Cloud Kitchens – The next big opportunity?



The rapid growth of Online Food ordering sector creates new business opportunities for existing & upcoming restaurants to grow their business, one such upcoming trend is the Cloud Kitchens business model. We live in an era where we order food right from your mobile and get it delivered to our location. Nowadays all the restaurants you visit collaborate with online food ordering portals like Zomato, Swiggy, etc,. to ease the ordering process and expand their business as well.

Dark Kitchens / Ghost Kitchens / Cloud Kitchens / Virtual Kitchens are Fully equipped kitchens that you can find in most of the restaurants but they don’t have dine-in or takeaway, they run solely for the online delivery services.

Cloud Kitchens business model

The Cloud Kitchens don’t require much upfront costs when compared to a classic dine-in & takeaway restaurant and budding restaurateurs can use this as an opportunity to test out their brand & customer base before opening a premise in a low-risk environment. Thus giving an opportunity to the chefs to concentrate on one objective, to prepare the best food!

In India, there are many Cloud kitchens namely Faasos, Holachef, Freshmenu, RedBox etc who run solely depending upon the online orders but few of them have introduced takeaways due to the increase in demand.

Cloud kitchen does everything for you right from taking orders from the customers, providing you the information from what to prepare to deliver the food to customers and getting a feedback immediately. So, this will give an opportunity to get more feedback and exposure to the customers.

Deliveroo, one such online food ordering portal has introduced their own dark kitchens into play by naming them as ‘Deliveroo’s editions’ to focus on delivering best food to the customers on time without any compromise.

With introductions of such dark kitchens by food delivering portals, they create a monopoly market where the customers get to order from the portal’s very own kitchens and deliver them with more priority when compared to other restaurants listed out.

In India, Redbox introduced small kiosk in multiple parts of the city aiming to run as a takeaway & delivery only kitchen. With very less menu options and faster delivering times, Redbox also became one of the successful kitchens out there. Similarly, Swiggy also launched cloud kitchen in few cities to accelerate their sales and get involved in cloud kitchen concept.

Why invest in cloud kitchens?

Why invest in Cloud Kitchens

Considering the current scenario in any metro city, getting space for a restaurant is a challenge. Either the space is too small or it’s too expensive to afford. But profit wise, your profit is in your hand as most of the costs that occur in a regular restaurant doesn’t occur in Cloud Kitchens.

Not just that, a cloud kitchen can easily change the type of food they prepare by hiring the right chef & updating the menu online which is very less investment compared to a classic restaurant where they have to change everything right from the theme of the restaurant to the marketing strategy.

With Cloud kitchens, there are N number of opportunities because all it needs is kitchen space and demand to feed the hungry customers. With minimum risks involved, Cloud kitchens are one of the safest bid if you are planning to invest into something. 
But as mentioned above for a cloud kitchen to survive, lots of efforts & marketing plan is a must.

Should an existing restaurant invest in Cloud kitchens?

If your restaurant is well established and is running well, investing in cloud kitchens would increase your overall exposure and add more profits at a less cost.

At any given time, a cloud kitchen would require less investment compared to the classic dine in restaurant and here’s the breakup :

Kitchen space: Depending upon how big of a kitchen you want, anywhere between 800 sq ft to 1200 sq ft would be optimal for your kitchen to run. Considering this space in a prime spot would cost a bit high whereas in a non-prime spot would cost lesser.

Kitchen equipments: For any cloud kitchen or kitchen for that case, investing in durable kitchen equipment is a must to make the process of cooking easier. These equipment should cost you the majority of your budget. If you want to spend lesser here, investing in used equipment would be an alternative option. `

Kitchen staffs: There should not be any compromise in hiring the best staffs since the best chefs & efficient employees are the pole behind the kitchen.

Other expenses: Other expenses include a POS system to manage your expenses, 25-30% per order that the online food ordering portals charge, Restaurant licenses & permits and food packing costs.

*Note : The above mentioned cost is an approximate occurring cost for any cloud kitchen. You can cut the cost at various places such as rent for the place, equipment, etc

Pros and cons of Cloud kitchen :

Pros:
Low operation cost
High-profit margins
Less risk

Cons:
Online only visibility
Challenging brand building
Less customer interaction

Do you want to know how to market your Cloud kitchen? Read more about Restaurant marketing
What are your thoughts on Cloud kitchen? Do you think it’s future ready? Share your views below.

Cloud Kitchens POS