Uber Co-founder’s CloudKitchens Is Scaling Massively: Are Ghost Kitchens the Future?

While the food delivery sector helps restaurants stay afloat amid the gloomy COVID-19 phase, startups with different business models are emerging in distinctive corners of the world. From taking orders over a phone call to placing various orders with just a few taps on our smartphones, food delivery has come a long way. A majority of UberEats Clone food delivery startups opt for the prevalent aggregator model. However, the dynamic market is changing, and the ghost kitchen (virtual kitchen) model is sprouting massively.

One trending news that’s made the entire food delivery sector go crazy is that Uber co-founders CloudKitchens is expanding massively, acquiring more than 40 properties in 24 cities over the past two years. Ghost kitchens are entirely dependent on the virtual medium to reach out to their audience. With people relying on online platforms for food deliveries, are ghost kitchens the future of the food industry?

With COVID-19 eliminating dine-ins, are restaurants preferring virtual kitchens? What does CloudKitchens’ recent move mean to the sector? Can unveiling an UberEats clone with ghost kitchens emerge triumphant in the current market conditions? Read more to find out.

What’s the buzz around CloudKitchens? 

“Based on what we know thus far, that is the largest operating network,” stated Melissa Wilson, the Principal & off-premise expert of Technomic.

CloudKitchens, the ghost kitchen service provider, was founded in 2016 by Uber’s co-founder Travis Kalanick. One of the prominent aspects of CloudKitchens is that it stays under the radar (preventing staffers from posting their employment status on LinkedIn) to stay trending on customers’ radar. Quite fishy, isn’t it?

The Los Angeles-based Startup has silently acquired more than 40 properties over the past two years. These properties are either closed restaurants or warehouses spread across 24 cities, including Ohio, Seattle, Las Vegas, etc. Acknowledging that these properties are pretty expensive, the company has spent a whopping $130 million to acquire them, according to reports.

The Motive 

What’s even more interesting is the fact COVID-19 has aggravated the market for food delivery services, and especially the UberEats Clone delivery-only model market. With restaurants finding it challenging to accommodate users, managing expenses is an uphill task. Exploring the delivery-only model can be the ideal way out in the ‘new’ normal world.

“It is certainly a way to catapult themselves, their geographical distribution & penetration, very quickly,” added Melissa.

Kalanick’s time as a one-time CEO of Uber witnessed increased attention towards its food delivery segment UberEats. The platform rose in numbers tremendously in 2017, and it was at this time UberEats announced its collaboration with McDonald’s, driving crazy attention on the Internet.

CloudKitchens’ motive remains under the cloud, but there’s something very fishy, considering the latest turn of events.

Ghost Kitchens vs. Conventional Restaurants – A Duel 

Two staggering stats that make the restaurant world go berserk is that,

• 52% of the restaurant owners find labor costs to have a negative impact on their business growth in 2019.
• 64% of the restaurant owners opined that they plan to increase menu prices to balance exploding labor costs.

The lockdown situation has added fuel to the flame. Low & medium-scale restaurants are finding it increasingly challenging to manage expenses, including

• Restaurant rents
• Maintenance costs
• Labor costs
• Inventory costs
• Overhead expenses

On the other hand, the CloudKitchen market has been one of the fastest-growing sectors, clocking a massive double-digit CAGR of 17.25% between 2017 and 2030. The market was valued at $700 million in 2018.

In a duel between conventional restaurants & CloudKitchens, the latter has the ability to win comprehensively, and here’s why:

• Reduced working area & hence fewer rents.
• Less staff cost as there’s no need for servers in the delivery-only model.
• Less operational costs as the entire system gets digitized.
• Enhanced profit margins.

Will restaurants with the trend? Well, the foundation has been laid, and the market forecasts a massive positive trajectory. It’s time to ask restaurant owners ‘what’s cooking?’

An UberEats clone with the delivery-only model – Right time? 

Enhanced commission rates are one troubling reason why restaurants hesitate to collaborate with third-party platforms. Convincing them to transform into CloudKitchens depends on the hands of skilled entrepreneurs. If businesspersons can manage to take care of their supply chain (ghost kitchens), there’s no doubt in the fact that rolling out an UberEats clone with the delivery-only model will be highly remunerative.

With Artificial Intelligence (AI) and Machine Learning (ML) revolutionizing industries, leveraging data can steer a food delivery platform towards success. Quality insights on popular cuisines, delivery time, etc., can be game-changers in this technologically-driven world.

If you’re aspiring to roll out a food delivery app, we, at Appdupe, are just a call away. Our seasoned technical experts’ team will assist in rolling an on-demand delivery-only food delivery platform that is easy-to-use, resilient, and world-class!

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Marketing is my soul mate and writing is my side kick. Using my writing skills to share the knowledge of app development and upcoming technologies.