Covid hit the F&B industry hard. Many restaurants were unprepared for the rapid change in consumer habits and shift towards food delivery. One estimate states that more than 2,000 restaurants have permanently closed during the pandemic in Malaysia.
This hardship has forced many restaurants to look for innovative solutions to remain profitable during the pandemic. While dine-in catering was no longer generating the steady stream of customers like it once was, third-party food delivery platforms were starting to dominate the market.
Delivery kitchens offer restaurant businesses the ability to transition into a food-delivery world, streamline their operations and work collaboratively with online food delivery platforms like Foodpanda and Deliveroo. This way, they gain access to a far greater market and are able to cook food quicker and more cost-effectively.
One year on, and the evidence of the benefits of embracing the delivery kitchen business model are starting to come to light.
Restaurants are notoriously hard to operate. With slim margins, running a profitable restaurant business requires a keen understanding of the market, high-quality food – and sometimes a bit of luck. Additionally, the upfront costs associated with expanding a traditional restaurant can be anywhere upwards of RM500,000 in Malaysia, making it unaffordable for most.
On the other hand, the cloud kitchen model provides restaurant owners with an alternative means of expansion. With significantly reduced upfront costs, cloud kitchens are significantly cheaper than their traditional counterparts. Several factors contribute to this, including the fact that cloud kitchen operators like Kitchen Connect will handle all the permits, construction, renovations and other bureaucratic matters, and that you won’t need a huge front of house team to accommodate guests. With this in mind, scalability is far more affordable and even considered a realistic evolution of your brand.
The industry is rapidly expanding
Even before the pandemic, the food delivery industry was growing exponentially. Changing habits caused by increasingly busy schedules and the growth of third-party delivery platforms meant that in 2021, $267 million USD is predicted to be spent on food delivery in Malaysia.
The cloud kitchen model provides businesses the opportunity to get ahead of competitors still lagging behind and become pioneers in an increasingly competitive industry.
Insightful data that helps streamline operations
The cloud kitchen business model embraces data at all levels of operation. At Kitchen Connect, we provide clients with access to a suite of technology-driven solutions that increase efficiency and productivity.
In our cloud kitchen model, access to a single tablet in the centre of the kitchen enables restaurants to manage and keep track of all their delivery orders in one place. They also have access to clear and comprehensible data regarding orders, the most profitable menu items, and more. Food-delivery businesses are able to make informed decisions with this information and extract every last bit of profit possible while running a restaurant business loved by its customers.
Immediate and flexible solutions
The cloud kitchen model provides an immediate and flexible solution to restaurants that plan on rapidly expanding their operations. Traditional restaurants may take in excess of a year to open, making expansion a lengthy process. Comparatively, in a cloud kitchen, the process may take just a few weeks, becoming a more responsive and affordable option for scaling a restaurant.
Expand into new markets and areas in Malaysia
The location of your delivery kitchen is one of the most important factors contributing to its success. While dine-in restaurants need to be in areas with lots of foot-traffic (think shopping districts, near tourist attractions, and in the city centre) to get enough customers, delivery-focused restaurants need to be in or near residential areas. This is a huge benefit to restaurants, as rents will be far lower here in comparison – and orders should be just as high if not higher.
Kitchen Connect has done the research necessary to find areas ripe for food delivery businesses, meaning you can easily expand into new areas without too much concern. Different brands will, of course, perform differently in the same area as it depends on countless factors tied to that neighbourhood such as a huge expat community or higher average income affecting the type of food ordered. This is where part of the benefit of a delivery kitchen comes into play:
Try new ideas and locations at a fraction of the cost
Working with a delivery kitchen operator like Kitchen Connect means you’re able to test out these new markets and areas with considerably less risk. Unlike typical rental contracts offered for dine-in restaurants, delivery kitchens can be organised on short-term leases. They also are a turnkey solution, meaning brands don’t have to be concerned about costly renovations, brand new equipment, and much more. Together, these advantages mean that restaurant businesses can try new ideas in new areas with much less capital until they find the perfect solution.
Partner with other successful businesses in the F&B industry
The rise of online delivery platforms is simultaneously a consequence and blessing of the smartphone era. Many delivery kitchen models are specifically designed to work with these platforms, providing you with an efficient and optimised means of distributing food directly to your customers.
Operating a delivery kitchen allows you to partner with these thriving businesses and piggy-back off of their success to create your own. By skipping the lengthy process of transforming your dine-in location and opening a cloud kitchen, you can get a foot in the door of this new and burgeoning industry.