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Cloud Kitchens

Defining the future of the restaurant business.

Overview

Offering flexible kitchen rentals to lower foodservice costs

Cloud kitchens started as the restaurant industry’s equivalent of co-working spaces, in the form of shared kitchen spaces. Cloud kitchens are usually located in industrial districts, vacant warehouses, or unused parking or storage facilities, offering restaurateurs an alternative to expensive restaurant real estate. Clients can instead rent multiple fully-equipped cloud kitchens for flexible amounts of time. Cloud kitchens allow chefs to test their products or more established restaurants to expand their reach without spending on opening full-service restaurants.

While inspired by the co-working model, the most notable advancement enabling cloud kitchens has been online food ordering platforms. Increasingly, the growth of the cloud kitchen space has also given rise to virtual restaurant brands—chef-created or celebrity-inspired delivery-only brands uniquely suited for cloud kitchen preparation.

What's driving this industry?
Market Sizing

The market size for US cloud kitchen operators is estimated to range between USD 1.6 billion and USD 3.4 billion by 2026

Conservative case

USD 1.6 Bn

Base case

USD 2.5 Bn

Expansion case

USD 3.4 Bn

USD billion12345202120222023202420252026
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COVID-19 IMPACT

The restaurant industry was hit hard by the Covid-19 pandemic, with a majority of dine-in restaurants forced to shut down as authorities aimed to contain the outbreak. As of December 2021, around 80,000 restaurants in the US had temporarily or permanently closed since the onset of the pandemic, down from 110,000 (17% of all restaurants) at the peak of Covid-19.

This has, however, created potential market opportunities for the industry, as cloud kitchens have the potential to help restaurants cater to the growing demand for delivery-only services. Cloud kitchen operators have seen a spike in funding and new partnerships to expand operations and grow the sector.

  • In July 2021, Kitopi raised USD 415 million to accelerate expansion in Saudi Arabia and Southeast Asia as well as to expand its tech stack.

  • In October 2020, Nextbite raised USD 120 million to strengthen its virtual restaurant brand business, including launching new virtual brands, hiring a VP to develop more celebrity-backed brands, as well as recruiting a culinary director and a branding expert from Chipotle.

  • In July 2020, Karma Kitchen raised USD 319 million to buy the freeholds of its cloud kitchen sites and work toward opening 53 new sites across the UK and broader Europe over a five-year period.

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Market Mapping


A variety of cloud kitchen models are currently under development with the most popular being commissary kitchens - commercial-grade kitchens where foodservice providers can safely and legally prepare meals without having to own and maintain the facility themselves. Incumbents dominate the operator-managed cloud kitchens segment, with new players also rising in prominence due to their end-to-end value proposition for restaurant brands. Virtual restaurant brands also represent a popular segment due to the ease of expansion through third-party kitchens. Independent cloud kitchens are less common in part due to their limited potential to reach scale.

The majority of companies in the operator managed cloud kitchens segment are in the growth stage. The virtual restaurant brands segment features a balance between companies in the early and growth stages while the commissary kitchens segment mostly has early-stage players.

Incumbents
Growth
Early
Seed
Pre-Seed
Commissary Kitchens
?
Virtual Restaurant Brands
?
Independent Cloud Kitchens
?
Operator Managed Cloud Kitchens
?
CloudKitchens
CloudKitchens
CloudKitchens
CloudKitchens
DoorDash Kitchens
Deliveroo
Grab
CloudKitchens
Kitchen United
Karma Kitchen
Crave Hospitality Group
Nimbus Kitchens
Kitchen Republic
Amped Kitchens
Fulton Kitchens
Wired Kitchens
Huuva
Ghost Kitchen Charleston
Hubb Kitchens
GrubHub
Taster
Kbox Global
JustKitchen
Virturant
Nextbite (formerly Ordermark)
The Local Culinary
Creating Culinary Communities (C3)
Virtual Dining Concepts
Kitchen Ventures
Combo Kitchen
Peckwater Brands
Mealco
Butler Hospitality
Sweetheart Kitchen
Curb Food
Epic Kitchens
DoorDash Kitchens
Kroger
Walmart
REEF Technology
Kitopi
All Day Kitchens
Ghost Kitchen Brands
JustKitchen
Local Kitchens
Wonder
Cuyna

The Disruptors


Cloud kitchens have been gaining popularity in the US, with a few startups obtaining substantial funding to expand their businesses. By 2021, well over USD 4 billion had been invested in cloud kitchen startups.

CloudKitchens is the emerging leader in this space, having attracted the highest funding in the industry—well over USD 1 billion was raised during 2019–21. The company’s investors include Uber Co-founder Travis Kalanick and the Saudi Arabian Public Investment Fund. With a strong presence across the US, the company has leveraged funding to venture into Mexico, the UK, and India through a series of acquisitions.

Increasingly, players in the space are veering toward creating virtual restaurant concepts or digital food brands, even embarking on crossborder partnerships to take their brands to new territories. These companies mark a departure from the capital-intensive kitchen infrastructure model prevalent in the industry. Rather than operating and managing their commercial kitchens, some players focus on developing food brands that can be franchised by third-party kitchens. Creating Culinary Communities (C3) is a noteworthy player in this arena, partnering with MENA-based cloud kitchen operator Kitopi to launch major C3 brands across 150 locations in the Middle East and Asia. Both players also attracted capital infusions in 2021, with C3 raising USD 90 billion in two rounds and Kitopi drawing USD 415 million in a funding round led by Softbank’s Vision Fund 2.

The industry has also experienced incursions from pure-play online delivery management platforms looking to leverage their tech stack to launch their own cloud kitchen businesses. Nextbite (formerly Ordermark) is a classic example.

Commissary Kitchens

?

Disruptors

?
Funding in USD Millions
CloudKitchens
1250
Karma Kitchen
316
Kitchen United
150
Nimbus Kitchens
Unknown
Watchlist
?
Crave Hospitality Group
Huuva
Ghost Kitchen Charleston
Hubb Kitchens
Kitchen Republic
Amped Kitchens
Fulton Kitchens
Wired Kitchens

Virtual Restaurant Brands

?

Disruptors

?
Funding in USD Millions
JustKitchen
Public - Market cap USD 16.5 mn
Creating Culinary Communities (C3)
90
Taster
51
Kbox Global
22
Virtual Dining Concepts
20
Nextbite (formerly Ordermark)
Unknown
The Local Culinary
Unknown
Watchlist
?
Peckwater Brands
Mealco
Kitchen Ventures
Virturant
Combo Kitchen

Independent Cloud Kitchens

?

Disruptors

?
Funding in USD Millions
Butler Hospitality
50
Sweetheart Kitchen
41
Epic Kitchens
6
Watchlist
?
Curb Food

Operator Managed Cloud Kitchens

?

Disruptors

?
Funding in USD Millions
JustKitchen
Public - Market cap USD 16.5 mn
REEF Technology
1502
Kitopi
804
All Day Kitchens
120
Local Kitchens
25
Ghost Kitchen Brands
1
Watchlist
?
Wonder
Cuyna

CloudKitchens

CloudKitchens is a kitchen infrastructure company that caters to established restaurant chains interested in turnkey expansion solutions, local restaurateurs seeking delivery models to reach new markets, and food entrepreneurs looking to test new brands with minimal risk.

The company has over 50 active locations across the US and has kitchen partnerships with major American food brands such as Chick-fil-A and Applebees.

CloudKitchens has also steadily expanded its global presence through acquisitions and partnerships. In July 2020, the company acquired NanoKitchens, a Mexico-based network of hubs for last-mile delivery in the food and retail segments for the B2B and B2C sectors. Earlier in April 2019, CloudKitchens acquired Foodstars, a UK-based startup with over 100 commercial kitchens to rent for food and beverage companies. The acquisition enables CloudKitchens to offer delivery-only kitchens in London, Birmingham, Manchester, and Leeds. CloudKitchens delivery-only kitchens also operate in India, across Delhi, Mumbai, and Bangalore, under the KitchenPlus brand.

CloudKitchens raised USD 850 million in a November 2021 circular that valued the startup at USD 15 billion. Prior to that, the company received USD 400 million in November 2019, backed by former Uber CEO Travis Kalanick and the Saudi Arabian Public Investment Fund.

Segment:
Commissary Kitchens
Total funding:
USD 1.3 billion
Competitors:
REEF Kitchen, Kitchen United, Karma Kitchen, Kbox Global, Taster
Disruptor Funding History

Commissary Kitchens:

CloudKitchens
Karma Kitchen
Kitchen United
Crave Hospitality Group
Huuva

Virtual Restaurant Brands:

Creating Culinary Communities (C3)
Taster
Kbox Global
Virtual Dining Concepts
Peckwater Brands
Mealco
Kitchen Ventures

Independent Cloud Kitchens:

Butler Hospitality
Sweetheart Kitchen
Epic Kitchens
Curb Food

Incumbents


Online food aggregators remain popular entrants to the cloud kitchen space

Different types of players in the restaurant delivery supply chain are now exploring the cloud kitchen space. These include third-party delivery platforms and supermarket chains, who have entered the market via partnerships or backward integration strategy; third-party aggregators such as DoorDash and Deliveroo, who have now started to backward-integrate into the restaurant delivery value chain and are providing cloud kitchen services for existing restaurants on their platform, as well as services for original brands; and retail stores such as Walmart and Kroger, who have expanded into this space using their store network to set up cloud kitchen facilities in collaboration with cloud kitchen operators across North America. 

Commissary Kitchens
Virtual Restaurant Brands
Independent Cloud Kitchens
Operator Managed Cloud Kitchens
In House Development
M&A
Partnership
Investment
DoorDash Kitchens
Deliveroo
GrubHub
Kroger
Walmart
Grab

Notable Investors


No investor data is available

Funding data are powered by Crunchbase
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