The concept of cloud kitchens, also known as ghost kitchens or virtual kitchens, is revolutionizing the food industry globally, and the UAE is no exception. For those unfamiliar with the term, a cloud kitchen is a commercial kitchen that prepares food solely for delivery, operating without a dine-in facility. These kitchens rely on online delivery platforms like Zomato, Deliveroo, or Talabat to reach their customers.
With a booming market and significant potential for growth, setting up a cloud kitchen in the UAE is an attractive venture for aspiring entrepreneurs. This guide will provide you with comprehensive steps and insights to successfully establish and operate a cloud kitchen in the UAE.
Want to know more about setting up a cloud kitchen in the UAE? This blog will cover:
The Growth of Cloud Kitchens in the UAE
In 2023, the UAE’s cloud kitchen market was valued at $275.61 million, with a projected compound annual growth rate of 25.17% between 2024 and 2030. Two primary factors drive this growth:
Convenience of Delivery
The convenience of online food ordering has made cloud kitchens an attractive option for consumers in the UAE. The ease of having meals delivered to their doorsteps is a significant draw.
Technological Advancements
The vast popularity of food delivery apps has made it easier for consumers to order food from various restaurants, boosting the growth of cloud kitchens.
Why Choose a Cloud Kitchen?
Cloud kitchens are popular due to several unique advantages:
Lower Overhead Costs: Unlike traditional restaurants, cloud kitchens do not require a physical storefront or wait staff, significantly reducing overhead costs. This financial advantage allows entrepreneurs to focus more resources on food quality and marketing.
Reduced Initial Investment: Setting up a cloud kitchen requires a lower capital investment compared to traditional restaurants.
Flexibility in Menu and Cuisine: Cloud kitchens offer greater flexibility in experimenting with different cuisines and frequently changing menus.
Now that we know all there is about cloud kitchens, it’s time to start your own. For entrepreneurs aiming to enter the UAE’s food industry, cloud kitchens are an excellent choice. Read here to discover valuable examples of how to run a thriving cloud kitchen business.
Let’s now explore the licenses that businesses need to obtain to convert themselves into a cloud kitchen.
Essential Business Licenses for Establishing a Cloud Kitchen in the UAE
To establish a cloud kitchen in the UAE, obtaining the appropriate business licenses is integral. Free Zones such as Meydan FZ offers instant licenses that include a guaranteed bank account within three working days and unlimited visas for employees, investors, or partners. Here are the recommended licenses:
5610.00 – Restaurants and Mobile Food Service Activities
This license is vital for any business wishing to operate in the food and beverage industry. It allows entrepreneurs to prepare, serve, and provide meals to customers for immediate consumption, whether through take-out, delivery, or on-premises dining. This license opens the door to the bustling food trade in the UAE.
Businesses that can use this license include:
- Restaurants
- Cafeterias
- Fast-food outlets
- Pizza delivery services
- Take-out eateries
- Ice cream truck vendors
- Mobile food carts
- Market stalls preparing food
However, it does not cover concession stands. Obtaining this license positions entrepreneurs to explore multiple revenue streams, given the UAE’s thriving business environment, which is ripe for expansion and chain eateries.
- Third-Party Approval: Approval from the Food Safety Department (Sharjah Municipality) is required after obtaining your trade license, not before.
- Compliance: This business activity is exempt from filing an Economic Substance Return and Anti-Money Laundering compliance.
8211.14 – Managing and Operating of Self-Kitchens
While delicious food can make a cloud kitchen successful, efficient management and operations are equally important. This license covers day-to-day administrative services, ensuring the smooth running of the kitchen by managing suppliers, staff, schedules, and processes.
Administrative tasks included are:
- Financial planning
- Billing and record-keeping
- Personnel management
- Physical distribution
- Overall logistics
Investing in management and operations helps a cloud kitchen serve customers better, build strong consumer relationships, and maintain consistent revenue streams. However, this license is specific to administrative tasks and is not suitable for entrepreneurs looking to hire staff for broader operations beyond administration.
- Third-Party Approval: No third-party approvals are needed for this business activity.
- Compliance: This business activity is exempt from filing an Economic Substance Return and Anti-Money Laundering compliance.
With the food industry in the UAE experiencing significant growth, these licenses offer numerous opportunities for entrepreneurs to thrive in the competitive market.
Benefits of Setting Up a Cloud Kitchen
Here are some significant benefits of spearheading your own cloud kitchen in the UAE:
Low-Cost Startup: In an expensive city like Dubai, the initial investment required to run a traditional restaurant can be prohibitive. Cloud kitchens, however, incur significantly lower rental and infrastructure costs.
Increased Revenue Potential: Cloud kitchens are highly profitable due to their lower operational costs and the booming online food delivery market, especially post-COVID-19.
Efficient Order Processing: Cloud kitchens collaborate with delivery services or create their own ordering platforms, streamlining the order management process and enhancing customer reach.
Enhanced Customer Services: With a clear division of labor, cloud kitchens can focus on preparing high-quality food while delivery services handle the logistics, ensuring faster and more efficient service.
Reduced Advertising Costs: Operating online means that cloud kitchens can rely on food delivery platforms for a significant portion of their orders. Social media marketing can further boost brand visibility with minimal investment.
Cost-Efficient for Customers: The cost-efficiency of cloud kitchens translates to lower prices for customers without compromising on food quality, making them a popular choice.
Cost of Setting Up a Cloud Kitchen in the UAE
Setting up a cloud kitchen in Dubai can cost around AED 23,000. This estimate includes expenses for securing necessary licenses, renting kitchen space, and other initial setup costs. Factors like the size and location of the premises can significantly influence the overall cost.
Let’s begin setting up your cloud kitchen with Meydan FZ!
Starting a cloud kitchen in the UAE is a promising venture given the current market trends and consumer preferences. The lower startup and operational costs, combined with the growing demand for food delivery, make cloud kitchens an attractive business model.
For more detailed information and assistance with setting up a cloud kitchen in the UAE, you can contact business setup consultants at Meydan FZ. They provide comprehensive support, from license acquisition to navigating regulatory requirements, ensuring a smooth start to your cloud kitchen business.
You can effortlessly calculate your business setup expenses with our cost calculator. Additionally, you can select from our company setup packages to find the ideal solution for your requirements.
Embark on your cloud kitchen journey today and capitalize on the thriving food delivery market in the UAE.
