“Cloud kitchen” in Thailand is cooking hot and continues to boil
With food delivery services enjoying significant growth and looming uncertainty over the future of eating out, cloud kitchens are washing up on Thailand’s shores in a new and big wave that will inevitably disrupt brick-and-mortar restaurants.
According to the Kasikorn Research Centre, the number of food delivery orders in the first half of 2020 surged by 150%, helped largely by the outbreak of the coronavirus (COVID-19) and the resultant nationwide lockdown. Though restaurants have been allowed to reopen since the middle of May, the demand for food delivery services has remained high and is continuing its upward trajectory, as consumers turn from dining out to eating in. The food delivery market this year is projected to grow 19-21% from 35 billion Baht in 2019.
Aggressive competition in food delivery services has forced the leading aggregators like Foodpanda, LINE MAN, and GrabFood, as well as the restaurant companies to create cloud kitchens – also known as ghost kitchens or virtual kitchens – that will ramp the game up to the next level. Based on a delivery-only business model, the cloud kitchen redesigns the food ecosystem to create an in-home dining experience from kitchens close to consumers.
Central Restaurants Group Co., Ltd. (CRG), one of the country’s leading quick-service restaurant chains, is exploring expansion through the cloud kitchen model and is investing a massive 500 million Baht in opening 100 cloud kitchens across the country in the next five years. In July, CRG launched its first cloud kitchen called “Every Foood” on Nakniwas Road in Bangkok’s Lat Phrao area and is planning another nine branches in Bangkok and the suburbs before the end of this year. Another 40 branches are slated to open by 2022, and the remaining 50 cloud kitchens are scheduled for 2023-2024.
CRG’s President, Nat Vongpanich says the new business model responds to consumer trends and increases opportunities to access a new target group by shifting to the online platforms. It will be a growth driver for the food delivery business because the company can expand existing restaurants quickly at minimal cost, while consumers can enjoy hot and fresh food with a faster delivery time via the food hunt and aggregator apps.
Minor Food Group, one of Asia’s largest casual dining and quick-service restaurant companies, has also announced a strategy for the second half of this year that will see an aggressive reinforcement of its food delivery services. In addition to creating a kiosk model to serve as a grab-and-go service located close to consumers, it is also adopting the cloud kitchen to stay competitive in the restaurant business.
At present, the company operates more than 2,300 outlets in 26 countries under The Pizza Company, The Coffee Club, Riverside, Thai Express, Benihana, Bonchon, Swensen’s, Sizzler, Dairy Queen and Burger King brands.
Prapat Siangjan, Deputy Chief Operating Officer of the Minor Food Group, said that the cloud platform would allow customers to place a food delivery order and receive it faster and fresher from a restaurant branch within a three-kilometre range, just as if a chef was cooking the dishes at home. Customers can also place a single order from different brands to ensure the freshness of the food.
Oishi Group is the latest player to enter the market opening Oishi Kitchen in August 2020, as its first central kitchen in Big C Extra on Rama IV Road. This allows consumers to pick a variety of dishes from the four Japanese chain restaurants under its umbrella; namely, Oishi Buffet, Shabushi, Oishi Ramen, and Oishi Delivery and combines them in one order via food delivery apps like Foodpanda, GrabFood and LINE MAN. Oishi Group is planning to open another 5 – 10 Oishi kitchens in prime metropolitan areas by 2021.
Aggregators face up to new challenges
Foodpanda, the first food delivery app provider in Thailand, pioneered the cloud kitchen concept in February 2019, under the brand “Krua by foodpanda” in The Curve Neighbourhood Centre, Suan Luang (On Nut 17), Phra Khanong district offering seven popular restaurants under one roof. Foodpanda is now planning to expand its cloud kitchen in the near future.
Grab Thailand, one of Asia’s leading everyday super apps, introduced Thailand’s first-ever GrabKitchen at Samyan market in October 2019, after launching it in Indonesia. Grab has since opened two more Grab kitchens on Vibhavadi 64 and, more recently, in Thong Lo and expects to add two – three more cloud kitchens in the near future. Each outlet has an average space of 300 sq. m and serves 12-16 food and beverage brands.
LINE MAN partnered with the popular restaurant review platform Wongnai to present the first LINE MAN Kitchen at Punnawithi in June 2020, offering consumers a choice of dishes from 13 well-known restaurants in a single order.
GET, the latest food delivery app established in 2019, is rebranding its app and brand to become Gojek Thailand. Gojek, Indonesia’s unicorn startup and a pioneer of the integrated super app model, is unifying brands in Vietnam and Thailand under one name. This is a crucial move to strengthen the Gojek brand across Southeast Asia. Gojek launched its cloud kitchen service in Indonesia last year under the name GoFood Kitchen and now operates 20 cloud kitchens.
Meanwhile, cloud kitchen infrastructure providers are joining the fray in an attempt to crack the lucrative home-delivery dining market.
CloudEasts, a Philippines-based food and beverages services startup, established its cloud kitchen model in the middle of 2019, and has become the country’s largest cloud kitchen provider. CloudEasts is aiming to expand its unique kitchen operations concept across the region by developing more than 100 cloud kitchens across Southeast Asia.