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Pandemic induces growth of Jordanian ghost kitchens market

A meal of the new take on the traditional Jordanian dish “maqlooba”, offered by “Eglibha”, a cloud kitchen owned by The Hungry Food Company. (Photo: Handout from Khaled Khalifeh)
A meal of the new take on the traditional Jordanian dish “maqlooba”, offered by “Eglibha”, a cloud kitchen owned by The Hungry Food Company. (Photo: Handout from Khaled Khalifeh)
AMMAN — Ghost kitchens, professional food preparation facilities designated for the preparation of delivery-only meals, appear to be on the rise in Amman, Jordan.اضافة اعلان

Also known as cloud kitchens,  the market of ghost kitchens was valued of at $43.1 billion by a new “Global Opportunity Analysis” report by Allied Market Research, which estimated that it would exceed $70 billion in value by 2027.

To Jordanian entrepreneurs, this provides for a unique opportunity.

In an interview with Jordan News, Khaled Khalifeh, CEO of the Hungry Food Company, a Amman-based corporation with a growing portfolio of cloud-kitchen, delivery-only restaurants, encompassing “Hungry Sushi”, “Hungry Poke” and “Eglibha,” expressed optimism towards the future of the Jordanian cloud kitchen market.

Now that COVID-19 restrictions are easing, “people are longing for normalcy” and going back to physical restaurants, Khalifeh said. “Nevertheless, it has a future in Jordan,” he added.

“Two years ago, (ghost kitchen businesses) were almost nonexistent” in Jordan. Today, “there are dozens of new concepts initiated every month,” estimated Khalifeh.

Prolonged closures of businesses in Amman in light of the pandemic have led to severe economic recession, and propagated increased unemployment. However, restaurateurs and entrepreneurs managed to identify a silver lining: Greater reliance on food delivery as people stayed home proved a golden opportunity for both entrepreneurs to start their ghost kitchen, delivery-only concepts, and for restaurant owners to utilize their kitchens towards serving ghost kitchen businesses as foot traffic reached all-time lows.

“The pandemic and cloud kitchens go together like peanut butter goes with jelly,” said one local cloud kitchen frequenter who chose to remain anonymous.

Khalifeh, who also owns a separate physical restaurant location, like many other restaurant owners, was taken aback by the sudden decline in business activity. In search for alternative revenue streams, he came across the cloud kitchen business model, which he viewed as “ideal for COVID.”

Novel sources of revenue are especially vital for the support of employees. Khalifeh was looking to “avoid the downsizing of staff members,” because of both government restrictions limiting businesses’ ability to lay off employees, and because he aimed to avoid dismissing individuals “that had worked at his restaurant for a long time.”

Many had spotted the opportunity to start their own businesses, “but didn’t have the appropriate infrastructure,” according to Khalifeh, and subsequently turned to kitchens to bring their ideas to life. Here, a symbiotic relationship between cash-strapped food entrepreneurs and demand-deprived kitchens is obvious. During such pandemic-induced circumstances, “a cloud kitchen is very feasible,” said Khalifeh.

Certainly, the cloud kitchen model possesses various advantages when it comes to the era of COVID-19, particularly when taking into account its delivery-only nature, according to Khalifeh.

When you operate a central kitchen serving cloud restaurants, “it doesn’t have to be cuisine specific, so you save no appearance, furnishing and non-food items” that are usually pertinent to the restaurant’s cuisine, according to Khalifeh.

Cost efficiency is, perhaps, the most notable advantage of cloud restaurants when compared to traditional restaurants.

Khalifeh estimated that starting a delivery-only restaurant can save owners “50 percent, if not more” of what it would cost to start a traditional restaurant. A single kitchen’s ability to serve multiple cloud restaurant clients even enables restaurant owners to purchase materials in bulk from suppliers, which further drives cost down, according to Khalifeh.

However, Khalifeh noted that the relative cost effectiveness of cloud kitchens does not mean it's easy to run one. It’s an area that “people jump into because it seems more affordable,” he said. “It’s a very price sensitive market, and margins aren’t as high as people believe.” This sensitivity is largely due to the fact that in exchange for generally the same prices found in traditional restaurants, customers are losing out on the dine-in experience, which includes service. Providing an experience, whether through presentation or other methods, is “the core of the cloud kitchen model,” asserted Khalifeh.

“Then comes marketing,” an imperative aspect that serves to make up for the lack of a physical location, which typically consists of banners and cuisine-specific decoration, he said.

Ultimately, Khalifeh believes that this industry is enjoying considerable growth. “It’s easier now, and you have people that provide that service to clients” looking to start such businesses. “People are more comfortable with the idea of delivery, and the logistics of it are improving” through user-friendly delivery apps and faster transportation.

Khalifeh sees delivery apps launching cloud kitchen sections “as they did with grocery shopping.” He even predicts the entry of regional cloud concepts into the Jordanian market in the near future.

Price sensitivity, an issue already “prominent in other Jordanian industries” however, “remains the main challenge.”

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