Cloud Kitchen Concept – The Complete Breakdown

Cloud kitchens are a tidal wave of a trend for food businesses. And restaurants are quick to surf this wave. You don’t have to look too far to see the tsunami of restaurants or ex-CEOs that are adopting the cloud kitchen concept. Fat bottom lines? Fat bottom lines! 

Faasos & Freshmenu, are big examples of cloud kitchens in India. Deliveroo & Uber Eats make this possible in the US and Europe.

But no matter what social media would have you believe, it’s not all sunny in food biz heaven.

The rising competition in the restaurant world is real and it comes with high-rent, expensive designs and rising costs. And hence the stratospheric popularity of the Cloud Kitchen concept. Think lower real estate costs, a reduction in order processing time and quicker deliveries.

This means you are serving more customers per hour. What’s not to like?

In fact,

In our online delivery report we found that, 67% of restaurants would prefer opening a cloud-kitchen over a dine-in as their next outlet. Get the full research here.

Here’s a quick idea on what a cloud, (dark, ghost or virtual) Kitchen is. The concept of a cloud kitchen is simple. It is an internet-enabled delivery restaurant.  It’s hassle-free, cost-efficient, no unnecessary expenses, and no parking problems as well. And it’s being called the future of takeaway

So altogether a lot of upsides.

How cloud kitchens are a cost-effective alternative
to traditional restaurant business models

Let’s break down the (approximate) costs of setting up a cloud kitchen concept in New Delhi, India:

 

Costs of a cloud kitchen concept in India
Costs associated with a cloud kitchen concept

 

And comparatively, in the US:

 

The costs of setting up a dark kitchen in the USA

Basically, you save a lot on rent and marketing. The 2 biggest cost centers for a restaurant.

Running a Cloud Kitchen

In this article, we will focus on your cloud kitchen concept, across 3 major restaurant functions:

  • Technology (that simplifies your operations and automates processes)
  • Marketing (how to set-up marketing for your Cloud Kitchen)
  • Food & menu (ideas for a compelling menu)
  • Managing Inventory (reducing wastage and lost orders)

And include some ideas to get started with:

  • Equipment
  • Licenses
  • Packaging
What technology would you need to run a cloud kitchen concept?

You need to:

  • Acquire customers
  • Manage orders and billing
  • Collect data to drive repeat buying
  • Build engagement
  • Get feedback
Acquiring customers online

You need to be present on all third-party online ordering platforms and online aggregators like Zomato, Food Panda, Uber Eats and Swiggy (or Yelp, Deliveroo, Uber Eats in the US). But you also need to have your own online ordering portal and invest in your brand, to avoid paying high third party commissions and get direct online orders. The cloud kitchen concept is built around the “direct orders” on your platform, thus lowering you dependency on a 3rd party.

Here is a complete guide on How to link with Online Food Ordering Aggregators

Managing orders and billing

Once you start getting online orders, they need to be managed. Manually punching in orders from different sources on multiple screens is not optimal (in other words, we have successfully crossed the stone age). You need a tool that helps you streamline all your orders and integrate with your POS system. So that you can focus on serving those orders and your customer experience.

Collecting data to gain visibility of your business and drive repeat buying

Without clear visibility of your outlet performance, hottest selling menu items, and sales, it’s business-as-usual till it’s not. A good restaurant management system is designed with this in mind. It helps collect and make sense of customer data from different touchpoints in their buying cycle. It then puts that data to use for driving repeat purchases with Loyalty programs and CRM campaigns.

Build engagement

With seasonal CRM campaigns, special promotions, events or just a timely message. The steps to effective CRM campaigns are to define campaign objectives, target the right audiences, figuring out the timing of the communication, communicating sharply, using email right, analyzing results and then being regular in your messaging.

Executing your cloud restaurant’s marketing

In times of great competition, being memorable and loved are crucial advantages to have. Making sure your marketing is bang-on is a great start. But ideas don’t run themselves. You need to set up your marketing software, resources, and people. You could run your marketing yourself if you have the time. Or find the right agency to work with. Either way put aside enough time, resources and an appetite to experiment when it comes to your cloud kitchen’s marketing.

Social Media Marketing

One of the most popular and efficient way to market your brand. Your restaurant’s Instagram, Facebook, Twitter are all great channels to create a bit of buzz about your brand. 

Having your own “voice” and personality is a must. Like these restaurants.

 

View this post on Instagram

 

Butter up your friends and loved ones with a Honey Butter gift card this holiday season. #HBFCMerch

A post shared by Honey Butter Fried Chicken (@honeybutterchi) on


Given the popularity of Social media with customers (especially in the food biz), you should double down on this channel and extract the maximum value out of it. 

Our top recommendations for your Social media content:

  1. Be Authentic. Showcase real people and real stories.
  2. Give your audience a sneak peek behind these scenes.
  3. Use events.

Check out Digital & Social Media marketing tailored for restaurants.

SMS marketing

This is also an important marketing channel that connects you directly to customers. Regular emails and SMS informing about the brand and keeping them updated with the latest addition to the brand is a very smart strategy to keep the customers engaged and well- informed which may turn into more orders. While you will need a CRM tool to send out emails and SMSs, you would also need specialist campaign managers to run and optimize these campaigns for you.

Are you struggling to make the most of your restaurant CRM?   

Loyalty programs

Regular customers get some special benefits which encourage them to order more. There are different kinds of loyalty programs suitable for different occasions, restaurant types or objectives. As before, it’s a good idea to take the help of specialists to run and optimize your loyalty campaigns for you.

 

The ideal cloud kitchen menu

Focussing on a niche is a great idea for your cloud kitchen.

Regional & traditional cuisine

Becoming the go-to place for a specific cuisine increases your chances of being memorable.  Also, it urges the customer to try something new most of the times. Do you serve a killer crepe? Or an authentic Poke bowl?

 

View this post on Instagram

 

#pokebowl #foodporn #eathealthy #eatclean #californiapokehouse #dailyfoodfeed #numnum #yummy #instafood #delicious

A post shared by California Poke House (@californiapokehouse) on


The temple of health

Vegan, Gluten-free, Non-GMO, Juice cleanses – are some hot trends in food right now. You could watch out for the next food trend and capture an emerging micro-market.

 

View this post on Instagram

 

We love a hearty Minestrone vegetable soup on a cold day. Made with roasted vegetables including eggplant, zucchini and potatoes in a delicious tomato broth with gluten-free pasta, cannellini beans, fresh basil and spinach, this soup will keep you warm. All you need to do is add hot water and enjoy!⠀⠀⠀⠀⠀⠀⠀⠀⠀ ⠀⠀⠀⠀⠀⠀⠀⠀⠀ GLUTEN-FREE | DAIRY-FREE | VEGAN⠀⠀⠀⠀⠀⠀⠀⠀⠀ ⠀⠀⠀⠀⠀⠀⠀⠀⠀ ⠀⠀⠀⠀⠀⠀⠀⠀⠀ #thesimplejar #simplesoup #soupisgoodfood #soupoftheday #masonjarsalad #bouldercolorado #denvercolorado #boulderfoodie #denverfoodie #denverfitness #coloradofoodie #coloradofood #healthyeatingideas #boulderfood #boulderrestaurants #boulderlife #boulderlifestyle ##denverliving #denverfoodscene #denverfood #mealdeliveryservice #coloradovegan #vegansalad #veganfriendly #veganlfie #glutenfreelunch #glutenfreemealideas #minnestrone

A post shared by The Simple Jar (@thesimplejar) on

Bakeries, Sweets and desserts

This is a very suitable category for the cloud kitchen concept. Online delivery for desserts is on the rise and companies like Crep-fe are on trend with their delivery first business model.

 

View this post on Instagram

 

Buen día!!🙌 Ayer fui a ver a una Diosa… la número 1 en cocina natural y comida saludable👉💜@manuduranona que hace tiempo quería conocerla, nunca pude ir a sus whorshop, pero este año 2019! Obvio que voy a ir a todos 🙌 Estoy emocionada y feliz Me recibió muy bien, es agradable y auténtica así como es sus historiales….divina!!💜 mil gracias🙏 Le preparé una torta de vainilla HEALTHY y glutenfree está misma que está en la foto, sacada por manu que tiene esas increibles bases que amo😀👌 . . . 😙💜 . . . #healthyfoodfloggersanluis #budin #budines #glutenfree #sinazucar #celiacos #diabeticos #fitnnes #vegan #intolerantesalalactosa #disfrutoconsalud #realfood #comidareal #amor #saludable #DESAYUNO #merienda #natural #cocinanatural #eat #foodie #amazing #eatclean #foodphotography #fan #HEALTHY 💜

A post shared by 💙💜Carla Tatiana Videla 💜💙 (@carly.natural.food) on

Meal boxes and catering

A very fast growing category, packaged meals are making their way to health-conscious office goers the world over. Customers that are looking for healthy options beyond what the get in the office cafeterias.

Packaged meals that target the office lunch

Managing suppliers and inventory

Supply-wise, the cloud kitchen concept begins to resemble a traditional restaurant. The only difference is in the turnaround time. In the online delivery setup, you don’t get a chance to cajole waiting customers or turn down their order without strongly affecting sentiments regarding your brand. This happens because there is less human interaction (also the inability to serve them complimentary bread to make up for a service delay). This means that you simply cannot afford to run out of produce and supplies. Overstocking on the hand creates wastage which is not flattering to your costs or the environment. But if you do end up wasting, consider these upcycling techniques.  

As you can imagine, managing inventory can be a nervous process. Inventory management keeps a record of the departure and arrival of your raw material. The best way to manage inventory is to keep a detailed record of how your raw goods are getting used. By what quantity and in what duration.

Over time your inventory data allows you to make better stocking decisions and helps anticipate demand spikes. It is also crucial to figuring out your food cost. Some inventory management techniques can help such as JUST-IN-TIME methodology, ABC analysis and more.

3 must-haves to get started with your
cloud kitchen concept right away
Kitchen Equipment

Having a good kitchen design that is built for speed, is an important investment for cloud kitchen. Well planned racks, good quality utensils are all very real considerations, to make your cloud kitchen operationally efficient. We recommend some good research here. Be mindful of how big you want your kitchen to be since rent and the cost of equipment can be significant.

Licenses

Before you start, try acquiring the licenses that make your operation legal and compliant with food and safety norms. Here’s what you need.

  • FSSAI License
  • GST Registration
  • Municipal health and trade licenses
  • Fire safety compliance

Get started with the FSSAI license.

Packaging

The First impression always counts. So make sure the packaging is attractive. Throwing in some complimentary condiments can win you the impression game.

The most important aspect of packaging is temperature. Nobody likes being served cold (or even lukewarm) food. Make sure the food is hot and fresh when it reaches the customer. Being a cloud kitchen means you should take the opportunity to delight your customers with the packaging. Functional containers suitable for different kinds of food that helps preserve it’s presentation and travels well. Consider using a biodegradable material for your packaging to make an even better impression.

Packaging for soups, sauces and gravies
Soup Stock Tokyo

Food packing boxes

Doggy bags with a fun sticker

 

You could also save on commissions by giving your customers a reason to order from you directly (an offer).

See LimeTray’s packaging solutions.

Further reading on Cloud Kitchens

The cloud kitchen business model and who should consider opening one.

How to start your own Cloud Kitchen.

 

 

 

Cloud Kitchen Concept – The Complete Breakdown
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Souradeep Datta

Souradeep Datta

Souradeep is a content marketer at LimeTray. His roots are in advertising, digital marketing, and design. Loves food, music, simple things and making things simple. Prefers writing about himself in the first person. But he knows he can't always have what he wants. Reach him on: Twitter @deepsour Instagram @deep_sour