Kitopi: The Brave New World of Cloud Kitchens

The case opens in February 2021 as Mohamad Ballout, co-founder and CEO of Kitopi, a Dubai-based managed cloud kitchen platform, is looking over the company’s 2020 results. Propelled by the COVID-19 pandemic, delivery orders had been on the rise globally and dine-in restaurants were more than ever focused on profitability. Against this backdrop, Kitopi had seen high traction in its business and the management needed to decide on which growth opportunities to focus. The case provides an overview of the pain points of the various players in the on-demand food ecosystem —the aggregators, the restaurants and the customers— and lays the ground for the nascent cloud kitchen business worldwide complete with the competitive outlook. The case also provides a detailed overview of how Kitopi structured its kitchens, how the company developed proprietary software to track space utilization and efficiency across its operations, and how it built it supply chain capabilities. While the B2B positioning of the company enables Kitopi to help restaurants expand much faster and in a less costly way, the company is mainly invisible to customers who don’t know that their food order is coming from a central kitchen. Also, the company has been witnessing the consolidation of aggregators across its markets.
The case puts the reader in Ballout’s shoes, who wondered if the company could feasibly continue to own the supply side of the business and retain its position as a primarily B2B company without risking being squeezed out by the aggregators, who owned the customer relationship and data. Should the company focus on building on its currently small B2C arms, consider licensing it tech stack, or be squarely focused on its core business?