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Cloud Kitchens
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.
Industry Updates
Market Sizing
The US Cloud Kitchens market could reach USD 1.8 billion–3.9 billion by 2027
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Market Mapping
Various cloud kitchen models are currently in operation, with the most popular being virtual restaurant brands, possibly due to the ease of expansion through third-party kitchens. Commissary kitchens are also a popular segment, with a relatively high number of players operating within the segment. Both segments are dominated by Minimum Viable Product and Go-to-Market players.
All four segments are dominated by disruptors, with several incumbents (mostly rideshare service providers such as DoorDash and Grubhub) also operating in the industry. Independent cloud kitchens are less common in part due to their limited potential to reach scale.
Cloud Kitchen companies can be segmented into the following four categories:
Commissary Kitchens
Virtual Restaurant Brands
Independent Cloud Kitchens
Operator Managed Cloud Kitchens
The Disruptors
Most disruptors operating in the space are Go-to-Market or Minimum Viable Product stage players. The highest-funded company in the space is Wonder, which offers operator-managed cloud kitchen services as well as online food delivery services. Among the pure-play cloud kitchen operating companies, operator-managed cloud kitchen company Reef and commissary kitchen operator CloudKitchens remain the two highest-funded companies, despite operational setbacks. All three companies have accumulated over USD 1 billion each in funding.
Operator-managed cloud kitchens and commissary kitchens remain the highest-funded segments in the space. Despite being the segment with the highest number of disruptors, virtual restaurant brands has a relatively low amount of funding.
The industry has also experienced incursions from pure-play online delivery management platforms (e.g., Nextbite) looking to leverage their tech stack to launch cloud kitchen businesses.
Funding History
Competitive Analysis
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.
Notable Investors
