Presently, the economy of the United Arab Emirates is continuously progressing, that too at an extraordinary pace. The evolution of the food industry of the UAE is no exception to this advancement. You can open a cloud kitchen business in Dubai to cater to the high demand.
Today, the concept of the cloud kitchen is gaining momentum rapidly in the UAE. You may already have the knowledge of relative terms like ghost kitchen, virtual kitchen, or dark kitchen. Primarily, all these terms more or less represent the same thing.
Let us tell you the difference of cloud kitchen with the traditional restaurant. A cloud kitchen operates exclusively through online orders and delivery services. In comparison, traditional restaurants offer full dining experience (sitting arrangement, background music, and all the shenanigans that go with it). Kapeesh?
Idea behind this business model is to eliminate the need for costly dine-in area, which in turn reduces overheads. So, if you are an entrepreneur, we are sure the cloud kitchen is super appealing for you. In Dubai, the population is mostly tech-savvy and the need for convenience is high. Accordingly, setting up a business in Dubai like a cloud kitchen can prove a strategic move for investors.
The procedure of cloud kitchen setup involves many layers and all have immense importance. Well, you must choose the right business model and understand licensing requirements. Then, there are steps like handling operational challenges and devising effective marketing strategies.
Ensure your cloud kitchen startup succeeds by following all the modalities. This guide walks you through everything, from understanding legal requirements and financial planning, to overcoming common obstacles. You get the expertise to launch a successful cloud kitchen in Dubai, one of the world’s most dynamic cities.
Summary of the cloud kitchen vertical of the UAE
It is the too long, did not read (TLDR) of the main points, that this blog presents.
- Cost-effective working: Cloud kitchens avoid the expenses associated with traditional restaurants. It does so by eliminating the need for a physical dining space. So, no additional rent, no additional furniture, no high demand for electricity, and so on.
- High demand: Dubai’s fast-paced lifestyle, diverse population, and strong delivery infrastructure are all variables that create an excellent market for delivery-only food services. People are too busy to go out.
- Legal and regulatory compliance: When you are operating in Dubai, you most definitely have to adhere to specific licensing and safety regulations. Whether you choose a mainland or free zone setup, understanding these requirements is crucial.
- Flexible business models: There are multiple cloud kitchen models, each with both pros and challenges, which you can select from. These include independent, multi-brand, aggregator-owned, and shared kitchens.
- Investment and costs: There is variation when it comes to upfront investments. The difference depends on location, kitchen size, and equipment quality, along with licensing requirements.
- Strategic marketing: A strong digital presence and effective marketing strategies are both essential if you really want to differentiate your brand in a highly competitive market.
- Scalable operations: The beauty of this idea is the scalability. You can start small and scale operations later according to the rising demand. We sure consider this to be a long-term investment, super attractive if we may add.
Process to register cloud kitchen license in Dubai
Licensing of a cloud kitchen in Dubai requires you to know all the important legal requirements. Therefore, we are going to help you in understanding the step-by-step registration procedure of a cloud kitchen business in Dubai. Here are the steps of the process for registering a Dubai-based cloud kitchen.
- Reserve company/trade name
- Determine business jurisdiction
- Acquire initial approval
- Find kitchen premises
- Obtain trade license
- Get food safety license
- Take premises safety certifications
- Complete business registration
- Create business bank account online
Next, we briefly look upon these steps of the registration of the cloud kitchen business in Dubai.
Reserve company/trade name
Pick a memorable business name for your cloud kitchen and reserve an accompanying trade name.
Determine business jurisdiction
Dubai mainland is the better option for cloud kitchen setup in Dubai. However, the permission to hold onshore operations has made the free zones an option. Choose the jurisdiction that better suits your kitchen and its prospective customers.
Acquire initial approval
Take a no objection certificate (NOC) from the Dubai Department of Economic Development (DED). Otherwise, you can receive the preliminary approval from the chosen free zone. Remember, this NOC puts you on course for the next steps.
Find kitchen premises
Secure a commercial space on rent/lease for operating your cloud kitchen in Dubai. Draft and notarize a tenancy/Ejari agreement to complete the deed. It protects both the property owner and the business by clearly stating what activities are allowed and what are not.
Obtain trade license
The trade license outlines the scope of your business activities, and is essential before you begin any kind of operations. Get the trade license from the Dubai Department of Economic Development (DED) or the free zone authority. The cost of trade license is different for diverse types of businesses and the jurisdiction in which they will operate.
Get food safety license
You need a food safety license from the Dubai Municipality (DM). It tells the world your kitchen and food hygiene are top notch and you are following all food safety protocols. Follow the food safekeeping rules with regular inspections, otherwise, you may face hefty fines or business closure may occur. The mechanism for food safety license includes the following.
- Submitting your kitchen layout for inspection
- Demonstrating compliance with food safety regulations
- Offering mandatory safety training to all staff members
Take premises safety certifications
Health and safety are extremely important in the food business. So, ensure that your kitchen passes all inspections and meets the local health codes. Normally, the three important certifications you can expect are the following.
- Fire safety inspections
- Ventilation inspections
- Hygiene inspections
Complete business registration
Submit the application with necessary legal paperwork to the DED, free zone authority, or other regulatory authorities. Pay the licensing fee and other relevant regulatory dues. Start running the operations after final regulatory approval and receiving the licenses and other permits. Prepare and attach these legal documents with your business license registration application.
- Photocopy of passport of business owner
- Copies of UAE visa of shareholders
- Business plan
- Company name reservation certificate
- NOC from the DED or the free zone authority
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Ejari/tenancy certificate
- Trade license
- Food safety license
- Premises safety permit
Create business bank account online
Opening of a corporate banking account is important for managing finances. Together with handling and simplifying daily financial transactions, it helps you in getting investments, and paying staff salaries. We recommend that you separate your personal bank accounts from your business ones.
Types of cloud kitchens in Dubai
A crucial decision is the selection of the right business model. After-all, it influences your operations, branding, and investment costs in the UAE. These are different business models of cloud kitchens in Dubai.
- Independent cloud kitchen
- Shared kitchen model
- Multi-brand cloud kitchen
- Aggregator-owned cloud kitchen
Now, we briefly look upon these kinds of cloud kitchens in Dubai.
Independent cloud kitchen
An independent cloud kitchen is run by a single food brand that operates exclusively from one dedicated kitchen space. In this model, you have complete control over your menu, pricing, and overall brand image. It is because you are building your brand from scratch.
You are responsible for everything, from developing the menu to handling the digital marketing and customer engagement and finally making the delivery as smooth as possible. So, finalize the online platforms where your customers can order from. But, we recommend that you go with this particular model only if you have the initial investment on hand.
On the other side, you will have to work on handling your primary expenses. For example, kitchen rental (not an issue if you have your own kitchen), equipment, staff salaries, digital marketing, etc. The best part, you can offer as much creativity and customization as you can, for personalizing your customers’ tastes.
Also, you can highlight seasonal dishes on your menu for better revenue and market share. However, the risk lies in the initial lack of brand recognition. It is exactly why we recommend robust marketing strategies along with exceptional food quality for building loyal customers.
Shared kitchen model
The shared kitchen model is beneficial in the Dubai food market. In this model, two or more food businesses can use a common kitchen facility. So, if you are looking for cost-effectiveness, then this is a great option.
Shared kitchens allow several brands to distribute the cost of renting and maintaining a kitchen. It is ideal option, if your startup is still testing the feasibility and future demand of your food concept. In case, your food setup is not looking for scalability just yet, then voila!
But, there is also a downside. You may have less flexibility in scheduling and a lower level of control over the shared space. Moreover, coordination between all businesses using the kitchen and its equipment is important.
In addition, branding may get a tad more challenging. The important thing is, if your budget is not very high, then make sure that your financial risk is low. For this purpose, a shared kitchen business model is definitely a good choice.
Multi-brand cloud kitchen
The multi-brand cloud kitchen is in great demand in Dubai. In it, a single kitchen operates multiple virtual restaurant brands. Basically, you are offering your services and food items to multiple customer segments at the same time.
With this business model, you can expand your revenue streams without the need to rent multiple physical spaces. You may operate an Italian brand during dinner hours. Then, you can switch to a healthy vegan brand during lunch according to the market analysis.
You can serve multiple food niches without establishing extra kitchens. However, you may face one big operational challenge. You have to maintain the quality across all food delivery brands.
The solution is to use robust management practices to guarantee consistency in food preparation, packaging, and delivery. Multi-brand cloud kitchen is ideal for you if you have some experience already. In return, you can achieve scalability with lower incremental costs.
Aggregator-owned cloud kitchen
The aggregator-owned cloud kitchen involves partnering with large food delivery aggregators that own and operate cloud kitchens. In this setup, you rent space in an aggregator’s kitchen. Aggregator-owned cloud kitchens offer a lower barrier to entry because the infrastructure, including the complete kitchen, is already in place.
There are many major players in Dubai, including Deliveroo Editions. These players are providing fully equipped kitchen spaces. Thus, you and other cloud kitchen brands can operate. The primary advantage is that you can focus solely on food preparation.
You do not have to worry about the logistics of setting up and maintaining the kitchen space. Nevertheless, the trade-off is that you have less control. By limited control, we mean the kitchen’s operational processes are not going to be your call by 100 percent.
In addition, there is a chance that the aggregator may impose restrictions on processes like marketing. There is a high probability that you may have to share revenue. Nonetheless, if you’re a startup looking to test the market with minimal upfront investment, this model can prove highly attractive.
Calculate business start-up cost
Conclusion
A cloud kitchen business in Dubai has a lot of potential, so you have the opportunity to grow. According to your budget, you have to finalize which business model is perfect for you. The registration process may look hectic, but once ready, you can easily make it in Dubai as a food entrepreneur.
Always invest on resources, time, and research and development (R&D). Otherwise, business growth and customer retention in the Dubai’s food market can turn out difficult. To stay competitive, use creativity and innovation in your final plans.
Are you looking to begin a cloud kitchen business in Dubai? You can succeed after efficient business setup and solving all operational challenges in the UAE’s food sector. Do not worry as you can effectively go through all this with the assistance of KWS Middle East now.
FAQs about the cloud kitchen sector in Dubai
These are the answers to the common questions about cloud kitchens in Dubai, UAE.
What is a cloud kitchen?
A cloud kitchen is a concept where you set up a centralized professional food preparation facility. Exclusively, its purpose is the fulfillment of online food delivery and takeout orders. It reduces the startup and operational costs by eliminating dine-in area.
Why are cloud kitchens in Dubai booming?
Cloud kitchens have their sole focus on the back-of-house operations to streamline food production according to the customers’ demands.
Why are traditional restaurants in Dubai costly than cloud kitchens?
Traditional restaurants invest heavily in dining areas to serve customers in-house. Also, they spend on decorations including art, lighting, balloons, etc. Another expenditure is hiring front-of-house staff (people who welcome you, guide you to your seat, take orders, and so on).
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