Cloud kitchens are a modern and cost-effective way to manage your restaurant business. Running on the delivery-based system, they lack the physical set-up of conventional restaurants. Cloud kitchens require very little maintenance and need no extra space.
They are a product of people’s need to eat restaurant food while sitting at home. While the cloud kitchen is not new, they have seen steep growth ever since the pandemic. Due to COVID-19, the cloud kitchen industry has seen a massive growth rate of five years within a few months in 2020. Experts have predicted that the industry will grow up to $1 trillion by 2030. (1)
With their doorstep delivery service, maintaining social distance has become much easier. Cloud kitchens have become a safer alternative to going outside for eating. According to Euromonitor, there were already 3,500 ghost kitchens running in India. Cloud kitchens will soon become a major part of the kitchen industry.
Cloud kitchen is for people who want to run a restaurant but lack space, funds, or desire to get into the hassle of maintaining a kitchen. If you are trying to start your own kitchen business and need some tips along the way, this blog will guide you.
HOW TO RUN A CLOUD KITCHEN?
To manage a cloud kitchen, you will need to understand the following aspects.
When starting your kitchen, you need to fulfil some obligations and get your license. Some of the documents and licenses you will need are:-
1) FSSAI license
2) Health license
3) Local authority license
4) GST certification
Once you have completed these legal formalities, you have the right to run your cloud kitchen. Fulfilling your legal duties will help you avoid any trouble in the future.
b) Taking Orders:-
You must be ready with many options to take orders from your customers. Since Cloud Kitchen uses the internet as its base of operations, you need a website. Creating a website that offers easy navigation to users will result in more orders.
You can also receive orders via phone call or a messaging app like Whatsapp. People appreciate the simplicity and these options provide the most hassle-free service.
You may also get orders through third-party apps. You need to enlist your business in as many food ordering and delivery platforms as possible. Some of the famous apps are Swiggy, Zomato, etc.
c) Order Preparation:-
Once you have received an order, it is time to prepare the dish. You might choose to prepare a few dishes or only one dish due to lack of staff. That’s okay, as long as your dish is delicious. Lots of cloud kitchens only serve one dish.
You can also receive orders from various other brands. Depending upon the brand, your chefs may specialize in a particular taste for that brand. This makes that brand’s food taste different from others.
Once you have completed the order, it is time to send it to the packaging department.
d) Packaging And Delivery:-
The packaging of the food should be solid enough so that it doesn’t spill during the delivery. It may also have your brand’s logo to make the packaging feel premium. Depending on the type of food, you might need spoons, forks, containers etc.
After you have finished packaging, the food is ready to get delivered. Delivery should be quick while the food is still hot. Your delivery staff should follow proper safety and hygienic guidelines.
For delivery, you may either partner with online food aggregators or hire third-party delivery services. They will pick up the food from you and deliver it to the customers. You may also hire a delivery staff of your own.
Business Models For A Cloud Kitchen:-
Cloud kitchens come in various models. Based on your preference, you may choose either of these models. These models act like a structure upon which you may base your cloud kitchen. Some of these models are:-
a) Independent Cloud Kitchen:-
Independent Cloud Kitchen is a basic form of cloud kitchen. It works with a compact kitchen setup. The kitchen can be around 500-600sq ft. Usually, they specialise in only a single cuisine. They often depend upon many distributors for delivery. They may manage the delivery through their hired staff as well. You can save a lot of money due to the lack of service and low maintenance costs, unlike traditional restaurants.
b) Multi-Brand Cloud Kitchen:-
The Multi-Brand Cloud Kitchen model is simply many brands working under one parent brand. They specialise in many cuisines via their various brands. Each of these brands specialises in its single cuisine. Sharing the kitchen reduces the all-around cost of the operation and makes it more manageable. Each brand specialises in food depending on the demands of a particular neighbourhood.
c) Hybrid Cloud Kitchen:-
This model is not your typical cloud kitchen as it comes with a storefront. Although, it still does not have a dine-in feature. It can have multiple stores but it operates just like a typical cloud kitchen. Such kitchens may prepare a multi-cuisine menu and also offer a seasonal menu to prepare some particular dishes as per the demand. The customers can visit such kitchens and see how their food is being prepared. They may also take away their order from the kitchen.
d) Shell Kitchen:-
Shell Kitchen uses an aggregator-based cloud kitchen model. Typically, the space that is used by the kitchen is owned by the delivery agents. Multiple restaurants may work under this model. The kitchen operates as a commercial kitchen space and offers other kitchens to work together while sharing a kitchen. Delivery agents provide only the space for the kitchen. Restaurants bring their cooking equipment and staff.
e) Outsourced Cloud Kitchen:-
In this model, the food is prepared in a centralised kitchen. The partner restaurant gives some final touches to the dish. The food is then picked up by the restaurant and the food is delivered through the cloud kitchen. It is a great model for restaurants that receive large amounts of orders regularly.
Benefits Of Opening A Cloud Kitchen:-
A cloud kitchen offers many benefits over traditional brick-and-mortar restaurants. Some of these are:-
a) Low Investment Cost
b) Easy To Adapt
c) High Profits
d) Easy To Expand
e) Easy To Experiment
- Low Investment Cost:-
One of the biggest advantages of cloud kitchen is that you don’t need to invest too much in it. Due to a lack of huge infrastructure and too many employees, one can run a cloud kitchen with very little investment. All you need is room for the kitchen and a few employees to prepare and deliver the food. The lack of operational cost of a cloud kitchen makes it a very low-risk venture.
- Easy To Adapt:-
Technological usage in cloud kitchens makes it easy to assess user behaviour. This helps the chefs to prepare food that caters for a particular taste for a neighbourhood. You may also launch a seasonal brand that serves a particular dish in a season.
Due to the lack of any physical space, one doesn’t need to stick to a particular time or a menu. Cloud kitchen makes it easy to vary the timing as well as the menu. This results in less wastage of food and a relaxed working environment.
- High Profits:-
Since the investment is pretty low, the ROI (Return On Investment) is usually high. The expectation from food delivery services is that they will grow to $230 billion by 2025. The lack of staff and infrastructure enables one to spend more on food and marketing. If you can market your brand and cater to people’s needs, you will have the perfect recipe for success.
- Easy To Expand:-
Your brand’s major long-term expenses are comparatively less than a traditional kitchen. You can save up the cost of things that one finds in a typical restaurant. This makes it possible to establish more locations for your kitchen without much extra charge. You can thus easily open your kitchen at multiple locations and eventually expand to become a bigger brand.
- Easy To Experiment:-
One of the best things about a cloud kitchen is that you get to experiment with your services. It is easy to be flexible due to the nature of the cloud kitchen. You can use your customer’s feedback to give variations to a dish. Or, you may start a new dish and give it a special taste in your kitchen. Being able to experiment keeps the business fresh and keeps your creativity alive.
Marketing is a very important aspect of any business. You might cook some of the best food in the world, but if you don’t market it, your business will never be able to reach its potential. You need to invest adequately in the marketing of your business. Some of the ways you can market your business and increase your customers are:-
a) Online Presence:-
You must establish an online presence for your brand. Having an online presence will help your customers to get in touch with you. In this digital age, you must have a website and actively handle your social media. You will find it easy to engage with your customers on social media and receive their feedback. Having an increased engagement with your customers will help establish a better relationship.
b) Linking Up With Third-Party:-
People usually order food using third-party apps like Swiggy, Zomato, Uber Eats etc. You must integrate your brand with these third-party platforms and promote your brand. This will result in more orders at no additional charges for delivery. The delivery will be taken care of by these platforms.
c) Email Marketing:-
You can market your cloud kitchen through E-mail marketing. It is just as effective as any other form of marketing. It is very useful in driving up sales by introducing an event or a sale. You can build a community around these emails and have a more personal engagement with your customers.
Although the cloud kitchen is a modern phenomenon, you can still use traditional marketing ways to promote your brand. One of the best ways to do so is to use billboards and banners. The good thing about banners is that you see them each time you step onto the road. People will be regularly watching the banner and eventually contact you.
e) Word Of Mouth:-
This is one of the best forms of marketing that can help you become famous and earn loyal customers. It is a free form of marketing and the highest praise for your work. Once you begin to receive word of mouth marketing from your customers, you can rest assured that you are doing some great work. Many businesses have seen a huge hike in their sales due to such marketing. People will often use their social media handles to discuss your brand. You can also engage with them online. A healthy engagement with your customers will help you get more customers.
If you are considering entering the restaurant business, now might be the best time. Whether you are a homemaker looking for a source of passive income or are interested in opening your restaurant but lack funds, Cloud Kitchen is the perfect platform for you. You don’t have to worry much about the infrastructure. You can start your cloud kitchen from the comforts of your own home.
Cloud kitchens are the future and they are here to stay. They are cheaper to maintain and offer high efficiency. They allow you to work on your own time and have flexible work hours. With many benefits over the traditional restaurants, they will soon become a mainstay in our lives.