February 24, 2024

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Adoption in Cloud Kitchen Spikes During COVID-19 in Indonesia

Before the global pandemic hit the world in 2020, at least 70% of the restaurant’s business was attributed to dine-in, with deliveries accounting for the remaining 30%. There were restaurants that relied solely on dine-in customers, such as those in hotels. The Coronavirus, on the other hand, changed everything.

As a result, the concept of cloud kitchens, which had been circulating for a few years, gained widespread acceptance. In the last year, the concept has proven to be a major lifeline for the global F&B industry. Since last year, approximately 1,600 food establishments in Indonesia have closed due to the pandemic, which has wiped out a large portion of their sales.

To survive, the entire F&B industry was forced to quickly adapt to the new normal, which meant utilising online channels more aggressively to reach customers. As a result, food delivery in Southeast Asia had increased by 183% in 2020 compared to 2019, reaching an estimated gross merchandise value (GMV) of USD 11.9 billion by the end of 2020, according to a report.

The rise of the food delivery industry has increased the global popularity of the cloud kitchen model. The global market for the sector was valued at USD 43.1 billion in 2019, and it is expected to grow to USD 71.4 billion by 2027, with a compound annual growth rate (CAGR) of 12% from 2021 to 2027. In Indonesia, meanwhile, cloud kitchens are expected to grow at a CAGR rate of 20.7% from 2021 to 2028, according to research. The country also represents Southeast Asia’s biggest market for the food delivery sector with an estimated GMV of USD 3.7 billion in 2020, followed by Singapore’s USD 2.8 billion and Thailand’s USD 2.4 billion.

A global cloud kitchen report identifies three major types of cloud kitchens: independent cloud kitchens, where one operator manages a single kitchen (or different virtual restaurants under one roof) but without a storefront; commissary or shared kitchens, where multiple F&B brands operate in a single commercial-grade kitchen facility managed by cloud kitchen operators; and shared kitchens, where multiple F&B brands operate in a single commercial-grade kitchen facility managed by cloud kitchen operators and which are outfitted kitchens in small movable containers.

Cloud kitchens are a highly localised business, which means that each location’s offering should be tailored to local demand. As a result, a thorough understanding of supply and demand patterns is critical to the success of a start-up in this sector.

Restaurants operating under a cloud kitchen roof, on the other hand, must compete with hundreds of other merchants on food delivery apps. As a result, their businesses have less visibility, particularly for pure virtual restaurants that do not have an established name in the F&B industry.

According to a consulting firm’s advisor, the average order value and the number of daily transactions are critical for the success of a cloud kitchen model. “While the model could be a stopgap solution for large established offline F&B merchants, it may not be the case for emerging or online brands that do not have legacy margins to protect. Hence, for new brands, it could be about driving high volumes and riding on along with the sustained demand for on-demand food,” he added.

However, as demand for dine-in facilities is expected to rebound once the pandemic is contained, not all F&B merchants should adopt a 100% cloud-based or 100% offline model. A hybrid model would be the best option. There is no doubt that the dynamics of the food and beverage sector have shifted in recent years. They have become more customer-oriented, transparent, and increased the usage of technology.

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Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

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Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

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SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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