Why Cloud Kitchen is a Recipe for Success (And How You Can Start Your Own)

From productivity to customer satisfaction, a cloud kitchen solves for everything.

Imagine: not having to pay high rent for better locations or not worrying about more parking space and better ambience.

With cloud kitchens, you have the power to focus on just two things: making great food and delivering it quickly.

People now prefer the comfort of eating food at home rather than venturing into long hours in traffic. Combine this with the advent of technology, and you realise how cloud kitchens are a major game changer in the restaurant industry.

What is a Cloud Kitchen?

It’s an easy concept. Think about a fully-equipped commercial kitchen in a restaurant, except it doesn’t have any restaurant seating or even a takeaway counter – that’s a cloud kitchen for you. They’re a crowd pleaser because of convenience-driven choices and also prove to be beneficial for restaurants wanting to reach a large customer base.

Not just new entities but even age-old restaurants and QSRs are now venturing into having cloud kitchens. Even various restaurants consultants agree that the cloud kitchen model presents a massive opportunity because of its operational efficiency and low starting up costs. So is it beneficial for you to open a cloud kitchen as well? Let’s find out!

Business Viability of the Cloud Kitchen

Here’s a fact: in a survey conducted for our Online Food Delivery Report, we found out that

67% of restaurants would prefer opening a cloud-kitchen over a dine-in as their next outlet. Get access to the full report here.

The major reason being that kitchen only units come as a far more viable option for saving on high rentals and the requirement of client-facing staff. We further go deep into these points below:

Savings on infrastructure

We all understand that the costs of maintaining a full-fledged restaurant are sky high. To add to it are the real estate prices for these locations. Kitchen-only units come as a far more viable option when it comes to infrastructure.
Shourrya Sachdeva, founder of Crepe-fe, a dessert delivery brand says – “While I would want retail outlets, the major reason we prefer cloud kitchens is to avoid the challenge of high rent and deposit. They have become an industry norm because of their affordability.”

Cloud kitchens can be optimised for making food in the most hassle-free manner and also ensure better quality control.

Reduction in service time

The best thing about a cloud-kitchen is that it lets you enjoy the power of distributed cooking. If you’ve kitchens in multiple locations, the food can be served hot and fast with a much lower delivery time.

More contextual customer data

cloud kitchen data
Collecting customer feedback to improve performance

Cloud kitchens work the best when combined with technology. Having your own order online system or a mobile app lets you collect crucial customer data that helps in further engagement with your customers as well as newer menu planning.

Flexibility in menu

Another crucial value that cloud kitchen model provides is the flexibility to keep experimenting with the menu. It’s easier to respond to new food trends and fads by quickly adapting them in your delivery menu rather than alternating the processes at a traditional setup of the restaurant. It also means more versatility in the food you can offer.

Wish to optimise your menu to increase orders? Here is a resource you can read.

Higher margins and competitive pricing

The cost of delivery has to be accounted for when running a cloud kitchen but it still is much more affordable than running a brick-and-mortar restaurant place, where infrastructure and operational costs suck away most of your margin.
Ultimately, with higher margins, you’ve the ability to offer competitive prices and test them to see the market’s response.

Better expansion opportunities

With cloud kitchens the opportunity of rapid expansion is massive. You can either open and run multiple bands from the same kitchen or expand geographically with kitchens in more kitchens. In some cases, you can even do both. Depending on your market strategy and the response
For example, Faasos runs 160+ kitchens and 4 brands including Faasos, Behrouz Biryani, Oven Story and Firangi Bake – all offering a distinct menu.

Now that we know all the wonders cloud kitchen can do for a food business let’s understand all that you’ll need to start your own cloud kitchen.

Deciding on the Cloud Kitchen Business Model

Cloud kitchens bring with themselves category innovation and newer menu choices. You’ve heard of a ghost kitchen or a dark kitchen – all these variants including cloud kitchen are great for setting up quickly and getting immediate access to a growing digital market, without the risk or expense of opening a full-scale traditional restaurant.
These kitchens usually start focusing on a particular theme or model. Be it Asian Haus focused on Asian cuisine or Crepe-fe – made for desserts. The other way around is to focus on packages like Box8 that provides a range of meals. Some popular options for today’s cloud kitchens include:

Healthy Food

Consumers today are conscious of their food choices. They don’t just want to eat good, they want to eat smart. More and more cloud kitchens these days opt for a healthier menu and are even transparent about the calories added.

Regional Cuisine

Regional menus like Rajasthani or Punjabi cuisine are also a popular choice for cloud kitchens. At times focusing on a particular dish like Biryani also works great for the business.

Indulgent Food

How can we not mention some indulgent food like waffles or crepes, these work great too in a cloud kitchen model and can be optimised for quicker delivery. all these variants including cloud kitchen are great for setting up quickly and getting immediate access to a growing digital market, without the risk or expense of opening a full-scale traditional restaurant.

Meals

Meal boxes are a great option for the customers that are always on the move or require a variety of food options every day. Brands can innovate in various cuisines for these meal options.

Find more ideas on the cloud kitchen business model here.

Getting Resource-Ready for Your Cloud Kitchen

Online Ordering Website

Your online food ordering website is like your silent server. It will be the first thing people notice about your brand. It becomes even more important for cloud kitchens as instead of a physical entity, your website becomes your main connection with the customers. It should always be updated with enticing images and descriptions. Having a website helps in maximising your sales opportunities and increasing the customer base. When you invest in your restaurant’s website, it’s like investing in a long-term promotional and business tool which should not be neglected in any case.

POS & Order Management System

When running a cloud-kitchen, speed, automation and optimisation are three main things you need to excel at. Having a restaurant POS that helps you integrate with different tools and runs on cloud-tech will make your life much easier. Another thing you must-have is an order management system that can bring orders from different third-parties into one place for faster processing. With high-volumes of orders coming your way, it’s important the time they take to get in your POS and kitchen is significantly optimised to seconds.

[Also read: How your POS can act as a central unit for your restaurant business]

 

Integrate POS with CRM - cloud kitchen
Tip: Always integrate your POS with your CRM for effective management.

Engagement and Feedback Tools

When running a cloud-kitchen with no or very less direct contact with your customers, it’s important to engage with them through different mediums like SMS or email. This is where getting orders on your own platform helps. You get to have customer details and send them meaningful communication for long-term relationships and some hot orders.

Different mediums for sending campaigns

Using a feedback tool to ensure you’ve a correct picture of how your service is being liked by the customers and what you can improve on also helps in the longer run. Also, don’t neglect having a strong loyalty program. It’s of utmost importance when you want to convert more third-party customers to your own platform and saving so much on commissions.

Look no further for the right tips to send great CRM campaigns and get loyal customers

Kitchen Location & Licensing

For your cloud kitchen’s location, you can opt for any place that’s nearby to your target delivery areas. Now that you don’t have to think about accessibility, parking, stunning interiors etc it’s much easier to find a location and at a much cheaper price. You can even partner with fellow restaurant owners who plan to enter the cloud kitchen space. The good thing about having a kitchen-only setup is that it provides a huge collaboration and cost reduction opportunity.

Getting an FSSAI license is also mandatory for any food business. You’ll have to make sure your kitchen fulfils all the requirements for the same.

Cooks, Raw Material and Menu

Crafting the right menu and using quality equipment and raw materials is something that’s important for any kind of restaurant. This should be the first step in your planning process. Cloud kitchen owners these days spend a significant amount of time and budget setting these three things right for their business. Some even build their own machinery or grow their own produce. This further acts as a great addition to the brand story and is a major marketing point.

Delivery Partners

Whether you plan to deliver by yourself or use third-party services, it’s really important to ensure quick delivery of your food. Partners like Zomato, Swiggy or Uber Eats are popular choices for a fast delivery experience. Having your own set of delivery boys is another popular model that cloud kitchens experiment with.

Strong Packaging

Even though they’re ordering food for delivery, people want it as hot and fresh as they would get while sitting in the restaurant.

When all your orders are delivery focused, packaging can either make or break the game. It can also act as an addition to your brand value if designed with great interest. Overall, it should be strong enough to avoid any spilling in transit and also keep your food warm.

Marketing Your Cloud Kitchen Right

Online Presence

Salad Company - Social
Salad Company’s Instagram feed to engage with customers

Since your online presence is all the contact you’ve with your customers, it needs to reflect your brand, menu and marketing offerings well. Using your social media platforms to communicate new offers, messages, and driving sales is what a lot of cloud kitchen owners give the first preference.
When thinking about your social media strategy, ask these questions:

  • Who are my target customers?
  • Where do they hang out the most online?
  • What pleases them the most?
  • What do they want from your restaurant?

Offline Presence

Building an offline presence in your target delivery areas either through distributing pamphlets, participating in community events or partnering with local influencers – all this will help in spreading a word about your brand out and ultimately increasing sales.
When your brand is focused on a cloud kitchen model it is important to take the opportunities to showcase your brand offline wherever possible. Food festivals, fleas and carnivals are a great way to do this and reach new customers. They’re great to tell the market you’re here and delivering. Also, to present your signature menu items.

Here’s how to stand out when participating in a food fest.

Over to you:

We hope with all this information in place, you’re armed to get started with your own cloud kitchen or improve on an existing one.
With the online food delivery market expected to hit a market volume of $11,137 million by 2022, the potential of cloud kitchens getting a major chunk of this market is huge. This rise is supported by the lower meal production costs, increased logistics scale and strong demographic trends.

What do you think about the future of cloud kitchen in the restaurant industry? We believe it’s more than a fad – it’s the future. We’d love to hear your thoughts in the comments.

Further reading on Cloud Kitchens

Cloud Kitchen Concept – The Complete Breakdown

Cloud Kitchen Marketing Ideas to Grow Your Online Sales

Why Cloud Kitchen is a Recipe for Success (And How You Can Start Your Own)
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Niharika Maggo

Niharika Maggo

Niharika is a Content Marketer at LimeTray. When she’s not busy wearing down the keys on her keyboard, she's found listening to podcasts, reading or drinking tea.