Since the beginning of the COVID-19 pandemic, 17% of US restaurants have closed their doors. In straight numbers, that translates to over 110,000 dining rooms that used to be filled with hungry customers. Since our onions used to be on the plates that now sit empty, we intimately understand the challenges restaurants are facing.
With the industry in free fall, restaurant owners and chefs have been forced to adapt to survive. For some, cloud kitchens have been the answer. Let’s take a deeper look.
What Is a Cloud Kitchen?
Cloud kitchens, or ghost kitchens as some prefer to call them, allow restaurants and food brands to prepare meals for delivery and take out without a permanent brick and mortar space. These stripped-down versions of commercial kitchens are straight food preparation space — no dine-in option. But, they have everything needed to craft beautiful dishes with commercial kitchen equipment, dishwashers, and cold storage. Caterers have used these spaces for years to prepare meals for offsite events.
Before the pandemic, about 15% of operators reported using a cloud kitchen, but by May of 2020, 51% of operators had turned to cloud kitchens to prepare some or all of their delivery orders. Other operators moved solely to cloud kitchens paired with take-out and delivery services to meet growing demands amidst lockdowns and quarantines.
Food delivery apps have made delivery accessible and easy for everyone, with delivery sales growing 300% faster than dine-in over the last five years. That growth has only accelerated since COVID-19 arrived.
The Cloud Kitchen Business Model
So, how exactly does a cloud kitchen work? Operators rent kitchen space from a landlord who owns kitchen facilities. These spaces are most common in densely populated urban areas. With kitchen space rented (for cheaper than the overhead of a restaurant space), brands get onto a food delivery app and start filling orders. The orders are picked up and sent out from the cloud kitchen space instead of a restaurant.
Cloud kitchens have been used to launch new food brands for less. By having purely virtual interactions with customers, operators save on the cost of equipment, the cost of space, and the cost of labor. Existing brands have also used cloud kitchens to meet demand or expand their delivery range.
But it’s not all easy money and success with cloud kitchens. Competition in delivery apps is growing. The perks of a storefront are free advertising and food traffic, sales boosts you don’t get when your restaurant is virtual. Chefs are also restricted by delivery area. A typical delivery radius is 3 to 5 miles from the kitchen, so you may be able to find kitchen space for cheap, but are there customers around? And let’s not forget that there is only so much kitchen space up for grabs.
Still, many brands have found cloud kitchens are the key to their success in a post-COVID market.
Effects of Cloud Kitchens on the Ag Industry
What challenges restaurants challenges the farmers who supply them. If there’s no one to eat food, the food doesn’t leave the field. At Gills Onions, many of our products are designed specifically with the food industry in mind. Items like our Whole Peeled Onions, Sliced Onions, and Slivered Onions are prepared and packaged to make chefs’ work easier and safer. When restaurants close their doors, agriculture hurts, too.
Cloud kitchens are one innovative solution that the restaurant industry is using to bounce back, and they benefit those of us in agriculture just as much as those in food service. Cloud kitchens also present a unique opportunity for brands to partner with local farmers and source fresh produce from their own areas.
Time will tell how the cloud kitchen concept develops and grows, but one thing is for sure: restaurants are here to stay, and we’ll be there to make sure they have all the onions they need.
Ready to try onions the Gills Way? For more information, contact our sales department.