KARACHI: Pakistan entered the $1 trillion global cloud kitchen market amid rising coronavirus infections this year, generating significant interest among restaurant owners as the world was forced to rethink its passion for dining.
A cloud kitchen restaurant, also known as dark kitchen, ghost kitchen, and satellite or franchise restaurant, is a delivery-only concept. It receives orders from multiple brands and retains their unique taste while preparing food.
“The concept was conceived during the outbreak of COVID-19, and it was also during this period that we decided to introduce it in Pakistan,” Abdus Samad Rashid, founder and CEO of Hotpod, Pakistan’s first cloud kitchen, told Arab News on Saturday. “Cloud kitchens help food brands discover themselves digitally. The coronavirus situation has also acted as a steroid to the idea which was already gaining popularity due to the mounting costs of restaurants.”
Cloud kitchens are expected to create a $1 trillion global opportunity by 2030. At present, more than 13,000 of these facilities operate around the world, according to Euromonitor International, with 7,500 in China and 3,500 in India.
Backed by Singapore-based High Output Ventures and strategic local investors, the Hotpod introduced cloud kitchen concept only two months ago, enabling restaurants to expand their network through a managed kitchen infrastructure with minimum capital risk, zero hassle, and effective customer service.
“Cloud kitchen is a new concept in our market,” Rashid explained. “These are hidden kitchens that serve food at lower rates since they reduce the operating costs of restaurants significantly. It also makes it possible for them to offer services in new geographies by simply maintaining their digital presence.”
“These kitchens not only promise greater economies of scale to different brands but also generate more employment opportunities, increase tax revenues, and enable home chefs to set up and operate professional food chains,” he said.
Hotpod plans to establish about 50 cloud kitchens in the next four years across the country and hopes to branch out in the Middle Eastern markets.
“We started with two kitchens and are trying to add one every month,” he informed. “Pakistan is a growing market and we have witnessed it during the pandemic. Our intention is to expand in the Pakistani market first before moving to the Middle East and North Africa. Dubai and Saudi Arabia will also be our preferred markets.”
In Pakistan, there are more than 100,000 food outlets across the country. The food and beverage processing industry is also the largest in the country after the textile sector, accounting for 27 percent of the value-added production and 16 percent of employment in the manufacturing sector, according to Pakistan’s Board of Investment.
Adeel Hashmi, Chief Growth Officer at Hotpod, estimated that the potential of cloud market in Pakistan was roughly about Rs7.5 billion ($47 million) per year. He added that major drivers behind the success of cloud kitchen business included high demand for online food delivery, rising real-estate costs, and coronavirus infections.
“Cloud kitchens are the future of the restaurant business, especially after the pandemic. When 50-year-old people and children below the age of 15 place online orders, it implies a big change,” Hashmi said. “Our volumes in terms of transactions and brands have doubled since we started the kitchen in September 2020.”
Hashmi said the cloud kitchen was currently serving nine local brands and targeting at least 20 businesses per kitchen.
“Opening a new restaurant requires an investment of millions of rupees,” Hashmi noted as he highlighted how cloud kitchens could help new entrants in the market.
Stakeholders say the concept can cut down costs and increase outreach of restaurant businesses, especially amid COVID-19.
“This is a good concept and more people should focus on it. The idea helps reduce input costs and enables food chains to cater to a much larger segment of customers,” Tania Faheem, partner of 3 Sisters Cuisine, a homebased eatery that caters to online orders, told Arab News.
The market size of Pakistan’s food industry is estimated to be somewhere near Rs20 billion per year, while the global food and beverage market size is thought to be $7 trillion, according to various sources.
Pakistan enters $1 trillion cloud kitchen market as pandemic rages on
https://arab.news/nnjpv
Pakistan enters $1 trillion cloud kitchen market as pandemic rages on
- Estimates suggest the global cloud kitchen market can reach $1 trillion by 2030
- The business has found traction in Pakistan due to growing demand for online food delivery and rising real-estate costs
Pakistan’s fragile economic recovery faces risk as Iran conflict raises escalation fears
- KP finance chief says wider Gulf conflict could undermine $41 billion remittance target, push up energy prices
- Economists warn oil surge would widen import bill as Iran targets neighboring countries in regional flare-up
KARACHI: Pakistan’s fragile economic recovery could come under pressure if Israel-US strikes on Iran escalate into a wider regional conflict, threatening oil supplies and remittance flows vital to the country’s balance of payments, officials and independent economists said on Saturday.
The United States and Israel struck Iran following weeks of rising tensions, while Pakistan has also faced renewed border clashes with Afghanistan in recent weeks.
Economists warn that a wider Middle East conflict could quickly destabilize Pakistan’s hard-won macroeconomic gains under a $7 billion International Monetary Fund program since the country relies heavily on Gulf states for imported fuel and worker remittances, which are projected at $41 billion this fiscal year.
Iran has already targeted several neighboring countries in an attempt to strike US military bases in the region, raising fears of a broader escalation and drawing condemnation from regional governments, including Pakistan.
“Pakistan’s western borders are in a state of war,” Muzzammil Aslam, finance minister of the country’s northwestern Khyber Pakhtunkhwa province bordering Afghanistan, told Arab News over the phone. “Given the limited trade with western borders, Pakistan exports are unlikely to be affected. However, if the war expands across the Middle East, it will definitely impact the remittances.”
Aslam warned that energy prices could also spike due to potential supply disruptions.
Pakistan’s finance adviser Khurram Schehzad and finance ministry’s spokesperson Qamar Sarwar Abbasi did not respond to questions seeking their comments on the issue.
However, the country, which is a net oil importer, has only recently posted a modest current account surplus after years of deficits, helped by import compression and higher remittances. Inflation, which peaked at 38 percent in May 2023, has eased to single digits.
Experts said a sustained surge in crude prices could reverse those gains.
“If the Iran-US conflict escalates and oil moves sharply higher, Pakistan is likely to feel it immediately,” Farrukh Saleem, an economist, said. “An increase in crude materially widens the import bill, pressures the current account and weakens the rupee.”
He said such a situation would feed inflation and limit the State Bank of Pakistan’s room to ease the policy rate which it kept unchanged at 10.5 percent in January.
“The Pakistan-Afghanistan tensions are more about security,” he continued. “They don’t move oil, but they raise country risk, delay investment, and strain fiscal space.”
In response to a question, Saleem said he did not see an immediate balance-of-payments crisis.
“Most Middle East conflicts since 2006 have followed a pattern: sharp opening strikes, controlled retaliation, backchannel de-escalation,” he said.
Former state minister for investment Haroon Sharif warned that prolonged instability would weigh on investor confidence.
“A prolonged conflict will lead to capital outflows,” he said.
Regional tensions are also affecting aviation, with Pakistan International Airlines suspending flights to the United Arab Emirates, Bahrain, Doha and Kuwait, while services to Saudi Arabia have been rerouted.
“The monetary impact of these flight suspensions can run in millions of rupees because one flight costs us as much as Rs2 million,” PIA spokesperson Abdullah Hafeez Khan told Arab News.
“Right now, we can safely say domestic carriers are expected to lose millions of rupees in view of the prevailing situation,” he added.
KP’s finance chief Aslam said Pakistan should remain diplomatically careful while dealing with the ongoing conflicts.
“Given the remittances and oil prices are correlated to the balance of payments, one can say the risk of that crisis remains,” he added.
