Within the virtual restaurant industry, The Cloud is the secret ingredient for kitchens and food brands looking to grow and expand. Founded in Abu Dhabi, United Arab Emirates, in 2019, The Cloud is now present in seven countries. They have a dual focus: helping kitchens get started quickly or expand, and broadening awareness and access for food brands. Percent is excited to bring food sector investments to its clients, as the online food delivery market is expected to grow from 160.3 billion in 2022 to $483.9 billion by 2032–a compounded annual growth rate of 12%.
What is a cloud kitchen?
According to Forbes, cloud kitchens are restaurants that only have kitchens. They are a technology-enabled food production facility where multiple restaurants prepare delivery-optimized food, usually for delivery. Unlike traditional restaurants, a cloud kitchen is scalable and typically has better margins with lower overhead costs (among other items, rent and payroll costs are significantly less expensive). Technology comes into play by creating more efficient workflows, or by connecting kitchens to brands that need space in a particular market, or connecting brands to delivery services and customers. For example, The Cloud’s platform brings all orders into one dashboard and a single workflow, provides data and insight on everything from kitchen performance to sales and earnings, and helps users manage their inventory and supply chain to increase efficiency.
Using idle capacity to power growth
Globally, fully equipped kitchens are rarely fully utilized – whether that is due to only serving breakfast and lunch, downtime between shifts, being closed overnight, or consumer preferences that result in predictable busy periods. The Cloud connects these underutilized kitchens to curated digital food brands, matching existing equipment and ingredients used to the requirements of the brand. It’s a win-win for everyone: the kitchens can increase their top and bottom lines and use their facilities efficiently, while consumers gain access to a wider variety of food options. The Cloud uses online aggregators (such as Deliveroo, HungerStation, UberEats) to reach a broad customer base, and handles packaging and marketing.
Although the concept became better known during the global pandemic, it was not new and continues to grow. The Cloud’s own track record demonstrates the scalability of its business model: during 2022 alone, The Cloud worked with 1,000+ host kitchens and completed over 970,000 orders.
The Cloud difference
Traditional cloud kitchens sell their food under different brands using online delivery aggregators. The Cloud operates differently by connecting food brands to underutilized kitchens and to consumers. A Cloud kitchen client can reduce their operational costs and increase their sales volumes using The Cloud’s proprietary technology. This creates efficiencies across the board, benefitting the restaurant/ kitchen, food brand, and consumer.
The Cloud focuses on two main products:
- Food sales to customers via online aggregators (B2B2C). A majority of the brands are created and owned by The Cloud, with a small percentage that are based on arrangements between The Cloud and the specific brand. The Cloud currently offers more than 30 brands and a variety of cuisines: Italian, Arabic, Chinese, Pizza, Indian, Japanese, and more.
- Food sales to host kitchens. A relatively new and limited service, The Cloud is now providing perishable and nonperishable food to select kitchens for their use in food production. This enables The Cloud to expand their control to elements of the supply chain and ensure consistent quality.
Since The Cloud does not run its own kitchens or use its own assets, it has no capital expenditures. This allows them to quickly test and scale production in different areas without incurring the time or cost of setting up production facilities. Discovery and market testing can happen quickly, with menu offerings able to change as consumer preferences shift.
Data and technology allows The Cloud to constantly monitor kitchen utilization, top purchasing areas, and day-to-day performance metrics such as preparation and dispatch time. This helps to identify any opportunities for greater efficiency and continue to optimize kitchen use. For the restaurant, any incremental revenues gained by making excess kitchen capacity available to The Cloud goes right towards their bottom line.
The Cloud also creates concepts, menus, and packaging for a majority of its brands. Constant market evaluation lets them identify – and then fill – gaps, whether that’s a type of cuisine or reaching a new delivery market.
Finally, The Cloud’s technology processes all orders and can coordinate logistics for deliveries made by The Cloud rather than a delivery aggregator. Where this option is available, it extends The Cloud’s control over both the supply chain and customer experience.
The Cloud and Percent – a beneficial match
Just as The Cloud brings more food choice to consumers and more efficiency to kitchens, Percent gives The Cloud greater visibility to a broader investor pool of qualified institutional and accredited retail investors. These investors benefit from sector and geographic diversification as well as the opportunity to realize higher yields with an income stream from private credit investments.
In addition to expanding their reach, The Cloud can use Percent’s monitoring and due diligence tools to gain insight into their own performance and investor preferences. Like bread and butter, it’s a beneficial match.