Commonly known as ghost kitchens or virtual kitchens, the cloud kitchen market in the UAE is experiencing an immense boom. For readers who may be unaware, let’s break down what a cloud kitchen is.
Cloud kitchens are commercial kitchens, focused only on preparing delivery-only meals. These establishments don’t have dine-in options; they operate through online delivery platforms like Zomato, Deliveroo, or Talabat. So why did cloud kitchens become all the rage? There are several unique benefits to operating one.
- Lower overhead costs: With no storefront and wait staff required, overhead costs are lower than dine-in establishments
- Reduced investment: Cloud kitchens require a lower capital when compared to traditional restaurants
- Flexibility: At a cloud kitchen, experimenting with different cuisines and changing menus is easier due to lower operational costs
In 2023, estimates suggested that the UAE cloud kitchen market was valued at $275.61 million. Even more incredible is its predicted compound annual growth rate: 25.17% between 2024 and 2030. Two factors contribute the most to why consumers are opting for cloud kitchen services.
- The convenience of delivery: Consumers in the UAE are enjoying the ease of online food ordering
- The growth of technology: As more consumers become accustomed to delivery apps, cloud kitchens are a seemingly obvious choice
For entrepreneurs looking to break into UAE’s food industry, cloud kitchens are likely to be at the top of the list. To learn more about the practices of popular cloud kitchen operators in the UAE, Kitopi, Kitch, Kitchen Nation, and The Cloud are great places to start.
To establish a cloud kitchen in the UAE, here are some business licenses we recommend. SPC Free Zone uniquely offers each of these as instant licenses, along with a guaranteed bank account within three working days and unlimited visas for employees, investors, or partners.
5610.00 – Restaurants and Mobile Food Service Activities food and Beverage Service Activities
Exemplary food is what makes a cloud kitchen rise to tangible success. For any business wishing to operate in the food and beverage industry, this license is essential. Although a cloud kitchen may not have on-site dining, this license is what enables entrepreneurs to prepare, serve, and provide meals to customers for immediate consumption.
Whether a prepared meal is eaten at the restaurant’s premises, purchased as take-out, or delivered—as is typically the case for cloud kitchens—this license is an entrepreneur’s ticket to entering the bustling food trade.
For those curious about the types of vendors who can use this license to operate, here’s a quick look: restaurants, cafeterias, fast-food restaurants, pizza delivery, take-out eateries, ice cream truck vendors, mobile food carts, and market stalls where food is prepared. This further extends to restaurant and bar activities that are connected to transportation. Note that the operation of concession stands is excluded from this list.
Although certain avenues listed above may not resonate with entrepreneurs that have a clear-cut vision for their cloud kitchen, remember that UAE’s thriving business landscape creates immense potential for expansion and chain eateries. A successful cloud kitchen opens the doors to multiple revenue streams, given that an entrepreneur has procured all the right licenses.
- Third-party Approval: Third-party approval from the Food Safety Department (Sharjah municipality) is required for this business activity, after obtaining your trade license (This approval is not required prior to obtaining your trade license)
- Filing of Economic Substance Return: Business activity 5610.00 is exempt from this requirement
- Anti-Money Laundering Compliance: Business activity 5610.00 is exempt from this requirement
6810.99 Kitchens Center (Cloud Kitchens)
A Kitchens Center, often referred to as a Cloud Kitchen, is essentially a commercial kitchen space that is rented out to food businesses. Unlike traditional restaurants with dining areas, these kitchens focus solely on food preparation for delivery or takeout.
A Kitchens Center would fall under the category of “non-residential buildings” as it is a commercial space used for business operations. It involves the “buying, selling, renting and operating of self-owned or leased real estate”. Essentially, the owner of the Kitchens Center is providing a commercial space for rent to other businesses. It’s important to note that while the Kitchens Center itself is a property-based business, the individual food businesses operating within it are not part of this classification.
However, this business activity excludes:
- Development of building projects for sale: This refers to constructing buildings with the intent to sell them rather than renting out the space. A Kitchens Center focuses on renting out kitchen space, not selling the building itself.
- Subdividing and improving land: This involves dividing land into smaller plots for sale or development. A Kitchens Center operates within an existing building, not on raw land.
- Operation of hotels, suite hotels, and similar accommodation: These establishments provide lodging and accommodation services, which are fundamentally different from the rental of commercial kitchen space.
- Operation of campgrounds, trailer parks, and similar accommodation: This involves providing outdoor accommodation facilities, unrelated to the commercial kitchen rental business.
- Operation of workers hostels, rooming houses, and similar accommodation: These are facilities providing temporary lodging, distinct from the commercial nature of a Kitchens Center.
- Third-party Approval: This business activity requires third-party approval from the Food Safety Department (Sharjah Municipality), post acquiring the business license.
- Filing of Economic Substance Return: Business activity 6810.99 is exempt from this requirement.
- Anti-Money Laundering Compliance: Business activity 6810.99 is exempt from this requirement.
8211.14 – Managing and operating of self-kitchens
High-quality, scrumptious meals may place you on the map as a cloud kitchen, but every business needs to hold strong and steady when it comes to management and operations. A cloud kitchen is no exception.
Day-to-day administrative services enable the kitchen to function with ease, keeping roadblocks to a minimum. For a self-kitchen, this means managing suppliers, internal staff, forming stringent schedules, and establishing productive processes for each member of the team.
On paper, this includes financial planning, billing and record keeping, personnel and physical distribution, and overall logistics. Investing in management and operations enables a cloud kitchen to understand how to better serve its customers, forge a strong relationship with consumers, and work towards building a consistent stream of revenue.
| Note that if an entrepreneur is looking to hire one set of staff to manage all operations of the business—not just administrative tasks—then this license is not suited for them. We recommend that they look towards the specific industry they are involved in, such as food or hospitality. In addition to this, entrepreneurs cannot contract a company that offers just one administrative service. For example, a cloud kitchen requires everything from handling financing to coordinating deliveries. If a company provides only one of these services, it does not fall under Combined office administrative services. |
With the food industry in the UAE experiencing significant growth, these licenses unlock a multitude of opportunities for entrepreneurs.
- Third-party Approval: No third-party approvals are required for this business activity
- Filing of Economic Substance Return: Business activity 8211.14 is exempt from this requirement
- Anti-Money Laundering Compliance: Business activity 8211.14 is exempt from this requirement
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