Unending lockdowns and other social restrictions due to COVID-19 has wreaked havoc on the restaurant industry. To survive, the F&B sector had no choice but to quickly adapt to the new norm, utilising online channels to reach their customers.
Because of this, food delivery skyrocketed up 183% in 2020 from 2019 in Southeast Asia, reaching US$11.9 billion. Along with this promising trajectory, foodtech in Indonesia is booming with another trend – virtual or cloud kitchen startups. We explore the rise of the cloud kitchen within this nation and the significant players leading by example.
The growth of the cloud kitchen in Indonesia
Between 2021 to 2028, the cloud kitchen market in Indonesia is likely to grow at a rate of 20.7% CAGR. This model isn’t something new for the archipelago, as Grab first introduced the concept for its GrabKitchen pilot before the pandemic in 2018. The current pandemic is forcing many companies to reassess their models and focus on optimising delivery strategies and catering to online orders for food delivery.
From cloud kitchens to robo cooks: The next big wave in foodtech in Southeast Asia
Particularly in the archipelago’s thriving economic hub of Jakarta, many businesses are adopting this strategy, including Grab which has plans to expand its network to over 80 locations in the country. Gojek, another pioneer in the Indonesian foodtech market, also began experimenting with virtual kitchens in 2019 and has successfully established 27 outlets in the country.
As cloud kitchens rapidly gain traction, more newcomers are tapping into this trend The main ones to watch out for are Yummy Corp, Hangry, Everplate, Kita Kitchen, Telepot Co-Kitchen, and Eats.
In a Series B funding round led by SoftBank Ventures Asia, cloud kitchen management company Yummy Corp, operating under the brand Yummykitchen, successfully raised $12 million USD. This investment comes just a year after the startup’s prosperous Series A funding which brought in $7.75 million USD in a round led by Sinarmas Digital Ventures (SMDV) and Intudo Ventures. Yummy Corp’s total funding thus far is $19.5 million USD.
Established in 2019, Yummykitchen now collaborates with over 50 food and beverage (F&B) companies and operates over 70 HACCP-certified facilities in Jakarta, Medan, and Bandung.
Indonesian culinary and foodtech startup Hangry recently secured $13 million USD in its “oversubscribed” Series A round led by Alpha JWC Ventures, with participation from Salt Ventures, Atlas Pacific Capital, and Heyokha Brothers.
Hangry currently runs 40 locations in Bandung and the Greater Jakarta area, introducing multiple sub-brands with broad culinary varieties. The company intends to expand its operations to 120 outlets with the new funds, including 20 dine-in eateries across the country by year-end.
Everplate, founded in 2019, currently has 7 locations throughout Indonesia. The company offers businesses a minimum one year contract, with a fixed rental scheme of 6 million IDR per month.
Tokyo Belly, SaladStop, and Fish Street are brands that are working with this startup.
Founded in 2020, Kita Kitchen has two facilities covering between 6 to 17 square meters. The startup offers a minimum contract of six months with a fixed rental scheme of 5 million IDR per month.
Partners of Kita Kitchen include Yoshinoya, Eatlah, SaladStop, D’Crepes, and Colette Lola Stack.
Also established in 2020, Telepot has one outlet covering an area of 7 to 19 square meters. They offer a six months minimum contract with a revenue-sharing scheme of 6 million IDR monthly.
Co-Founder of Telepot Co-Kitchen, Nicholas Hum, says that the company is dedicated to assisting the set up of F&B businesses with low startup and operating costs. It does this via its co-kitchen, which only serves online food delivery. With the concept of multiple brands in one kitchen, costs and risks will be split and thus reduced significantly.
Eatsii is the newest kid on the block, which just recently entered the market. The company’s cloud kitchen platform aims to enable F&B businesses to deliver food without a dining area by providing the kitchen space and required infrastructure.
It also offers dedicated delivery and pick-up only hubs that assist in expanding delivery and takeout operations. Eatsii gives restaurants an option to expand operations efficiently and cost-effectively.
Current consumer behaviour and investment trends point towards a promising future for further development of cloud kitchens in Indonesia, with the pandemic proving to be a significant implementation driver. Although the route to profitability is evident, the success of these emerging startups is dependent on several factors, such as the quality of food delivered and speed. The overall food delivery experience matters, too, from customer service down to the packaging and branding.
The outlook for foodtech in Indonesia is promising. Other industry sectors can learn from the cloud kitchen’s models and apply the concept to help elevate their business at a time when being agile is more crucial than ever.