Cloud Kitchens are the latest emerging trend in the food and beverage industry. With higher profit margins and low-risk operational costs, it is the preferred business model for upcoming and established restaurateurs looking to expand. This is because cloud kitchen operators are not faced with the same challenges that are involved in operating a traditional restaurant, allowing them to compete against other players in the industry such as delivery kitchens.
If you are considering starting a cloud kitchen, do keep the following points in mind.
- Location: Cloud kitchens typically require lower capital investments due to the nature of the operations. You can exclude factors such as parking spaces, seating arrangements, and prime locations when sourcing an optimal location. However, a solid infrastructure should always be available, such as water supply and sanitation. Needless to say, while selecting a location for your operations, the most critical factor to keep in mind is the ability to easily cater to your target audience.
- Kitchen Equipment: Procuring kitchen equipment will probably account for the largest part of the total capital investment. The success and profitability of the business model will largely depend on the quality and durability of the kitchen equipment purchased at the start of the operations. Selecting the right mix of equipment will also depend on the type of cuisine being served. Another key factor to consider is the overall capacity of the equipment and space. While it is imperative to manage costs effectively at the time of launch, one must factor in the ability to expand operations as the business and demand grow.
- Staffing: The typical staffing requirements of a cloud kitchen vary from a traditional restaurant, wherein you eliminate the need for the front of house skilled staff i.e. servers, waiters, etc. and other client-facing staff. The key positions required in a cloud kitchen consist of Chefs, cooks and their helpers, cashiers and administrators, cleaners and housekeeping and a delivery driver fleet. As the crux of the success of a cloud kitchen is based on the quality of the food, it is imperative to have a skilled cooking team.
- Packaging: For cloud kitchens, the business depends entirely on the quality of the food and the packaging it arrives in. A few things to keep in mind when selecting packaging is the visual impact (i.e. branding), cleanliness, quality, ease of use, ability to maintain food integrity, and, more recently, the eco-impact of the packaging materials used.
- Accessibility: Since the entire business of a cloud kitchen is driven by online ordering, it is critical for the operators to provide customers with a convenient method of placing orders. Having a dedicated customised private portal will help save commissions typically eaten up by collaborations with 3rd party delivery portals. However, partnering up with delivery platforms such as Zomato, Talabat, etc. will give the brand the added exposure required to reach a greater audience while also handling a part of the logistics for you.
- Point of Sale and Order Management: Another key ingredient of an efficient Cloud Kitchen business model is the efficiency of its Order Management system. This would not be possible without the right point of sale system. Ensure that the selected POS software eases the entire operation from the time the order is received until it is delivered. Consolidation and cross-integration with other tools and third-party vendors, and the ability to run the system on a cloud will be even more beneficial for the operator.
- Marketing: What use does a great brand have if people are not aware of it? After product development and setting up the kitchen, an effective marketing strategy is needed to generate sales. The right combination of social media marketing, SMS and email campaigns, loyalty programs, and online listings, can help significantly increase the customer base.
To summarize, once a cloud kitchen has been set up, the operator can reap various benefits from this business model including, but not limited to:
- Lower upfront investment
- Flexibility to adapt the menu
- Focus on the quality of food
- Opportunity to expand & grow faster
- Diversify business streams by collaborations with other brands
- Reduced overhead expenses
- Higher profit margins
The cloud kitchen model, given its nature, has been a recipe for success for many restaurateurs already. The lower upfront investment and better profit margins will enable operators to rapidly expand to newer areas and growing their customer base. Although established restaurateurs may find it easier to tap into the services of an existing cloud kitchen, opening your own cloud kitchen comes with many advantages and opportunities.
With top class restaurant consulting solutions, Ribbon Consulting can help you set up your cloud kitchen operations. You can reach out to us on mail at email@example.com or call us on +971 4360 5758 (Middle East) / +91 98200 07841 (India).