13 May 2020
Cloud Kitchen : Cost Effective Food Startup Model

    Disruptive thinking generates fantastic ideas i.e. working from scratch to success, Cloud Kitchen is not an exception too. The concept just found the hot spot at the right time i.e. increasing demands of meals on their own table and lack of customer's interest in dining at the restaurant. And now it's highly trending for its success.

    According to a recent survey conducted by Limetray reports that more than 67% of restaurant owners have the hunger to open a cloud kitchen as their next outlet.

    Concept of Cloud Kitchen :

    As the name "Cloud Kitchen" itself speaks "kitchen without any physical space". Ghost kitchen, Virtual kitchen and Dark kitchen are some of the synonyms of Cloud Kitchen.

    Features of Cloud Kitchen :

  •     No upfront dining area, only delivery

  •     Shared or rented kitchen

  •     Shared equipments and labour

  •     Shared costs and expenses

  • With the availability of third party integrations and facilities of mobile ordering, orders get in, meals are cooked, packed and then delivered by fleets immediately to delivery locations.

    Cloud Kitchen is successful, as they correctly discovered the customer behavior i.e. preference of a restaurant who specialises in a particular cuisine rather than ordering from a different restaurant. For instance: A customer would prefer to get Punjabi food from a restaurant named Punjabi Tadka rather than a restaurant named Pizza Cut, even if both chefs are the same person.

    Major Essentials for a Cloud Kitchen :

        Perfect Location : A cloud kitchen too needs a place, not to entertain the customers but for delivery boys, so a location should be taken depending upon factors like easy accessibility for delivery boys, basic amenities as they have huge order management and most importantly a location should have a targeted customers of the type of food the kitchen is offering.

        Legal Licenses : FSSAI License, GST Registration, Fire Safety License & Municipal Health Trade Licence are required to get the cloud kitchen functional and run seamlessly.

        POS Software: Cloud kitchens receive orders from various platforms and through a Point of Sale (POS) System, online orders can be integrated and distributed appropriately. POS systems also take care of invoicing and keep track of inventory and customer data. Therefore, POS Software is the most essential requirement of a Cloud Kitchen.

        Management of Online orders and their deliveries : Cloud kitchen being virtual needs to get a reliable system for receiving orders. Mostly this task is assigned to food aggregators like Ubereats, Zomato, Swiggy etc. Hiring them for a commission or Cloud kitchen can have their own delivery solution which can prove to be more credible and trustworthy.

        Marketing : Cloud Kitchen needs a vigorous online presence as it doesn't exist in physical terms. Therefore, social media marketing, E-mail marketing, SMS and pamphlets etc are ways to be present in the minds of customers.

    Advantages of the Cloud Kitchen model :

  •     Reduced capital cost since there are no infrastructure requirements like dining area, kitchen tools, decoration etc.

  •     Initially with minimal investments, a cloud kitchen can be established and then can be grown to new heights.

  •     The only requirements are few experienced chefs and a person to look after the packaging, i.e. a huge saving on operational expenses.

  •     Rather than diverting cost and effort, it helps in focus upon core-competency, i.e. the quality and taste of food, as at last its all about the food.

  •     Economic Advertising through social media channels, SMS and Email are effective for businesses like Cloud Kitchen.

  • Limitations of the Cloud Kitchen model :

  •     With minimal investment in technology anybody can enter the market, competition is never-ending.

  •     As there is no direct link between the kitchen and customers, loyalty may come very hard.

  •     Expansion limited to tech-savvy customers.

  •     Without an application of its own, cloud kitchens are highly dependent on food aggregators like Uber Eats in Zomato.

  • Existing Cloud Kitchen Business Models :

  •     The Independent cloud kitchen model : Single Brand, Single Kitchen and No Storefront

  •     The Rebel Foods (Faasos) Business Model : Multi-Brand, Single Kitchen, Multiple Outlets, No Storefront.

  •     The Freshmenu business model : Single-Brand, Single Kitchen, Multiple Outlets, a Storefront.

  •     The Swiggy Access business model : Aggregator owned, Multi Brand, Rented Co-working Kitchens, No Storefront.

  •     The Zomato Infrastructure Services business model : Aggregator owned, Multi Brand, Rented Kitchens, A Storefront.

  •     The Kitopi business model : Cooking and delivery fully outsourced.

  • Conclusion

    The industry of Restaurant and Food Delivery has already started shifting gears to include sustainable concept and technology as much as possible, keeping in mind the taste and preference of the customer. Although, the Cloud Kitchen concept is successfully operating in various models, but it may be still considered as in its initial stage. So as of now, there lies a strong need of ideas and also an opportunity for Start-Ups in the Food industry.

    Cloud Kitchen  Food Restaurant  Food Delivery  Funding  FoodTech  Startup India  Freshmenu business model  Kitopi business model