Dependency on food delivery will only continue to grow and it has proven during the Covid-19 pandemic.
As the world limps back to normal, people will find themselves short for time and virtual kitchens will become part of customers lives as they look for variety, affordability and speed in delivery.
Dubai-based virtual kitchen start-up Sweetheart Kitchen, which has seen a surge in delivery orders during the coronavirus outbreak, could not open more units due to lockdown and not getting necessary approvals from the government.
“We have to close our units in Kuwait because the curfew was so restricted and delivery was not allowed. Dubai was not so restrictive and the delivery model continued and our business grew very strongly but we could not open new units because we were not able to move paper works at the municipality due to lockdown. We managed to grow our top line during Covid as we worked incredibly hard,” Peter Schatzberg, founder and CEO of Sweetheart Kitchen, told TechRadar Pro Middle East.
Sweetheart Kitchen is a delivery-only multi-brand virtual kitchen with a portfolio of 30 different brands such as Wingo, Avocado Bravo, Affordabowls and Training Day, to name a few, under its belt.
He said that they have built and designed all the brands, menus, cuisines and processes internally and from scratch.
“We don’t rent the kitchen space or sublease it out to other F&B tenants that have their brands. We own it all and differs from other virtual kitchen models such as coworking kitchen spaces that have evolved from the food delivery business,” he said.
What differentiates it from others, he said is the use of technology.
“Inside the kitchen is our own ERP. We took an off the shelf, open-source and cloud-based software and built into it all the necessary protocols, routing systems, delivery, production and supply environment. I have internal data to access the performance of my kitchen and procurement is based on stock levels.
“I avoided going to big names for ERP as we built is very unique and a lot of customisations need to be done. Our systems track raw materials being used, expiry dates and match supply with demand, so we can source the freshest ingredients while minimising food wastes, making us a more sustainable kitchen,” he said.
Tech plays a key role
Food, in terms of restaurants, Schatzberg said is very “immature” in using technology.
“I don’t mean robotics. I mean a simple technology that goes deeper than PoS systems. No restaurants will rely upon technology to determine how much food they produce, how much inventory to move from one area to another, what purchase orders to create or sending to their vendors and procurement. “What we have simply taken is the traditional manufacturing and technology process that you will find in any mature industry and have applied that into a kitchen environment. I haven’t done anything in respect to technology that is innovative and brand new,” he said.
Schatzberg is not new to the F&B business as he invented the virtual kitchen model - Green Summit Group - in 2012 in New York but it did not take off and he again started it in Dubai in August last year.
Sweetheart Kitchen has five kitchens in Dubai - Al Barsha, Al Quoz and Al Warqa, Dubai Marina and Al Raffa - and has seven in Kuwait.
When asked why they need five kitchens in Dubai alone, he said that food should not travel more than four kilometres as the quality of the food gets diminished and, at the same time, the cost of delivery is not cheap.
“So, we are strategically placing kitchens to deliver quick service in under 20 minutes,” he said.
The start-up is planning to open about three units in Abu Dhabi in the third quarter and Schatzberg said that they will have about 18 or 19 units in the Gulf by the end of the third quarter.
“We have two leases signed in Saudi Arabia (Jeddah, Riyadh) but because of the lockdown, we did not get approvals for construction. We could have 10-15 units in Saudi Arabia (Jeddah, Riyadh and Dammam) by end of this year,” he said.
By the end of the year, he said that Sweetheart could have between 30 and 35 kitchens in the Gulf countries.
“Next year, we may look at Bahrain and Qatar but they are small markets. Putting all your resources into and that can sustain only three units is not that exciting,” he said.
“We have raised a total of €21m ($23.85m) and I am always been approached by investors. At the moment, we are not looking to raise capital. If the right investor group came along and they if they pose more than just money, then I may consider. I am not keen to add more brands to the portfolio at this stage but to improve our existing portfolio,” he said.
Virtual kitchen is there across every continent but most of them will fail, he said as most of the models will never be profitable.
“Majority of the entrepreneurs doesn’t have previous F&B experience or don’t have enough capital or scaled-up experience in delivery. As the model matures, I think that more people will copy the model and will work out well globally. Companies that make it through the tough times will end up in a strong position with or without the pandemic,” he said.