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.
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.
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.