen benefits from certain competitive advantages from:
- We are a vertical expansion Group of Companies, providing materials from upstream to downstream retail business;
- We developed our very own POS system via our MSC status company; and
- Shall the business growing rapidly, we may assemble our in-house delivery team and/or system.
Going forward, we would launch three more branches of Sedap Kaw Kaw and we are in discussing with our associated partners for developing a cloud kitchen modules.