By Nancy D’Souza & Namrata Kamath

The United Arab Emirates’ (UAE) F&B sector saw a huge rise in 2020, despite the pandemic. A total of 1,303 new food establishments opened in Dubai, which is approximately 3 eateries per day. That is a startling figure, especially in such a challenging year, and the city is showing no sign of slowing down as it prepares to welcome millions of visitors for the Expo which is set to begin in October.

As a country that has blossomed from the desert, developing pockets of communities far and wide, restaurants have had to look for efficient ways to increase their outreach. This has given rise to the cloud kitchen concept, also known as dark kitchens or ghost kitchens. Well established restaurants are using these to tap into new neighbourhoods, and virtual brands with no brick-and-mortar space have joined in to take a slice of this burgeoning industry.

Apart from access to a growing customer base, there are many financial advantages for restaurants to operate from cloud kitchens. There is no set-up or operational cost of running a full-service restaurant, and as customers behaviour changed over the pandemic and more people started ordering home deliveries, this trend has continued to rise.

Kitopi, one of the biggest cloud kitchen platforms in the UAE has the capability to set up a brand from ground up and serve customers within 14 - 21 days. In July this year, Kitopi raised $415 million in funding from investors to help fuel its expansion in the Middle East and support entry into new markets.

There are unethical practices being seen in the cloud kitchen world, where companies are creating numerous brands in one kitchen. There is no relationship building like in a traditional restaurant setting, and if the brand doesn’t do well, it is rebranded and launched as a brand-new product – even though it is the exact same product with a few changes.

Delivery aggregators have also seen a rise, with brands like Chatfood, Deliveroo, Zomato, Noon, and more, delivering food across the UAE with short lead times. According to Statista, global revenue in the online food delivery segment is projected to be $151.5 billion in 2021. Reports suggest that in this region, the UAE is the second-largest market for online food delivery with a market size of $834 million. Competition is rife and so restaurants that want to stand out need to offer huge discounts to get noticed.

Technology, affordability, and convenience means that cloud kitchens and delivery aggregators are here to stay. It will however be survival of the fittest.