How millennials and the pandemic are driving the growth of cloud kitchens in Indonesia

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Trends indicate that cloud kitchens are fast becoming a vital part of the food delivery market in Indonesia. According to a March 2021 report by Savills Research, the cloud kitchen market in the archipelago is on a growth trajectory. The tech pioneers in the space are Grabkitchen (Grab) and Dapur Bersama (Gojek).

As the industry grew, the list of companies entering the sector also increased. Savills estimates that seven operators in Jakarta alone operate 70 cloud kitchen branches comprising 500-plus kitchen pods. The names include Yummy Corp., Hangry, Everplate, Kita Kitchen, Telepot Co-Kitchen, and Eatsii.

“The cloud kitchens sector has been growing tremendously through the pandemic as F&B brands get disrupted in the traditional model of serving up food to consumers,” said Yiping Goh, Partner at Quest Ventures. “This trend will continue as the pandemic evolves into an endemic eventually. Indonesian F&B owners are tired of the numerous, extended lockdowns imposed and are forced to look for new models that are more endemic-resilient.”

She, however, believes that it is still early days in the cloud kitchen growth story. More innovation in the model, especially in the food delivery and experience, will continue to grow.

…, Mario Suntanu, CEO and co-founder of Yummy Corp., believes that regardless of COVID-19, consumer behaviour was moving towards significant consumption via food delivery due to a population that was getting busier and the traffic that was getting worse.

“Cloud Kitchen mainly addresses the merchant problem, and the merchant problem remains the same. It’s just that the urgency was higher during the pandemic, which accelerated the adoption,” he noted.

“We learned that products that sell well via delivery channels hadn’t been necessarily the same products that sell well in malls and shopping centres, especially when seen from the perspective of form and pricing. So it means that as malls open, there may be some readjustments of share of wallet, but overall the intersection of consumers would not be large enough,” Suntanu stated.

The amount of capital injected into the sector has been on the rise, evident from the number of players in the market compared to a few years ago. VCs and prominent tech companies, especially ride-hailing giants, have doubled down on their cloud kitchen facilities in Indonesia.

Recently, Yummy Corp. extended its Series B round with an investment from Sembrani Nusantara, a fund managed by BRI Ventures. This round came less than a year after it bagged US$12 million in Series B, led by Softbank Ventures Asia, in September 2020.

If the current consumption and investment trends are anything to go by, cloud kitchens are here to stay. But the success of this model depends on the quality of the food delivered in the quickest possible time. “Cloud kitchen would need to be carving out a distinctive experience to elevate the overall food delivery experience, such as speed, customer service, and packaging,” remarked Yummy Corp.’s Suntanu.

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