How has COVID driven innovation in the F&B industry?

For the past few decades, change and evolution in the F&B industry has been crawling at a snail’s pace. Customer behaviour went largely unchanged in these years, too: fine dining was done in fancy restaurants, while takeaway or delivery food was left for the cheaper, more fast-food oriented options.

This is largely because innovation is almost always sparked by necessity – and the F&B industry we’ve all gotten comfortable with worked near perfectly – until COVID hit.

Without a need, food technology innovations were few and far between. Sure, the likes of GrabFood, Deliveroo, WhyQ and FoodPanda have made food delivery a far more accessible option here in Singapore, but they never fundamentally changed the way the F&B industry worked. Instead, they just complemented the existing system – picking up food cooked in a kitchen behind the dine-in area of a brick-and-mortar restaurant.

Cloud kitchens (otherwise known as virtual kitchens, dark kitchens, ghost kitchens, and central kitchens) have been a concept for years, but they never truly caught on until the pandemic. Now, they’re surging in popularity, and it’s looking like they’re here to stay even after the pandemic clears.

What are cloud kitchens?

Cloud kitchens are effectively food production powerhouses. In a traditional restaurant, you’ll have a kitchen area, a seating area, and a physical menu. A cloud kitchen, on the other hand, only has a kitchen space. The menu is online, and the space is highly optimised to cook high-quality food in the most efficient way possible.

As most restaurant businesses don’t have an in-house food delivery division, partnerships with the aforementioned third-party delivery companies help cloud kitchens deliver food to their hungry customers.

Cloud kitchens mean restaurants can focus their efforts on food production – not on navigating difficult logistical issues, hiring a team of front-of-house staff, and paying extortionate rent for prime dine-in real estate.

Why are restaurants opening cloud kitchens so rapidly?

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COVID restrictions have been tough on everyone in Singapore. The restaurant industry took a substantial hit with dine-in areas that are frequently left vacant as people favour cooking at home, ordering takeout, or getting food delivered.

Many restaurants were quick to adapt, though. Those that already offered food delivery services ramped up their efforts, while more high-end restaurants that previously only catered to dine-in customers started completing their first delivery orders. There was just one problem: traditional restaurants were operating in a new, delivery-centric world, but neither the efficiency nor food technology was there.

Many restaurant businesses have correctly identified cloud kitchens as the way forward for expansion, complementing their pre-existing dine-in locations. Cloud kitchens are also incredibly affordable to start, costing a fraction of the up-front cost of a brick-and-mortar restaurant, and operating at a far lower cost, too. Coupled with the rapid change in people’s eating habits, this has made them the only logical option for running a successful restaurant business during, and after COVID. 

What benefits do they bring?

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We’ve already mentioned that cloud kitchens are a more efficient option, but why is this exactly?

  1. Upfront costs are far less. Cloud kitchen operators spend less than SGD$ 41k on opening a cloud kitchen, as opposed to the SGD$ 50-600k of a dine-in location.
  2. Lower operational costs courtesy of a smaller team and less rent.
  3. Less logistical worries like getting rid of waste food.
  4. Faster return on your investment, allowing F&B business owners to start delivering food within weeks.
  5. Complete more orders than ever, thanks to more efficient kitchen layouts and innovative food technology.
  6. Business help from cloud kitchen space suppliers like Smart City Kitchens to grow your virtual brand.

Final thoughts

The pandemic has changed the way we live our lives, and it will likely have lasting effects too. One of the most significant changes it necessitated was where we eat. Cloud kitchens are becoming increasingly popular for F&B businesses owing to their slew of benefits. As more remote and optimised kitchen spaces, they are the perfect solution for COVID restrictions and are far more efficient at cooking and delivering food than their dine-in counterparts. Businesses are discovering that the most likely bottleneck for cloud kitchens is simply how many orders you receive.

Since cloud kitchens aren’t designed to attract customer footfall, though, they require a bit of extra effort when it comes to marketing. Restaurants that aren’t already well-known through their dine-in locations have also had to innovate and find new ways to market their restaurants, typically through digital means. This could include building a new website, running digital marketing campaigns, having a professional food photoshoot, and much more.

To find out more about cloud kitchens, get in touch with Smart City Kitchens today. We’re here to help you build your restaurant business from the ground up.


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