Shared kitchens ride on food delivery boom

0 Comment(s)Print E-mail CGTN, April 3, 2019
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A shared kitchen in Shanghai, China. [Photo/VCG]

China's sharing economy has a newcomer – shared kitchens. They provide restaurants with a place to cook their food and pass it to deliverymen as fast as possible. The business model has got lots of attention both in China and abroad.

Panda Selected is one of the three major shared kitchen operators in China. It has over 40 shared kitchens in Shanghai alone, and even more in Beijing. Martin Xiao, COO of the company, said that a shared kitchen is like a lower cost restaurant.

"Restaurants don't have to pay for decoration here, and we can also offer lower rents because we get a larger space and the unit price is lower than renting a smaller space," he said.

As a result, the shared kitchens have two main types of customers – one is big-name restaurant chains that don't have enough space to deal with delivery orders in their own restaurants, and the other is small restaurants that have just started out or which only take delivery orders.

Some 406 million people in China ordered food deliveries last year, creating a market worth over 200 billion yuan (about 29.75 billion U.S. dollars). That booming food delivery market is the backbone of the country's popular shared kitchens.

Major players in China's shared kitchen business are riding on investment capital. Professor Liu Guohua at the School of Business and Management at Shanghai International Studies University (SISU) noted that the location of the shared kitchens is always in business districts, but how to cover the rental fees after financing rounds remains a big challenge.

Apart from operating costs, some others said the business model of shared kitchens here is not really that cost-efficient. Tong Qihua, the founder of a dim sum restaurant chain in both China and the U.S., pointed out that China's business model is different from the U.S.

"Shared kitchens in China have the same problem as traditional kitchens, which are only used during peak hours, and the rest of the time it's empty. So… the capital world will face the problem that their investment cannot optimize the efficiency of the kitchens," Tong said.

However, Xiao from Panda Selective said these concerns can be addressed. He commented that apart from offering a kitchen for restaurants, they also take care of all the food processing and safety licenses, provide marketing and online operations, and even sort out supply chain services. So far the market is on the way up, and it is estimated that there are more than 200 shared kitchens in Shanghai and Beijing. 

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