The Rise of Cloud Kitchens in Food Apps Era

What you need to know:

  • Online food delivery apps have won over a number of restaurants, including virtual hotels as well as busy Kenyans who want to get their food at the click of a button.
  • One Yum customer has singly ordered food via the online delivery service about 300 times since he downloaded the app.
  • As Kenyans order freshly cooked meals online, James Wambua, the owner of a virtual restaurant Chris P Wings, also known as a cloud kitchen is one the beneficiaries.

Every day, bike riders make at least 1,000 food deliveries in Nairobi. All of these are online orders from apps such as UberEats, a delivery arm of ride-hailing giant Uber, Jumia Foods, Yum and Deliveroo.

Online food delivery apps have won over a number of restaurants, including virtual hotels as well as busy Kenyans who want to get their food at the click of a button. One Yum customer has singly ordered food via the online delivery service about 300 times since he downloaded the app. And since UberEats launched in Kenya five months ago, it has tripled the areas in Nairobi it delivers to.

As Kenyans order freshly cooked meals online, James Wambua, the owner of a virtual restaurant Chris P Wings, also known as a cloud kitchen is one the beneficiaries. Cloud kitchens do not have seating spaces and have no overhead costs like employees’ salaries or rent.

His virtual restaurant initially solely relied on various food delivery apps such as UberEats, Deliveroo and Jumia Foods to reach hungry Kenyans. In June this year, he started with a simple menu; chicken wings and French fries and then added rice, coconut curry potato chips and is working out a vegetarian option.

In the beginning, Mr Wambua’s food orders would average about 15 a day, although sales totalled more than Sh100,000 on just one app because of the hype after it launched in Kenya. Four months later, he is getting about 25 orders a day, through his direct phone number and the three food apps.

“I started solo, doing the cooking, picking orders and delivering the food. Then I got boda boda guys who I knew, like from Taxify Boda who were doing deliveries for me,” says Mr Wambua, adding that now he has a team of five; two cooks, a motorbike rider and a receptionist who takes orders.

Mr Wambua is not the only one using this model. Other restaurants such as Wok on Wheels and Uncle Nene’s in Nairobi do not have a space to sit but receive a large number of orders, according to their delivery partners.

Traditional restaurants such as Urban Burger that receives 40 food online orders on average in one branch is also keen to cash in on the takeaway apps.

Other restaurants have closed their seating areas and operate kitchens while some in Kilimani, Westlands and Mombasa Road are also actively reducing their floor space.

Mostly women

Amal Devani, UberEats managing director says customers using their app vary from older people, university students, to anyone who can use a smartphone and most are not historically Uber customers. Despite its growth globally, Uber is not converting its riders to eaters. For them, this is a new market and some of the UberEats users do not necessarily use Uber taxi hailing app.

For some, the weather may be too bad to eat out, so they order food with a phone tap. Some may have had a long workday and are not in the mood to cook. Some may need to host quick evening meetings at their house but do not have the time to cook. People who live alone also tend to order in food more often than families.

According to Kent Joshua Kagicha, the marketing manager of Yum, about 60 per cent of their orders come from women.

“When we started in 2012, Yum was doing 18 to 20 food deliveries a day. When we hit 100, we had a party,” he says.

Now, Yum makes 300 to 450 deliveries on average every day, excluding those from restaurants’ in-house delivery systems and many boxes of food lumped up as one delivery. Although in Kenya, as it is around the world, food delivery is dominated by orders of pizzas, burgers and chicken, restaurants on UberEats, are not necessarily fast food eateries.

“We have less fast food restaurants than elsewhere in the world. In Kenya, we also have locals running their own restaurants on UberEats and those are the people that we are helping increase their range,” says Mr Devani.

Shreenal Rupareli, the Jumia Food managing director adds that Kenyans also favour continental meals and have similar tastes to their East African counterparts in Tanzania and Uganda. On the other hand, Nigerians often order local and African foods from Jumia, while Ghanaians pick healthy options such as salads.

Jumia Food, which delivers from alcoholic beverages to groceries, has expanded its takeaway app to reach untapped areas such as Eastleigh, Kiambu, Ongata Rongai, Ngong and Kitengela, in addition to Mombasa, Nakuru, Eldoret and Kisumu.

Different markets

For most of the restaurants and food apps, orders pour in on weekdays. Mama Rocks, a restaurant known for its burgers, sees more delivery orders than diners on weekdays, but this is flipped on weekends.

According to Yum, deliveries still shoot up on Fridays and Sundays and at the end of the month when people have earned salaries.

However, as UberEats find a comfortable route to stomachs of customers globally, after recording a 150 per cent growth in the period ending September 2018 according to results announced last week, it is also learning how to serve different markets with different lifestyles. In Kenya, the delivery fees hold back customers who would want to order food online. Many food delivery companies get money from charging commissions to the restaurants on the prices of food. These could range from 20 per cent to 35 per cent.

The food delivery ecosystem is also trying to on-board restaurants with a range of price points to cater to many price-conscious Kenyans.

“One of the efforts we are doing now is to push for lower cost options to cater for everyone regardless of their income levels,” says Mr Devani.

Portions also matter immensely to a Kenyan consumer.

“If you deliver small portions to Kenyan consumers, they will complain. We are actually telling restaurants that they would rather charge higher to maintain the balance between quality and portions,” says Mr Kagicha of Yum.

Kenyans are also spontaneous and not loyal to one cuisine. For instance, they order more Chinese dishes than the Chinese who live in Nairobi do.

They occasionally order lobsters or Indian tandoori and now some of the traditional restaurants are creating new menus to cater for their experimental palates.

Further, there are more speciality restaurants being added on UberEats such as a chocolate bar based in Nairobi’s Village Market, which only serves Kenyan-made chocolate.

The food delivery firms are also striving to convince more Kenyans to trust e-commerce by offering them flexibility. Yum allows people to schedule deliveries, meaning one can order lunch at the beginning of the week, and just sit back.

“I think there is something kind of cool about picking up your phone, seeing the foods on the menu that you didn’t even know existed, and then being able to get it delivered right to you wherever you are, whether at your house or your office, whether you are hanging out in the park, whether you are with friends or alone. It’s just a pretty exciting thing at least for me,” says Mr Devani, whose company hopes to deliver food by drones by 2021.

Social media

Just like many start-ups, Mr Wambua’s virtual restaurant was not an instant success. Before the food apps wave, he used to host tastings and even send Kenyans with large social media following some of his chicken to taste. He is still relying on social media comments to tailor his dishes.

His day starts with checking on the social media responses about his food. Then he goes shopping for the ingredients, cooks some sauces and then prepares the orders.

For instance, on Tuesdays he is usually serving a regular order from a bank of 50 boxes of food.

Just like Jumia Food, he delivers to locations that are beyond the three miles radius favoured by most delivery companies.

“We deliver to Syokimau, Ruiru, Thika. One customer in Ruiru ordered everything in the menu; she started from number one to number 12. We got an order from a woman in Somalia who was travelling to Nairobi. She came and ate some of the chicken in our kitchen and then carried the frozen ones to take home,” says Mr Wambua.

“We have had customers from the US placing orders online for their families, girlfriends, boyfriends, and paying through online apps linked to M-Pesa.”

Mr Wambua has big dreams. He wants to be like US-based restaurant chain Wingstop which specialises in chicken wings. He plans to set up a physical site in Karen, Nairobi this December.

“Hopefully by next year I’ll have three more locations and then start offering franchise opportunities,” he says.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.