Al-Bidayer Holdings – Investor Documentation

BUSINESS PLANNING | INVESTOR DOCUMENTATION | STRATEGIC CONSULTING | VALUATION

Ruskin Felix Consulting LLC created a market research report and business plan for Al-bidayer Holdings, UAE to understand the Cloud kitchen industry in UAE. The report consisted of an industry overview, food consumption patterns, market segmentation, total available market, serviceable available market, service obtainable market, product mix assessment, target market, qualitative analysis and assessment, geographical assessment, and location assessment. We helped in understanding the financial viability of the plan by providing insights on the cost, revenue, and project viability assessment. 

Cloud Kitchens also known as ‘dark kitchens’ is a concept with delivery only and no dine-in facility helping restaurants sell food at low costs and in a time-efficient way. They enable restaurants to overcome the disadvantages tied to a traditional storefront thereby reducing operational costs. Cloud kitchens are expanding rapidly in the F&B market in UAE where the food delivery sector is expected to grow at a rate of 6% annually over the next five years. The global food delivery market is expected to grow 10 times over the next 10 years and is estimated to be at $365 billion by 2030. According to the latest Redseer Consulting report, this sector is expected to have a 16% share of the total online food industry by 2023.

The global cloud kitchen market size was valued at $105 billion in 2019 and is estimated to reach $215.5 billion by 2027 with a CAGR of 12.0% from 2022 to 2027. The Total market size has also been affected by the COVID-19 pandemic; however, market demand has boosted back from earlier levels and reached much higher order levels. Cloud kitchens are also known as dark or shared kitchens. Cloud kitchens are delivery-only kitchens, which can be owned by a brand or third party working with various brands. Brands that are using cloud kitchens can also operate virtual restaurants or brick-and-mortar restaurants.

KaaS (Kitchen as a service): besides creating and running their brands, the model of renting out spaces or services of a kitchen for other brands to effectively come and use the spaces is a highly lucrative concept. Due to the bundle of services offered in the Kitchen as a Service model, and the advantages of the same, many brands will love to come and work with the company to deliver. This can be rented out as the whole Space (Rentals) or Kitchens Services (Profit sharing model). It is to be noted that Cloud Kitchens is more a real estate business than a food services business. 

NPV for the project cash flows for 5 years is AED 11.29 million. This shows that the project is feasible and can generate high value for the company in the long run. The valuation of the company from a PE-based multiple of 10 will be about $112 million. We have also provided the Year-on Year valuation based on a cash flow-based multiple in sync with the competition valuations to assess how the valuation will increase with time. 

The overall valuation has been computed on the expected number of kitchens being opened on an annual basis. We have also accounted for an increase in the NPAT per store year-on-year. The discounting factor for computing the present value of future net cash flows is 8%. With a 5 Year forward PE Multiple of 10, the valuation of the overall business with the expected pattern of kitchen locations is AED 261.88 million.

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