looking beyond covid-19: cloud kitchens – an industry sector on the boil in china
jul 28, 2020
shanghai, july 27, 2020——according to cushman & wakefield’s recent report, looking beyond covid-19: cloud kitchens – an industry sector on the boil in china, around for a few years now, cloud kitchens are primarily restaurant kitchens that take inbound food orders via an online ordering system and provide no dine-in facilities. they have a central kitchen that delivers food to customers, be they restaurants or individual customers.
in terms of industry development growth, according to qianzhan intelligence data, cumulative investment into cloud kitchens in china reached rmb 4.2 trillion by 2016, up from rmb 1.9 trillion in 2010.
although the cloud kitchen concept appeared abroad at an earlier time, china’s cloud kitchen industry development has been rapid and has led to a diversified product offering. today, cloud kitchen market participants in china can be grouped into the following categories:
catering chain enterprises;
group meal enterprises;
retail enterprises;
‘new retail’ enterprises with an internet background;
third-party enterprises, and;
industrial park cloud kitchen enterprises.
when considering the nature of the business, cloud kitchens hold many advantages, including:
centralised food and ingredient procurement;
unified food preparation standards (ensuring consistency in food quality and in food taste remains the same at all times);
unified food processing (unifying the raw food materials, recipes and food preparation procedures);
easy implementation and execution of recipe research and development (to continually improve existing food products and produce new food products);
easy execution of food quality inspections and food safety inspections;
increased food preparation and processing efficiency (leading to less overall employees needed to produce the same quantity of food orders when compared to a traditional restaurant);
streamlined food order processing;
easy implementation and execution of batching delivery;
increased business scale (leading to augmented business bargaining power and stabilised food and ingredient supply);
overall business costs reduced, and;
easy to implement and execute business expansion if required.
in terms of city locations, cloud kitchens in china tend to be located in ‘middle urban areas’ – just away from central commercial hub areas but also close to densely populated residential areas. they tend to favour older commercial buildings where space is cheaper to buy or to lease.
during the covid-19 outbreak in china, home deliveries of semi-prepared and/or cooked food thrived as people stayed at home and ordered online. during the outbreak period, many cloud kitchens in china worked flat out to satisfy the increased volume of home delivered food orders – with some cloud kitchens processing as many as 6,000 to 8,000 orders per day.
looking forward, there are still a lot of untapped business opportunities that the cloud kitchen industry sector could harness and take advantage of. take for example the online food delivery service in china. this business service has grown rapidly over recent years in the country. according to meituan (one of china’s largest online food delivery service companies), in the first half of 2018, the company had a total of 2.77 billion orders for online food deliveries, with an average of 15.18 million orders a day. by may 2019, according to krasia, this daily average had surpassed the 25 million order mark. ahead, the company expects this order volume to continue to increase over the next few years, thus contributing to extra demand for cloud kitchen services in china.
shaun brodie, head of occupier research, greater china, cushman & wakefield, said: “with the cloud kitchen industry sector anticipated to see growth for the foreseeable future, business value is expected to be created for a number of interested parties along the online food delivery industry chain, including: commercial property landlords; dining establishments; online food delivery enterprises, and consumers……thus, portending well for an industry sector on the boil in china.”
please to download the report.
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cushman & wakefield (nyse: cwk) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. cushman & wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. across greater china, there are 22 offices servicing the local market. the company won four of the top awards in the euromoney survey 2017 and 2018 in the categories of overall, agency letting/sales, valuation and research in china. in 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. to learn more, visit www.cushmanwakefield.com or follow @cushwake on twitter.
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