A tonic to the pandemic? How ghost kitchens are shaking up the UAE's food scene
Virtual kitchens Kitopi, Sweetheart, iKcon and others prep and cook the meals you order online from many restaurant chains
When you order a meal via an app on your phone, increasingly, nobody at the actual restaurant even sees it, let alone prepares your food or delivers your parcel. Instead, it goes to a virtual or “ghost kitchen” somewhere in the UAE, where a separate company cooks your meal – alongside the dishes of many other restaurants – before handing it over to another operation to deliver.
The rise of these ghost kitchens is one of the biggest trends in the food industry and is having a radical effect on the way restaurants operate. Dubai start-up Kitopi is one such enterprise, cooking up to a million meals every month.
Cooking pizza, sushi and woks under the same roof
Founded in January 2018, Kitopi has operations in Dubai, Abu Dhabi, Kuwait City and Riyadh with more than 35 kitchens and 1,000 members of staff cooking for Operation Falafel, PizzaExpress, Nathan’s Famous, Bondi Sushi, Right Bite, Burger Fuel, Wok Boyz and Under 500, to name only a few of its 120-plus clients.
Each location houses a series of smart kitchen stations, which Mohamad Ballout, co-founder and chief executive, says enables Kitopi to ensure that meals are prepared and ready for dispatch within 10 minutes.
Each restaurant that comes on board trains the chefs and approves the product prepared in the kitchen through taste tests
Mohamad Ballout, chief executive, Kitopi
As for concerns about whether signature and favourite dishes will taste the same, a ghost kitchen needs to ensure that the food cooked by its intensively trained staff is no different to the dishes made famous by each restaurant, from branch to branch.
A Pizza Express pie, for example, has a distinctive flavour whether you’re eating one in London, Hong Kong or Dubai. Accordingly, the ghost kitchen’s staff are trained to replicate signature dishes exactly so customers don’t notice the difference.
“Each restaurant that comes on board trains Kitopi’s chefs and approves the product prepared in the kitchen through taste tests. We also encourage brands to regularly audit our food and operation,” says Ballout.
“We cater to the entire customer experience journey from the call centre to delivery enabling, to expand and scale [a restaurant’s] offering and reach in any location via a Kitopi kitchen. Think of it as Franchise 2.0.”
Conjuring restaurants for culinary diversity
Kitopi pays each brand between 10 per cent and 13 per cent of the income from the food orders, and the restaurant itself bears none of the operational costs, such as ingredients, labour and delivery. Similarly, iKcon’s ghost kitchens in the UAE look after Clinton Street Baking Company, Doner & Gyros, Moti Roti and Keto Bowl.
Having total control over the creative process, raw materials, procurement, production and pricing justifies developing brands from scratch
Peter Schatzberg, chief executive, Sweetheart Kitchen
Meanwhile, Dubai’s Sweetheart Kitchen has taken the concept one step further; none of the brands it cooks for has a physical restaurant and each was “created” by the company itself to cover culinary bases.
With a central manufacturing unit and four kitchens across the city, its food is branded under Amigovio Burritos, Fat Boy, Chicken Little and 28 other brands that have never existed as physical spaces. Nonetheless, these “restaurants” appear on platforms such as Zomato and Talabat, logo and all.
“The idea of licensing someone else’s brands never crossed my mind,” says Peter Schatzberg, chief executive of Sweetheart Kitchen. “And in hindsight, I have concluded that avoiding franchise royalties and having total control over the creative process, raw materials, procurement, production and pricing has justified following my instincts and developing brands from scratch.”
Schatzberg says this model is far more difficult and takes more time to build volume, but believes that when it becomes scalable and pivots towards profitability, private label brand ownership is crucial in the delivery space. Sweetheart Kitchen aims to have up to 10 units in the UAE and seven in Kuwait by the end of March, and has plans to move into Saudi Arabia in the second half of the year.
Catering to new normal eating habits
The Covid-19 pandemic has accelerated the rise of virtual kitchens with restaurants increasingly relying on delivery to stay afloat. It’s not only fast food brands turning to ghost kitchens, either; high-end dining establishments and first-time restaurateurs are looking their way, too.
Because the initial investment to operate via a ghost kitchen is significantly less than opening a dine-in restaurant, it enables more entrepreneurs to launch or expand their business – albeit as delivery-only. For those looking to test the market, it’s an option that reduces the risk.
What the pandemic has done is leapfrog this adoption of food tech by at least five years
In the past, fledgling food operations may have started out with a food truck and built up a following by travelling to where the crowds are. But now, those customers are mostly sat at home on their smartphones and that’s where food brands will find their patrons. Going direct to a food-delivery app makes financial sense with risk and overheads reduced.
Renting restaurant space – especially in prime areas with high footfall such as malls – is one of the biggest overheads in the business. Virtual kitchens eliminate the huge cost burden of a physical location. Even before the Covid-19 pandemic, global trends indicated that customers were not looking for more physical restaurants, with data in the US showing that digital orders were growing 20 per cent each year, while numbers for restaurant visits remained static.
A report by market research company Mintel also shows that 57 per cent of millennials say they have restaurant food delivered so they can watch movies and TV while eating. For many people the best new casual restaurant is their home. It comes with a comfortable sofa, big-screen TV and Netflix, while the app-based menu has hundreds of customisable options from several different cuisines.
There are many who believe virtual kitchens are the future of food delivery, and who are investing heavily in the industry as a result. An Allied Market Research report shows the global virtual or cloud kitchen market size was valued at $43.1 billion in 2019, and is estimated to reach $71.4bn by 2027.
“We have seen a steady increase of restaurants wanting to join our platform as a means of battling the pandemic,” Ballout says. “What it has done is leapfrog this adoption of food tech by at least five years.”
At malls, many fast and casual dining places currently sit empty, as staff stand patiently waiting for the customers who are more than likely not going to show up in any significant numbers. As restaurants close brick-and-mortar locations owing to the effects of Covid-19, it’s often not because the demand for their food is no longer there, but simply that people do not want to, or cannot physically go to the restaurant.
It’s perhaps heartening to know, then, that many shuttered places are not defunct; they’ve just gone virtual. Or, in some cases, they were virtual and thriving all along.
Published: February 8, 2021 07:14 AM