Grocery retailers would be wise to consider partnering with a cloud kitchen provider, as Kroger and other industry leaders already have done.

That’s because the cloud kitchen industry is poised for huge growth, according to a new study. The category is set to enjoy CAGR of 15% for the next seven years, reports Noida, India-based analyst UnivDatos Markets Insights.

Already valued at close to $400 million, the cloud kitchen market is experiencing significant growth with an increase in the number of users on various social media sites and with rise in internet penetration, according to the report.

“Various companies and industries use social media marketing as one of their primary techniques for promoting their product offers,” according to UnivDatos. “As a result, the increased usage of social media marketing is expected to create a lucrative potential for the cloud kitchen market to grow and expand its consumers.”

According to Forbes data cited by UnivDatos, Facebook mobile ads account for 87% of ad income. Furthermore, increasing R&D research in the field of foodservice equipment is contributing to the emergence of innovative variants with improved efficacy and effectiveness of kitchen equipment. And the rise in internet penetration has increased the tendency of online food orders.

“The COVID pandemic has resulted in a major movement in demand away from restaurant eating and toward food delivered to the home,” according to the report. “Cloud kitchens have been crucial in making this possible. This increase in cloud kitchen activities is part of a larger movement in consumer preferences toward delivery services. Due to lockdowns in various regions worldwide the demand for online food delivery has increased.”

COVID caused an unusual increase in off-premises food services between 2019 and 2020. Restaurant meal delivery climbed by 47% internationally, with 95%, 89% and 69% increases in the United States, Russia, and Canada, respectively.

The independent cloud kitchen segment is expected to continue dominating the market, according to UnivDatos, owing in large part to a rise in global demand for exotic cuisines such as Thai and Chinese cuisine.

According to UnivDatos, major players going forward in the cloud kitchen industry include Kitchen United, Rebel Foods, DoorDash Kitchen, Zuul Kitchen, Keatz, Kitopi, Ghost Kitchen Orlando, Dahmakan, Starbucks (Star Kitchen) and Cloud Kitchen.

Cincinnati-based Kroger has taken a lead among grocery retailers in teaming with cloud kitchens to provide commissary-like production capabilities, either instore or in an offsite location.

In 2021, Kroger and Kitchen United announced a partnership to offer customers freshly prepared, on-demand restaurant food. 

The off-premise restaurant kitchens powered by Kitchen United at participating Kroger locations feature up to six local, regional or national restaurant brands. When placing an order using the Kitchen United website or app or on-site via ordering kiosks, customers can select items from each on-site restaurant to create a customized order on a single receipt. Restaurant staff will prepare the orders and delivery service fees will be determined by third-party providers. 

A Kroger’s Ralphs store was the first Kroger store to become operational. Ralphs and Kitchen United MIX opened their first “kitchen center” in the Westwood neighborhood of Los Angeles earlier this year.

The kitchen center enables customers to place an order digitally using Kitchen United's proprietary MIX platform via web, mobile, or an in-person ordering kiosk. Customers can then pick up their meal onsite or have it delivered. Restaurant staff will prepare the orders and delivery service fees will be determined by third-party providers.

Customers of the Westwood Ralphs can choose to mix and match their meals from Fresh Brothers, Bushi by Jinya, Sajj Mediterranean, Doghaus and other local foodservice providers. Customers can place their orders from 10:00 a.m. to 9:00 p.m., 7 days a week.

This summer Kroger and Kitchen United opened similar kitchens in Dallas, and the companies announced this fall that three more would be coming to Columbus, Ohio.