MORE FROM KrASIA

Singapore’s food delivery and cloud kitchen market remains dynamic, competition watchdog says

Delivery firms and ride-hailing startups are major players in Southeast Asia’s cloud kitchen market.

The Competition and Consumer Commission of Singapore (CCCS) has concluded its investigation into the online food delivery and cloud kitchen services in Singapore, considering that competition in the sector remains “dynamic.”

In July 2019, Smart City Kitchens (SCK), an independent cloud kitchen operator in Singapore, lodged a complaint alleging that GrabFood and Deliveroo refused to work with SCK tenants. The CCCS noted in a release on Wednesday that GrabFood and Deliveroo have since started providing their services to Smart City Kitchens.

Cloud kitchens are also known as virtual kitchens, shared kitchens, or ghost kitchens. These centralized spaces are leased out to tenants who rent the space only for the preparation of food. Tenants thus avoid the overheads of a full-fledged restaurant, like waiters and seating.

Delivery firms and ride-hailing startups are major players in Southeast Asia’s cloud kitchen market. GrabFood runs more than 50 cloud kitchens across the region. Gojek owns 27 cloud kitchens in Indonesia alone. Other heavyweights are eyeing the market, such as Thailand’s Central Restaurant Group, which plans to open 100 cloud kitchens by 2024.

The cloud kitchen model has risen in popularity as F&B tenants pivot away from the traditional dine-in model. According to Allied Market Research, cloud kitchen revenues are expected to surge globally to USD 71.4 billion by 2027, up from USD 43 billion in 2019.

The growth of this sector is partially driven by the increase in demand for online food delivery services. Revenue from online food delivery in Southeast Asia is estimated to reach USD 3.5 billion this year.