The food and beverage sector in Dubai has witnessed a significant transformation in recent years, largely driven by the COVID-19 pandemic. This has led to the emergence of delivery-focused cloud kitchens as a prominent trend in the industry. Many restaurant owners are leveraging these facilities as a cost-effective way to expand their operations into new markets and maintain business continuity during challenging times.
The increasing demand for cloud kitchens has spurred the growth of companies providing such spaces, with KitchenPark establishing itself as a leader in the market.
Given the growing interest and adoption of the cloud kitchen concept among entrepreneurs, we have prepared a detailed guide outlining the costs associated with opening such a kitchen in Dubai.
What are the key costs for a delivery-focused cloud kitchen?
Like any business venture, several factors must be considered when it comes to the cost of operating a delivery-focused cloud kitchen. Understanding these factors is crucial when developing your business plan, as they will determine the amount of capital required to launch your project.
1. Size of your kitchen
When looking for a kitchen space that meets your business requirements, you first need to decide whether you want to set up your own independent kitchen or opt for a cloud kitchen service provider like KitchenPark. For startups, the latter option is often preferable, especially as our facilities are located in major cities with a consistent customer base that generates numerous orders at all times. However, before deciding on the right kitchen unit, it’s advisable to research the surrounding area and assess whether your cuisine type will resonate with the local population.
It’s also essential to determine the size of the delivery cloud kitchen you seek to rent and the associated rental costs. In Dubai, our kitchens range from 12 to 500 square metres on average and require a financial investment of approximately AED 22,500. This is significantly less than traditional restaurants, which typically occupy around 200 square meters and require a financial investment of almost AED 1 million, ranging from AED 700,000 to over AED 800,000.
2. Equipment for your kitchen
One of the major costs you will incur when launching your delivery cloud kitchen is the expense of necessary equipment. Our units come equipped with all the essentials, but it’s up to you to decide what additional items you might need to ensure your operations run smoothly. Be sure to consider the basics, including pots, pans, refrigerators, and freezers, as well as any specialised equipment required if you prepare a specific type of cuisine. When purchasing your kitchen equipment, stick to a defined budget to avoid overspending.
It is also important to consider the amount you will pay for utilities, including gas, electricity, water, and so on. Additionally, you will need a tablet to track all incoming delivery orders. In this regard, our application allows you to easily view all incoming customer orders, even if they are using different food delivery companies.
3. Number of employees needed
Behind every delicious dish are professional chefs who are experts in their craft. You will certainly need to hire 1 to 3 employees for your cloud kitchen delivery service, depending on the number of orders you fulfil daily. Nevertheless, the cost of employees will in no way equal the amount that traditional restaurants have to pay, as they usually require around 30 employees. When starting your cloud kitchen delivery business, you will need fewer staff members, but as your business grows, you can increase the number of employees to help handle the increasing demand.
4. Marketing expenses for your business
Many restaurant owners may overlook this cost when launching a cloud kitchen delivery project. However, marketing will be a key element for your establishment, as you need to connect with consumers to grow your customer base. Since there are many marketing techniques you can use, let’s break them down:
- Logo: You can design it yourself or hire a company or freelancer to do so. The important thing is to ensure it accurately reflects your brand, as it can become a recognisable symbol for your company in the future.
- Website: Any business in the food and beverage industry needs a proper website that looks professional and offers a distinctive user experience. When setting up your website, make sure it includes an online menu, the restaurant’s story, and a contact form, allowing people to learn more about your business and get in touch with you. WordPress and Wix are excellent platforms for easily creating websites, but you can also hire someone to build them for you. It’s best to purchase a domain name to add a touch of professionalism to your URL.
- Social media accounts: You will need an account across all the major platforms used by audiences these days. While creating a social media account is free, you may need to spend some money to boost posts or create ads so you can reach a larger audience.
- Photography: There’s more to photography than just grabbing a camera, flashing the light, and taking pictures. Good photos require a professional photographer who knows what they’re doing, so hire an expert to take mouth-watering images of your food to attract more people to try it.
- Digital advertising: Regardless of whether you use Google or food delivery apps like Talabat, Careem Now, Deliveroo, or NowNow by noon, you will need to factor this cost into your budget when preparing to open a cloud kitchen for food delivery.
5. Technology for food operations
This is considered one of the essential costs, as your cloud kitchen delivery service will need top-notch Point of Sale (POS) systems and food technology software. Simply put, you shouldn’t skimp in this area. Our facilities at KitchenPark have top-tier food technology software that enables you to track everything happening in your business. Whether it’s managing incoming orders, compiling reports, or identifying the best-selling items on your menu, our technology can provide you with all of that.
6. Cost of food ingredients
It goes without saying that food ingredients should be as fresh as possible to ensure your food is fresh and of superior quality. Allocate a budget for this purpose so that you can make as much money as possible from each item on your menu. It is also wise to be aware of your customers’ habits so you don’t order too many ingredients.
7. Insurance requirements
This is a cost that applies to all businesses, including cloud kitchen delivery services and traditional restaurants. You will need two types of insurance: employer’s insurance and public liability insurance. This will ensure you are protected in cases of employee accidents or unfortunate incidents in the workplace and customers who decide to take legal action against you if they consume your food and become ill. KitchenPark understands the importance of being protected in unforeseen circumstances; therefore, all our kitchen units come with insurance included in the price.
8. Licenses and permits needed
Any business in Dubai will need various licences and permits to operate legally. Accordingly, you will have to bear the costs associated with the necessary licenses to run your cloud kitchen delivery service. Make sure to conduct thorough research in this area so that your business does not risk closure in the future. If you need more information on this matter, you can refer to our comprehensive blog available at your convenience.
Additional Necessary Costs
1. Marketing plan development
As your restaurant starts to gain popularity, you will need to develop a marketing strategy to sustain and expand your reach to a wider customer base. To achieve this, you will need to follow these steps:
- Create a social media plan
- Work with influencers
- Create a loyalty program
- Offer customers rewards for referrals
- Run promotions and discounts
- Targeted advertising
2. Data analysis
This is crucial as it allows you to understand your customers more deeply. By utilising data analysis, you will begin to identify their pain points and why they might prefer other restaurants instead of ordering from your cloud kitchen delivery service. To do this properly, you should hire a freelancer or a digital marketing agency. However, take the time to consider whether this is a top priority or not.
Essentially, data analysis can provide you with a lot of useful information, such as:
- Your customers’ ordering habits
- Which type of advertising campaigns are best for your business
- What are your most successful dishes
It’s Time to Rent Your Own Cloud Kitchen for Deliveries
The costs of operating a cloud kitchen for delivery are significantly lower than those of traditional restaurants. Moreover, you can achieve equal profits within 6 months, while regular restaurants take about 5 years to reach this point. Given all these factors, it is clear why cloud kitchens for delivery are gaining increasing popularity among restaurant owners in Dubai.
Are you ready to launch your own cloud kitchen today? Fill out the form or contact us today.
