In recent years, the number of people ordering home-delivered food has increased significantly, fuelled by the pandemic, as well as the rise of delivery apps such as Uber Eats, which make ordering a wide range of food easier than ever before.
This has led to the development of cloud kitchens to service this need, and they are now providing an attractive option for those seeking to start their own business in the food sector.
This article will cover the growth of cloud kitchens in Dubai and how to set one up:
- Overview of the cloud kitchen concept in Dubai
- The growth of cloud kitchens in Dubai
- Major players in the Dubai cloud kitchen market
- Benefits of cloud kitchens in Dubai for restaurant owners
- Benefits of cloud kitchens in Dubai for customers
- Steps to start a cloud kitchen in Dubai
- Cost of starting a cloud kitchen in Dubai
- How Worldwide Formations can help.
Overview of the cloud kitchen concept in Dubai
Cloud kitchens have arisen to service the demand for food delivery. Unlike traditional restaurants, these commercial kitchens do not serve customers on the premises but produce food that is delivered to customers by delivery services.
There are three main cloud kitchen concepts in Dubai: virtual restaurants, kitchen-as-a-service and full-stack food and beverage providers.
Virtual restaurants are online-only restaurants that sell B2C or B2B via third-party delivery apps. Meanwhile, kitchen-as-a-service businesses provide off-cloud kitchen services to food brands. Finally, full-stack providers can deal with the whole process, from receiving orders to delivering them.
The growth of cloud kitchens in Dubai
Cloud kitchens have proliferated in Dubai in recent years. There are thought to be more than 400 in the UAE currently, with the majority in Dubai.
There are several reasons behind this rapid growth. The first is the increasing demand for food delivery services. This was turbocharged by the pandemic, which restricted access to restaurants. Demand has remained high ever since, as customers love the ease and convenience of ordering diverse and quality food for home delivery.
Technological advances have helped make the cloud-kitchen concept more effective. Delivery apps are now very common, with many people owning devices they can be used on. Likewise, payment through these apps is now widely trusted and taken instantly.
Growth has also partly been down to the cost benefits for restaurant owners – including lower overhead costs. This is explored in more depth later in the article.
Major players in the Dubai cloud kitchen market
Numerous major players have become established in the Dubai cloud kitchen market in the past few years, such as Kitopi, which manages the whole food preparation and delivery process.
Kitch is another provider that has become established in Dubai. It processes online orders and provides dispatching services.
However, while there are major players in the cloud kitchen market in Dubai, it has by no means reached saturation, which means that new businesses can still enter the market and take a share – certainly enough to be profitable.
Benefits of cloud kitchens in Dubai for restaurant owners
There are various benefits of operating a cloud kitchen for restaurant owners. For instance, there are lower overhead costs compared to traditional restaurants as there is no need for a dining area, so the businesses can operate in smaller premises. This also saves on heating and lighting costs and means fewer staff are required as there is no need for waiters, bar staff, etc.
Another advantage is that entry to the market is faster than that of a traditional restaurant, as there are fewer set elements to set up. Cloud kitchens are also flexible and scalable – if your business is growing, adding another kitchen to your network is relatively easy and quick.
Benefits of cloud kitchens in Dubai for customers
The growth in cloud kitchens in Dubai is understandable, as they bring benefits to customers. For instance, a wealth of food options is on offer, more so than a traditional restaurant can provide.
Also, with the growth of delivery apps – and competition between them – delivery times are coming down. If you live in a highly populated area, ordering in can be faster than waiting for a meal in a restaurant.
Finally, regular customers can benefit from bonuses such as exclusive promotions and deals that bring the cost of the meal down.
Steps to start a cloud kitchen in Dubai
There are several steps necessary to start a cloud kitchen business in Dubai. One of the first requirements is to choose a name for the business. There are naming conventions in Dubai that must be adhered to, such as it being unique to your business and not containing any profanities.
Another early step is to get your business licenced. For a cloud kitchen, a commercial licence will be needed, for you will need to apply to the Department of Economic Development. The business must also be registered with the Dubai Municipality before trading.
You must submit a comprehensive business plan as part of the application process. This should contain your plans for how you will set up the kitchen, what foods it will serve, how it will be delivered, what staff you plan to employ and a detailed breakdown of your financial projections and how you envisage it making a profit.
Once this has been done, you will need to decide on a delivery service. There are three main options: employing your own staff to make deliveries; partnering with a third-party delivery company, such as Uber Eats, or allowing customers to pick up their orders in person.
Cost of starting a cloud kitchen in Dubai
There are numerous costs that need to be considered when setting up a cloud kitchen business in Dubai. One of the biggest costs is premises, and the amount needed can vary significantly depending on where in Dubai you choose to locate the business. An area near centres of population is advisable, as this is where the major markets are.
Other costs to be considered include buying equipment for the business – commercial ovens, grills etc. – and things such as the infrastructure to take and send out orders. Employees may also be needed in the kitchen, so wages need to be factored into your cost plan.
Finally, the costs of buying ingredients must be considered. There are plenty of food wholesalers in Dubai, so it may be worth shopping around to find those with the best deals.
How Worldwide Formations can help
As this article shows, a cloud kitchen business can be profitable. But, as with any business set up in Dubai, there can be complications and some degree of risk. This is why consultants like Worldwide Formations are on hand to help entrepreneurs start a cloud kitchen as fast and hassle-free as possible.
Worldwide Formations’ team has a wealth of experience in how to launch businesses in Dubai, and, with expertise in the local economy, our consultants can navigate the setup process with skill to ensure your business is fully legally compliant and ready to trade as soon as possible.
To find out more and to receive a personalised quote, contact us today.