The food & beverage sector in Saudi Arabia has undergone a major transformation over the past few years, a change accelerated by the COVID-19 pandemic. This shift has led to the rapid rise of cloud kitchens for delivery, one of the most important trends in the industry. Many restaurant owners are leveraging cloud kitchens as a cost-effective way to expand into new markets and keep their businesses running during challenging times.
As demand for cloud kitchens has surged, the number of providers offering these facilities has also grown — with KitchenPark establishing itself as a leading player in the Saudi Arabia market.
To help business owners interested in exploring this model, we’ve prepared a detailed guide to the costs involved in opening a cloud kitchen in Saudi Arabia.
What are the main costs of a cloud kitchen for delivery?
As with any business, several factors must be considered when calculating the cost of running a cloud kitchen. Knowing all these elements is essential when preparing your business plan, as they determine the amount of capital you need to launch and operate effectively.
1. Kitchen size
A kitchen space should meet your business needs. First, you must decide whether to set it up independently or partner with a cloud kitchen provider, such as KitchenPark. For start-ups, the latter option is often more practical, especially since KitchenPark facilities are located in major cities with high and consistent demand. Before selecting your kitchen unit, research the surrounding area and assess whether your cuisine will be popular with the local population.
You also need to determine the size of the kitchen you require and the rental cost. KitchenPark’s delivery-focused cloud kitchens in Saudi Arabia typically range from 16 to 25 square metres, with an average investment of SAR 23,000. This is far less than a traditional restaurant, which averages 200 square metres and requires an investment of about SAR 1 million.
2. Equipment requirements
One of the largest upfront expenses is the cost of kitchen equipment. While KitchenPark units are fitted with the basics, you will need to decide what additional items are necessary for smooth operations. Budget for essentials such as pots, pans, refrigerators, and freezers, and account for any specialised equipment if your menu requires it.
You should also factor in the cost of utilities, such as gas, electricity, and water, and invest in a tablet or device to manage incoming orders. KitchenPark’s platform enables you to track and display all customer orders in one place, even if they come from multiple food delivery apps.
3. Staffing needs
Behind every dish are skilled chefs who bring your menu to life. Depending on your daily order volume, you will typically need 1 to 3 employees for your cloud kitchen. This is only a fraction of the staff typically required for a traditional restaurant, which may need around 30 employees. As your business grows, you can gradually expand your team to handle increased demand.
4. Marketing requirements
Many restaurant owners overlook marketing costs when launching a cloud kitchen, but they are crucial for building a loyal customer base. And it’s important to utilise marketing to attract more customers. The key elements of a marketing plan include:
- Logo: You can design it yourself or hire a professional. The key is to ensure it represents your brand well.
- Website: A professional-looking website is essential for F&B businesses. It should include an online menu, your brand story, and a contact form. Platforms like WordPress and Wix make this simple, or you can outsource to a designer. Purchasing a domain name adds professionalism to your URL.
- Social media: Create accounts on major platforms and budget for post boosts or ad campaigns to expand your reach.
- Food photography: Invest in professional photos that make your dishes look irresistible — a key driver of online orders.
- Digital advertising: Consider Google Ads or promotions on delivery apps like Hungerstation, Careem NOW, or Jahez to drive traffic.
5. Food tech and POS systems
Technology is a core cost for any cloud kitchen. You will need reliable POS (point-of-sale) systems and food technology software. KitchenPark provides industry-leading systems that allow you to track everything, from incoming orders and bestselling dishes to detailed reports, helping you make informed decisions and operate efficiently.
6. Food ingredients
Quality ingredients are the backbone of your food business. Allocate a budget for fresh, high-quality produce to maximise margins per menu item. Monitor customer preferences to avoid over-ordering and reduce waste.
7. Insurance
Like any business, a cloud kitchen requires insurance. The two most common types are employer’s liability insurance and general liability insurance. These protect you against employee accidents in the workplace and customers who make claims and complain about incidents such as foodborne illness. At KitchenPark, insurance coverage is included in the price of your unit, protecting you in advance for unforeseeable events.
8. Licences and permits
Any business operating in Saudi Arabia must obtain proper licensing. Make sure you account for the costs of the permits required to legally run a cloud kitchen. Failing to secure them could put you at risk of closure.
If you need guidance on this step, refer to KitchenPark’s comprehensive blog resources for detailed instructions.
Additional essential costs
1. Marketing strategy
As your kitchen gains traction, you’ll need a strategy to expand your customer base:
- Build a social media plan
- Partner with influencers
- Create a loyalty programme
- Reward customers for referrals
- Offer promotions and discounts
- Run targeted ads
2. Data analysis
Understanding your customers is vital. By leveraging data analytics, you can uncover why customers might choose competitors and adjust accordingly.
Hiring a freelancer or digital marketing agency can help, though it is important to consider whether it is a priority in the early stages.
Data analytics can provide insights such as:
- Customer ordering habits
- The most effective advertising campaigns
- Your most popular dishes
Time to rent your cloud kitchen
Operating costs for a cloud kitchen are significantly lower than for traditional restaurants. In addition, the profitability can often be achieved within six months, which is a significantly shorter period compared to a dine-in restaurant, which takes around five years for a turnaround.
With such compelling advantages, it’s no surprise that delivery-focused cloud kitchens are becoming increasingly popular among restaurant owners in Saudi Arabia. At KitchenPark, we offer tailored rental solutions to help you set up and launch your cloud kitchen with ease.
Reach out to us for our cloud and jumpstart your food business today.
