Economy Middle East: Cloud Kitchen Business Setup Guide

With over 20,000 restaurants in Dubai, the cloud kitchen business is carving out a distinctive niche in the city’s culinary industry. This inventive business model provides a unique proposition for enterprising individuals. 

But before diving headfirst, it is essential to understand how the process works. 

What is a cloud kitchen?

A cloud kitchen business, also known as a ghost or virtual kitchen, is a restaurant that operates solely via food delivery. 

These establishments have no physical dining space. Instead, orders are prepared and delivered to customers’ doorsteps. Through eliminating the need for a physical dining space, cloud kitchens have revolutionized the traditional restaurant business model.

Why the cloud kitchen model works well in Dubai

The global online food delivery sector’s market value skyrocketed to $150 bn. Even as the pandemic wanes, the industry continues its upward trajectory, with the UAE’s food market projected to hit $394.20 mn in 2023.

Dubai’s digitally-savvy residents have quickly adapted to the online food ordering trend, contributing to the boom in the cloud kitchen business model. Additionally, the region boasts a well-established delivery infrastructure.

Furthermore, the high cost of renting brick-and-mortar restaurant spaces in Dubai is a hurdle facing traditional establishments. In contrast, cloud kitchens come with the advantage of comparatively faster licensing approvals, making them a highly attractive business model in the current market.

Read: Cloud kitchen business exploding, cooking up a sci-fi food future

Setting up a cloud kitchen business in Dubai

Step 1: Evaluate the market

Just like with any business, groundwork is a prerequisite. Conduct market research to identify demand patterns, popular cuisines, and the demographic profile of potential customers.

Forecasts indicate that revenue from food outlets in the UAE is expected to reach approximately $8.9 bn by 2025, up from $8.3 bn. This increase demonstrates a promising market ripe for cloud kitchen businesses.

Equally important is the fact that Dubai’s especially diverse expat population contributes to the city’s dynamic culinary scene. 

Step 2: Build a business plan

With insights from market research, develop a concrete business plan. This should detail strategies for marketing, operations, finances, and overall growth.

Your cloud kitchen business plan should outline several key strategies:

Marketing strategy

Considering the digital nature of cloud kitchens, having a strong online presence is a no-brainer. According to Digital Quality of Life Index Report, 10.07 mn people in the UAE are internet users. Base your marketing strategies on these statistics, focusing on social media and online advertising to reach your target audience.

Operational strategy

In terms of operations, focus on efficiency and scalability. Bear in mind that with the advent of the digital age, the number of online food delivery users will likewise continue to grow. Thus, an efficient system for delivery, sourcing ingredients, and order handling becomes critical to your cloud kitchen business. 

Financial strategy

Meanwhile, when it comes to finances, account for costs like procurement, manpower, kitchen setup, and delivery logistics, while also intending to gain adequate funding.

In Dubai, the UAE government’s push for the food technology industry to grow has resulted in financial grants and loans being available. Do your due diligence in researching the available funding options.

Step 3: Register and secure your licenses

Next, apply for a trade license from the Department of Economic Development. This license allows you to set up and operate your cloud kitchen business in the region.

Furthermore, obtain approval from the Dubai Food Safety Department (DFSD) for your food hygiene and safety procedures. This is vital, as it ensures your business conforms to the city’s health regulations and maintains high-quality standards.

Additionally, secure any required approvals from local municipal departments. These approvals may relate to business premises, waste disposal, or other operational aspects.

Moreover, consider getting an e-commerce license. This license permits your business to engage in online transactions and conduct its activities through digital channels.

Step 4: Locate and set up your cloud kitchen business

Subsequently, select a cost-effective site that complies with the local authorities’ food safety regulations. However, remember, the most essential aspect of cloud kitchen businesses is not foot traffic but easy access to your targeted delivery areas. 

Given that you will primarily serve customers through delivery, the kitchen location should preferably be in or near areas with high demand for your proposed cuisine. After finalizing your preferred location, ensure a thorough check is conducted by the DFSD. 

Step 5: Tackle staffing and training

Another aspect of running a successful cloud kitchen business is recruiting skilled personnel. Likewise, offer regular training opportunities and workshops for your staff to facilitate skill enhancement and stay updated on the latest food trends. 

This ongoing development can lead to increased quality and innovation within your cloud kitchen, taking your business above the competition.

Step 6: Implement a digital infrastructure

Due to the online-centric aspect of cloud kitchen businesses, it is important to create and establish a robust digital infrastructure. 

Develop a user-friendly, visually appealing, and secure website that enables customers to preview menus, place orders, and make payments seamlessly. 

In addition, launching a mobile application can significantly enhance accessibility and customer engagement. Features such as real-time order tracking, personalized cuisines based on user preferences, and a review system for quality control can help you differentiate your services. 

Step 7: Marketing your cloud kitchen business

Lastly, an effective digital marketing strategy can help your cloud kitchen gain exposure. Use social media platforms and partner with food delivery apps to reach your potential customers.

Alternatively, you can build an email and mobile subscriber list to keep your customers in the loop about new menu items, special offers, and important updates. Personalized offers can foster customer loyalty and the repetition of orders.

Final thoughts

Success requires strategic planning, a keen understanding of the market, and a relentless commitment to quality and customer service. With these in mind, the Dubai cloud kitchen business is worth exploring.

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