We as an industry, are in the midst of creating brands for a trillionaire segment. Yes, Euromonitor reported that till 2030 we could see the Cloud Kitchen market reaching the status of a trillion-dollar industry. So, if you are a restauranteur or have any type of food operation, you should be interested in being a part of this interesting movement. Your next restaurant might be virtual folks!
Branding the next trillion-dollar industry
In case you don’t know what we are talking about, a “Cloud Kitchen” is a food production operation built exclusively for, and optimized for, food delivery. This virtual brand market space has matured quite a bit in the past three years. Uber Eats said that it now counts over 40,000 virtual storefronts on its platform, up from 1,600 in 2018 and 20k in 2022. That data comes from a platform that has been a pioneer of virtual brands, launching its own cloud kitchen program in 2018 throughout hundreds of cities.
Unlike brick-and-mortar stores, cloud kitchens don’t necessarily have a dine-in facility. They operate through their own platforms or in most cases through third-party delivery platforms. Normally though, cloud kitchens stand behind some of its strong pillars being; smart real estate choices, trustable tech partners, and logistically impeccable strategies.
Well, smart and concise branding also, but we’ll get into that at the end of this article (curious or in a rush, we can give you some cookies here).
This concept has lots of benefits, ranging from the low cost of implementation, and connectivity with technology but also, extending your portfolio reach, broadening your audiences, mingling more with all types of foodies in your local market, and therefore biting more of your local share of pocket and heart.
The fact of the matter is that cloud kitchen business models are still evolving. They are a smörgåsbord of moving parts, pivotings, and models. Just so you know, you might see a lot of different names pop up. Don’t let them confuse you. Cloud kitchen, dark kitchen, ghost kitchen. They all mean basically the same thing at its core.
Ghost? Cloud? Virtual? Dark kitchens?
There’s a load of structures and hybrid models for operating a cloud kitchen business, but the best way to organize them is probably by; (1) ownership, (2) origin, and (3) structure. Cloud Kitchen one of the biggest cloud kitchen brand and operations describes these models perfectly here. In a nutshell, you can either have your operation from within your own kitchen premises and build brands from within, build it from a previously established brick-and-mortar operation now optimized for delivery, or have real state operation where you co-habit with different operations, leasing spaces to other brands or not.
Also, what we understood is that sometimes, depending on the market or your business plan, it’s also interesting to have a few operations playing the Brick-and Mortar game. This will not only diversify your portfolio but also give you a really nice balance between scalability, mixed-type income, and long-term branding added value.
Vicio, one of the hottest new fast-casual concepts in the world relies heavily on its ghost kitchen operations to deliver its fashionable burgers, having its packaging system, and social media communication as center points of its branding efforts, while their (few) stores act as a showroom for the concept only. Even though they play the brick-and-mortar game, the money is really coming from munchy Spanish people using delivery apps.
“We are a digital brand and we have a virtual relationship with people. We bet on delivery and not on the traditional restaurant model.”Says Aleix Puig (Vicio’s co-founder) to Business Insider España.
The thing is, all these “virtual” business concepts with different models are now a big reality in the restaurant world. People have been connecting more and more with this concept, to the point of being super comfortable with it, especially digital natives such as the Gen Z avid audience.
Pandemic accelerated Big Behavioural Shifts
It’s not only Netflix and Amazon that benefited from the Pandemic period, other markets became elusive and bright in the eyes of investors as well. We see a big behavioral shift in the F&B segment, especially restaurant and hospitality outlets. From a Dining-centric only marketing budgeting to a delivery-empowered mindset.
Operating from the south of Brazil, a client of ours, Libel Kitchen is super happy with the growth it had not only in terms of revenues but also in online engagement of their brands both brick&mortar and especially virtual brands. Customers are not only consuming more from their homes but also engaging more with their beloved brands, digitally.
“We encourage our brands to have this super engageful and conversational interfaces. Our branding and Social media tone of voice helped us not only survive the pandemic times, but also create long term relationships with our clients.”“Says Libel Kitchens CEO, Marcelo Libel.
Almost two-thirds of people (63%) say they prefer online food delivery over dining out—and ghost kitchens make it even easier to reach that 63%.
Big Data, Huge Insights
With that many people driving changes in consumer habits, then understanding Big Data can be the next step to succeed in this segment. This is something that has been done with mastery by one of our clients, one of the biggest Cloud Kitchen businesses in the UAE. Kaykroo operates through an ever-evolving Data Driven mindset closely tied to Delivery App insights. They know their audience’s exact needs and come up with tailor-made food concepts that not only fill some gaps in the market but also extend the same audience’s curiosity to future markets they want to create and test out.
With all this investment being made and a new set of competitors sharing similar strategies virtually, it’s up to the companies that believe in branding to spice up this business model, creating interesting new spaces within this segment.
Hungry House for example, is doing a really nice work connecting Chefs and creative thinkers to create cool menus and brands from the expert(chef’s) point of view. Other big brands are creating narratives within the digital influencers’ brand spaces, using Celebrities or Niched public figures to bring some sassiness to their food concepts, such as Packed Bowls By Wiz Kalifa, the rapper collab with our friends from Next Bite. Only within the Virtual Dining Concept, we can see food brands signed by people ranging from Mariah Carey(cookies), Mario Lopez (cakes) and the huge YouTube success turned burger virtual chain Mr. Beast Burger.
Understanding the branding role
Here at Bodega, we think a lot about our role in all this. How to build brands into a fast-paced concept that won’t become too flat or soulless? We’ve been thinking a lot about that alongside our partners in crime all over the world. From Switzerland to Dubai.
To run together with this concise brand space, limited by mostly digital interfaces and smart and optimized business models, branding has to really seal things right.
A strong Central narrative, assertive taglines, desirable packaging, and smart digital verbal and visual brand assets, attract customers to the offer and make them understand the brand’s point of view and food offer easily and powerfully.
Strategic visual assets must be created also with the understanding of maximizing brand touch points and understanding readability. Because brands that lack the physical experience, have to make the best use of their pixels and specially treat the packaging as the centerpiece of the story.
We have built our recipe folks… While working within this industry a lot in the last 2 years, we’re excited to share our methods on how to build engaging narratives for this fast-paced segment.
Your next restaurant might be virtual!
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