The Cloud Kitchen is Here in the Philippines―But What is It Exactly?

During the pandemic, many restaurant owners struggled to keep their operations running. Fortunately, this problem gave birth to a wonderful solution—cloud kitchens.

Cloud kitchens are services that offer kitchen spaces to food and beverage (F&B) business owners. If you’re planning to set up a cloud kitchen to support small businesses, or if you're a small business owner planning to join a cloud kitchen, you can learn more about it in this article.

What is the Meaning of Cloud Kitchen?

Cloud kitchen goes by several names, such as shared kitchen and virtual kitchen. It's a commercial facility for F&B business owners who want to rent kitchen space to prepare delivery-only food items. 

To simplify, cloud kitchens are restaurants that only have kitchens.^[1] They provide space conducive for cooking, baking, or preparing meals.

The cloud kitchen concept is perfect for food business owners who don’t have sufficient funds to pay for their own brick-and-mortar restaurant. Nevertheless, owners still have their own brand identity, apps, websites, and the like. 

🍴 Cloud Kitchen vs Ghost Kitchen: Is There a Difference?

Technically speaking, cloud kitchens and ghost kitchens are the same. They both offer kitchen spaces to F&B business owners who are either new to the industry or on a tight budget.

However, there’s a clear distinction between the two:

• Cloud kitchens - Many different food brands operate in the same outlet. The food may also be prepared by the same chef or multiple chefs.
• Ghost kitchens - These restaurants are present on most mobile food delivery apps but don’t have their own physical stores. Oftentimes, ghost kitchens are virtually present in different locations but have one central kitchen to prepare customer orders. When food is prepared in the central kitchen, the meals are delivered to subsidiary kitchens in different areas.

How Does a Cloud Kitchen Work in the Philippines?

Imagine a large warehouse divided into several mini-restaurants. Each section has stainless steel prep tables, hood vents, refrigerators, stoves, ovens, and sinks dedicated to every business leasing the space. All brands in this cloud kitchen also have a tie-up with a food delivery service to pick up their customer orders.

Unlike traditional restaurants, cloud kitchens don’t have dine-in or take-out options for customers. As the name suggests, customers will have to order via an app, website, or phone number, and then get their meals delivered for a fee.

Pros and Cons of a Cloud Kitchen

Not sure if you should set up or join a cloud kitchen concept? Consider these advantages and disadvantages before you dive in:

👍 Benefits:

• Cheaper to operate since you don't need to shell out a lot for rent, utilities, employees, and overhead costs
• Low risk
• Flexible location
• Easy opportunities for scalability

👎 Drawbacks:

• Limited customer interaction
• Limited market presence since it only operates online
• Dependency on delivery and other third-party apps

Cloud Kitchen Examples in the Philippines and Asia

In the Philippines, local startup CloudEats currently has over 30 brands. After launching in Vietnam, CloudEats raised US$7 million to further expand its operations in Southeast Asia.^[2] 

MadEats is also a fast-growing cloud kitchen in the Philippines. Its brands include Yang Gang, Chow Time, Fried Nice, Dot Coffee, MadBakes, and MadMakes.^[3]

Did you know that MadEats was opened by three driven women who are passionate about F&B during the ECQ in 2020? Learn more about their story in the video below:

Meanwhile, Grab's GrabKitchen works as a central commissary for several different F&B brands to prepare their food items in one kitchen. To date, GrabKitchen has five branches―Pasig, Makati, Parañaque, Sampaloc, and Malate.^[4]

Launched in 2020, Kraver's Canteen currently has six kitchens across Metro Manila. It offers a full suite of service solutions to its brands—kitchen rentals, tech services, restaurant production, and more.^[5]

Another notable player in the industry is the Mercato United Kitchen, which is dedicated to micro to medium enterprises.^[6]

As you map out your journey to establishing your own cloud kitchen, check out some other cloud kitchens in Asia. Look into their business models and how they worked them to their advantage:

• TiffinLabs (Singapore)
• JustKitchen (Taiwan)
• CloudKitchens (South Korea)
• Our Kitchen (Japan)
• Panda Selected (China)
• Rebel Food (India)
• Dahmakan (Malaysia)
• Spoonful Meals (Hong Kong)
• Everplate (Indonesia)

How to Set Up Your Own Cloud Kitchen in the Philippines

Cloud kitchen services are growing in popularity, attracting small players. If you’re planning to set up your own cloud kitchen, here are the things you need to do:

Step 1: Identify Your Customers 

As with starting any business, you have to identify who your target customers are before setting up a cloud kitchen.

Do your target customers take vegan or keto diets? What age groups will you be serving? And what’s the financial capacity of your target market?

Knowing these things about your target customers will help you plan your next strategies.

Step 2: Choose a Concept 

Once you’ve identified who your target customers are, you need to know their psychographics. What are their interests or the food they like to order on weekends? Do they prefer Asian, Western, or Italian dishes? Are they samgyupsal or ramen fans?

Taking these details into consideration will help you come up with your cloud kitchen’s concept and business model.

Step 3: Find a Good Location 

While most cloud kitchens would ideally be set up outside crowded cities due to the need for a large space, you also need to consider the following factors: 

• Your target market
• Distance between your cloud kitchen and where most of your target market is 
• Availability of food delivery services 

For example, Grab deliveries are available in key cities and nearby provinces only, not nationwide.

Step 4: Invest in Equipment 

You'll have to spend most of your capital on kitchen equipment, which can be expensive. It’s best to work with a certified and experienced chef to know which kitchen tools, equipment, and appliances you need for each space.

Step 5: Establish Good Working Relationships 

Cloud kitchen providers often partner with food delivery services or third-party apps to offer their goods. However, this service comes with extra fees and charges. If you want to maximize your income, you can choose to hire your own driver to deliver orders as they come in. 

Step 6: Set Up an App or Website to Take Orders 

Your customers should be able to reach you, be it via social media, website, or phone. If you don’t have the budget to create an app or set up a website, start with a social media account and a phone number instead.

Read more F&B business articles:

• What’s Cooking? How to Start a Catering Business from Home
• How to Start a Restaurant Business: 10 Steps to Ensure Success
• Why You Should Open a Bakery: Tips to Get Your Business Off the Ground
• What's Brewing: How to Start a Coffee Shop Business in the Philippines

Final Thoughts

Whether you own a small food business and want to join a cloud kitchen or set one up yourself, consider the costs that come with cloud kitchens.

In that regard, you can get additional business funding by applying for a loan. Compare some options below:

Sources:

• ^[1] Cloud Kitchens: A Technology-Driven Phenomenon (Forbes, 2020)
• ^[2] Cloud kitchen startup CloudEats raises more capital to ramp up Southeast Asian expansion (TechCrunch, 2022)
• ^[3] MadEats
• ^[4] GrabKitchen
• ^[5] Kraver's
• ^[6] The Mercato United Kitchen