Allot ot valid points in here, but it's not a complete failure yet. There are those of us who are still trying to make it work.
All of those companies failed for one reason only, they failed to develop a business model where the economics made sense for everyone. The cost of delivery factored in and the novelty made it near impossible and allot of companies like Nextbite and Kitchen United never had any revenue ( spoken from a knowledgable point of view) there was no blueprint for how to make them work. Non food entrepreneurs came into the space and thought they could solve it but it's a tough business.
Numbers:
Allot of hype yes, never understand the industry size numbers. It's as id one consulting group way overestimated the market size and ran with it. The true size is 50k virtual brands in the US today probably 1-2Bn in sales right now.
Quality :
It's not really a quality issue, the quality is the same as the core restsuanr business or sometimes better because these are easier to prepare. Truthfully allot of shops just re label their signature dishes so same food.
It's more of a perception and pricing problem. Most of the complaints are portion vs price and value of food. Same item delivery is at a minimum 50% higher most restaurants markup the items then the platforms charge you on the back end. Couple this with the deception theory and you have a bad quality stigma.
No connection :
I don't really agree with this. Saying they should focus on building community is like saying we should all go back to a world without internet. For better or worse the internet is here to stay and delivery is as well. If people wanted connection they would order direct but they don't because it's more convenient to order on an app. Here in lies the rub, too much delivery is very bad for a Restaurant, no delivery is tough
No shortcuts :
A franchise is a shortcut. 70% of restaurants fail in five years, franchises less so. Established procedure, built in marketing.
A virtual brand ( the right virtual brand is a franchise in a box) fraction of cost same benefits.
Here’s a summary of how cloud kitchens (“ghost kitchens,” delivery-only kitchens) are doing economically, along with key challenges and outlook:
What’s Good / Growth Trends
Strong Market Growth & Forecasts
Globally, the cloud kitchen market is growing fast. One report puts market size around US$ 80–82 billion in 2025 and projects it to hit US$ 200+ billion by 2033–2035.
Precedence Research
+2
Precedence Research
+2
The compound annual growth rate (CAGR) is often estimated between ~11–13% over the coming years.
For restaurants in my neighbourhood, I've memorized the good chef's days off so I can avoid them on those days. Also, because delivery is such a ripp off, I'll go pick up my own order. Abit to help me, a lot to help them.
Allot ot valid points in here, but it's not a complete failure yet. There are those of us who are still trying to make it work.
All of those companies failed for one reason only, they failed to develop a business model where the economics made sense for everyone. The cost of delivery factored in and the novelty made it near impossible and allot of companies like Nextbite and Kitchen United never had any revenue ( spoken from a knowledgable point of view) there was no blueprint for how to make them work. Non food entrepreneurs came into the space and thought they could solve it but it's a tough business.
Numbers:
Allot of hype yes, never understand the industry size numbers. It's as id one consulting group way overestimated the market size and ran with it. The true size is 50k virtual brands in the US today probably 1-2Bn in sales right now.
Quality :
It's not really a quality issue, the quality is the same as the core restsuanr business or sometimes better because these are easier to prepare. Truthfully allot of shops just re label their signature dishes so same food.
It's more of a perception and pricing problem. Most of the complaints are portion vs price and value of food. Same item delivery is at a minimum 50% higher most restaurants markup the items then the platforms charge you on the back end. Couple this with the deception theory and you have a bad quality stigma.
No connection :
I don't really agree with this. Saying they should focus on building community is like saying we should all go back to a world without internet. For better or worse the internet is here to stay and delivery is as well. If people wanted connection they would order direct but they don't because it's more convenient to order on an app. Here in lies the rub, too much delivery is very bad for a Restaurant, no delivery is tough
No shortcuts :
A franchise is a shortcut. 70% of restaurants fail in five years, franchises less so. Established procedure, built in marketing.
A virtual brand ( the right virtual brand is a franchise in a box) fraction of cost same benefits.
It's a tough business, anything helps!
chatGPT predicts massive growth...
how is cloud kitchens doing economically?
ChatGPT said:
Here’s a summary of how cloud kitchens (“ghost kitchens,” delivery-only kitchens) are doing economically, along with key challenges and outlook:
What’s Good / Growth Trends
Strong Market Growth & Forecasts
Globally, the cloud kitchen market is growing fast. One report puts market size around US$ 80–82 billion in 2025 and projects it to hit US$ 200+ billion by 2033–2035.
Precedence Research
+2
Precedence Research
+2
The compound annual growth rate (CAGR) is often estimated between ~11–13% over the coming years.
Persistence Market Research
+2
MarkNtel Advisors
+2
...
Robots not discussed. They are the coming gamechanger.
More and more tech will be adopted by Chefs.
For restaurants in my neighbourhood, I've memorized the good chef's days off so I can avoid them on those days. Also, because delivery is such a ripp off, I'll go pick up my own order. Abit to help me, a lot to help them.