Summary: Due to high competition, excessive start-up costs, complex regulations, and red tape to start a restaurant business, people are looking for options in cloud kitchens. It has a huge potential as people get a safe and easy way to serve delicious food at their convenience. Cloud kitchens or dark kitchens, ghost kitchens, virtual restaurants can benefit startups that do not want to venture out and experiment with low upfront costs. So, we are here to boost your efforts. Explore this guide on how to start a cloud kitchen business and make it successful.
Do you want to start a ghost kitchen or cloud kitchen? Or, searching for how to start a cloud kitchen? Or, do you want to know if starting a cloud kitchen is worth it? Yes…! From skilled staff and kitchen equipment to decorating the restaurant and interiors, you need to invest a huge amount of money. At the same time, virtual kitchens can be a better option with less investment. But if you want to make good profits in the F&B sector without investing a lot of money, then starting a cloud kitchen is the way to go.
Starting a cloud kitchen is a very important profitable business nowadays. But, not all of them were so successful. The reason is implementation. Many entrepreneurs who have great ideas of starting a ghost kitchen fail to execute them. They leap before they can leap. Companies are unable to execute the business ideas with proper implementation plans.
In this article, we mainly discussed how to set up a cloud kitchen and how much does it cost to start a cloud kitchen business.
You will explore the following points;
- Cloud Kitchen Market
- How to Start Cloud Kitchen Business
- Cloud Kitchen Business Model
- How Much Will It Cost to Set Up Cloud Kitchen Business
What is a Cloud Kitchen?
Summary: Due to high competition, excessive start-up costs, complex regulations, and red tape to start a restaurant business, people are looking for options in cloud kitchens. It has a huge potential as people get a safe and easy way to serve delicious food at their convenience. Cloud kitchens or dark kitchens, ghost kitchens, virtual restaurants can benefit startups that do not want to venture out and experiment with low upfront costs. So, we are here to boost your efforts. Explore this guide on how to start a cloud kitchen business and make it successful.
Do you want to start a ghost kitchen or cloud kitchen? Or, searching for how to start a cloud kitchen? Or, do you want to know if starting a cloud kitchen is worth it? Yes…! From skilled staff and kitchen equipment to decorating the restaurant and interiors, you need to invest a huge amount of money. At the same time, virtual kitchens can be a better option with less investment. But if you want to make good profits in the F&B sector without investing a lot of money, then starting a cloud kitchen is the way to go.
Starting a cloud kitchen is a very important profitable business nowadays. But, not all of them were so successful. The reason is implementation. Many entrepreneurs who have great ideas of starting a ghost kitchen fail to execute them. They leap before they can leap. Companies are unable to execute the business ideas with proper implementation plans.
In this article, we mainly discussed how to set up a cloud kitchen and how much does it cost to start a cloud kitchen business.
Cloud kitchens have several Benefits, including:
You ask, why the cloud kitchen business model? Well, a quick and relatively inexpensive way to get into the restaurant business. Believe it or not, the revolutionary business takes off with ease of establishment and simple operations.
Here are some of the key benefits of delivery-only kitchens.
- Cloud kitchens are cost-effective as the business is only related to the financial investment of the kitchen staff and delivery agents. There is no need to spend a lot on hosts, servers, wallets, etc. Thus, the operational costs are reduced to a minimum.
- More brand exposure at a lower cost. With the cloud kitchen business model, restaurants can launch multiple brands without changing locations or investing a healthy amount in a new brand. For example, a cloud restaurant serving Mexican cuisine can establish an entirely new brand of Thai cuisine without expanding its menu! Completely new at a nominal cost.
- Flexible menus are a chef’s kiss on the list of benefits. Cloud restaurants can experiment with changing menus without the burden of updating physical menu cards! Also, the cost of creating the menu is also reduced every time it is updated!
- Data tracking helps the restaurant owner save additional costs by eliminating inventory through fewer orders, implement new strategies to acquire customers, and much more. In simple words, the business can meet demands with efficiency and less wastage.
Tips to Setup Successful Cloud Kitchen Business
Running a cloud kitchen is not difficult, but it takes a lot of hard work to make it successful. The journey begins with creating robust and bulletproof workflows. So, if you are determined to start a food delivery business and make it successful, check out the steps to set up a cloud kitchen business.
Online ordering in a cloud kitchen setup
The primary source of ordering in delivery-only restaurants is online. An online restaurant can take orders through multiple methods such as online food apps, websites, and phone calls.
Cloud kitchen POS is essential in this system as without it, it becomes difficult to accept and manage orders.
Processing an order in an online food delivery system
Once the orders are received online or through a phone call, the next step is to process them. There is a significant difference in maintaining the unique taste and customization as per the customer requirements. To solve this order processing problem, ghost kitchens appoint different chefs for different cuisines or brands operating in the area.
This is where POS is used the most. A POS kitchen display system displays the orders received and additional cooking instructions directly in the kitchen. The kitchen staff can easily view the details and prepare the order accordingly.
Once the order is completed, the chef can mark it “completed” and send it with packaging. In short, every step from receiving the order to production, packaging, and dispatch is recorded in the POS. The cloud kitchen can view and analyze the collected data to improve the business.
Kitchen staff for cloud kitchen
To run a successful cloud kitchen restaurant, you need great chefs. While the main goal of a virtual kitchen is to keep customers happy and satisfied by serving faultless food, most of the investment is in hiring the best chefs. By not having a dine-in facility, restaurants can avoid hiring wait staff, custodians, and other employees.
If restaurants want a delivery system within their cloud kitchen system then they also need delivery personnel apart from talented and skilled chefs.
Supply management
A strong supply management system is essential if you want to set up a successful ghost kitchen. There is no difference between cloud kitchen and commercial kitchen supply management. However, restaurant owners need efficient management of suppliers.
Depending on the needs of the restaurant, there may be one supplier for one brand and another supplier for another brand. If the basic ingredients are the same, one supplier can take care of everything.
Inventory management for delivery-only kitchen
Having multiple brands under a cloud kitchen business is difficult to manage. However, with proper checks and numbers, inventory management is easy. A smart POS can help restaurants handle inventory carefully.
The POS enables you to view and manage inventory at any time. Thus, the daily balance helps keep consumption under control. Also, based on the requirements, purchase orders can be raised for each brand.
Location for Cloud Kitchen
Although location is very important for a cloud kitchen business, you can choose the location based on your target customers and market. When it comes to space, you don’t have to have a prime location with an attractive storefront location. You can start it in a room or underground, basement, parking lot, and other places.
Essential Kitchen Appliances for Cloud Kitchen
Yes, you need to have the proper kitchen equipment but it will be different from restaurant kitchen equipment. For example, you need;
- Exhaust hood
- Oven
- Fire suppression system
- Refrigerators and freezer
- Cooking range
- Counters
- Sinks
- Commercial fryers
They are the common equipment that you need to have to start a cloud kitchen business.
Start a Cloud Kitchen Business, Hassle-free
To start a cloud kitchen business, you first need to set up an online cloud kitchen ordering system that can be accessed via the internet and smartphones. It is a highly profitable business, but it is a bit different from traditional restaurants.
See how to start a cloud or virtual kitchen or ghost kitchen without any hassle.
- Know your customers before starting the business. Understanding the demographics is the first step to successfully running a cloud kitchen restaurant.
- Discover the basic concept of the kitchen. Start looking for what your customers want. Know the preferences of your target audience through online surveys, social media campaigns, etc.
- Apart from cooking, gain experience in accounting, management, marketing, and more.
- Competitive analysis can help set up the best delivery-only kitchen.
- Bear the initial cost of setting up a virtual kitchen. Although the overall cost is 40 – 50% less than setting up a brick and mortar restaurant, proper financial arrangements are required.
- Get an FSSAI license. This license regulates everything from food storage to preparation and distribution. The validity period of the license can last from one to five years, depending on how timely you renew it.
- Spend some money on properly equipping the kitchen. For instance, you need to invest in ovens, microwaves, cookware, plumbing, burners, and other electronics.
- Equip the cloud kitchen with advanced technology such as mobiles, laptops, tablets, POS, etc. to efficiently manage everything from receiving orders to delivery.
Other essentials for running a successful online ordering system are proper packaging, infection precautions and an organised delivery system.
Most Popular Cloud Kitchen Business Models
There are six types of cloud kitchen business models. Each model is different from others in terms of budget, brand, scalability, performance, and more. Let’s take a look at the most popular cloud kitchen business models.
Cloud kitchen owned by the brand
A brand owns a cooking kitchen with a delivery-only model. Ideally, no takeaways and no dining. Since there is no extra space to house the diners or their vehicles, the upfront investment cost is minimal.
Separate dining
There is already a system of dining with the added hustle and bustle for delivery or takeaway. Here, the menu is the same, but the food and delivery product lines are separate. However, the upfront cost is lower as long as the restaurant does not need new processes, additional staffing, etc.
Separate dining with shared kitchen space
The cloud kitchen business model has a separate dining function. Well, the kitchen is physically removed from the dining area and operates in a shared kitchen. The upfront cost of this cloud kitchen restaurant model is moderate as one has to rent a shared space, equip it, and keep it running. Also, maintain and operate the eatery!
Hub and spoke
These cloud kitchens are of many types. It includes a single brand, shared kitchen, sometimes multiple brands, etc. Each unit has a centralized production location! Well, the upfront cost is high because of the centralized kitchen, labor cost, pop-up location, etc.
Multiple virtual brands
Here, a cloud kitchen business operates multiple brands under its hood. It is a delivery-only model, there is no dine-in or take-out. The upfront cost can be low or moderate depending on their equipment, large premises, high rent, etc.
Shell kitchen
Imagine a shell kitchen where only the final work is done. These kitchens generally serve one dish. Reduced overhead cost. So, expect the upfront cost to be very low!
Final Words
Running a successful cloud kitchen business requires you to work hard right from the start. The initial steps include finding the right cloud kitchen model for the business, a mobile app development company that facilitates professional platform development, budgeting, and more.
So, if you are planning to launch an online food ordering system for cloud kitchens, find experts like Foodive who have already designed, developed, and launched hundreds of similar platforms.
Frequently Asked Questions About Cloud Kitchen Business
Are cloud kitchens profitable?
About 20% of cloud kitchen businesses make good money. So, if you want to be a part of the top 20%, start by outlining your goals, finding the right solution, deciding on a business model, and more.
What are the essential licenses required to run a cloud kitchen?
You need these licenses to start a cloud kitchen – FSSAI, GST, Fire & Safety, and Trade License.
How bright is the future of cloud kitchen business?
The cloud kitchen industry is booming with the advancement of online food delivery systems. Since most people prefer ordering food online instead of eating in crowded restaurants, this industry is booming!
