Dark kitchens, ghost kitchens, cloud kitchens–all three names pertain to restaurants without a front house and that rely on delivery riders to fulfill orders. A bold prediction by Euromonitor says the global market capitalization for cloud kitchens will go as high as one trillion USD come 2030; a more modest prediction by Acumen Consulting puts it at 201.1 billion USD by 2027.
Filipino entrepreneurs are fast to take up and scale this model.
In 2020, when restaurants were forced to deliver or to go bust, a QSR leader responded with a P7-billion investment to build a cloud kitchen network. More recently, promising startups secured substantial funding from both venture capital firms and angel investors in a race to build cloud kitchens that would cater to the Metro Manila market.
While the model attracts food entrepreneurs because of the low set-up and operating costs, Lalamove’s Managing Director, Dannah Majarocon, thinks that parallel investments have to be made by their industry counterparts, especially those in logistics, to help cloud kitchens reach their full potential.
‘’A delivery-only restaurant requires a streamlined backend, efficient staffing, and workflow to make the orders accurately–and this is only half the battle. A solid delivery system ensures that what’s produced from the kitchen arrives at the customer’s doorstep at an acceptable quality,’’ says Dannah.
She adds, ‘’Apart from the customer interface, your food entrepreneur also has to ensure the timely delivery and ingress of tools and ingredients to the kitchen; any delay means lost revenue. So for us at the logistics front, we understand that it takes a lot of consistency and dependability to be used in an enterprise setting.’’
Founded in 2013 as an on-demand delivery service provider, Lalamove has transformed into a sizable 3PL company that includes freight services, enterprise logistics, moving, and vehicle rental. In the Philippines, Lalamove is the only logistics company that provides the most varied vehicle options–from motorcycles to long-distance four-wheelers that can carry up to two tons.
To date, Lalamove in the Philippines has thousands of drivers to match almost a million active users. 15% of the total active users of their platform are micro to medium-sized enterprises; some of them are also cloud kitchen operators.
The PH cloud kitchen challenge
Cristian Munoz, the founder of Draper Startup House Manila & Public House, agrees with Dannah. ‘’Like cloud kitchens, third-party logistics (3PL) providers were born out of the need for more efficient and affordable solutions. It only makes perfect sense for cloud kitchens to tap the delivery expertise of 3PL providers because they already have the network of riders, the infrastructure, and software to support it, and the industry know-how to help cloud kitchens succeed in the market.’’
Recently, Cristian opened Public House on Burgos St., Poblacion. His vision was a platform that allows home cooks and chefs to quickly launch virtual restaurants by bridging the brick and mortar with the digital gap. For Cristian, Public House is not just a cloud kitchen–it is a startup launchpad that gives entrepreneurs excellent pricing for solutions, no upfront fees, a premium location with access to big food markets, an industrial-grade kitchen, and analytics. Online food entrepreneurs now have fewer excuses to scale up and make it.
He adds, ‘’Our tenants currently also use Lalamove and it is a great offer for its service, market reach customization and affordable options.’’
Cristian personally uses Lalamove for big delivery services like bedframes and bikes, since it is cheaper, more convenient, and more reliable than your average van delivery service.
‘’You need that kind of consistency if you’re running a business. It is easier for food brands in the bulk order sector (party trays, set menus, etc.) to use Lalamove over other services that solely offer motorcycles. Additionally, the cost of teaming up with Lalamove for delivery of produce or products instead of getting their own delivery truck/van is still more advantageous. Finally, consumers are also better off with Lalamove because they allow food brands to conveniently avail of the drivers’ insulated box and allow businesses to have their favorite drivers who can be integral to the brands’ growth,” Cristian explains.
Cloud kitchens are here to stay
COVID-19 significantly altered the way of life for most Filipinos–including their eating habits. The accelerated growth of cloud kitchens is largely due to this change in habits.
Dannah Majarocon concludes, “Cloud kitchens are here to stay. All the research points to the model being capitalized significantly, and being taken up by food entrepreneurs because of the low-cost advantages. For us in the logistics sector, this means investing in people, physical infrastructure, and technologies to support our customers in this line of business.’’
ADVT