According to the business wire, the global cloud kitchen market was valued at $56.71 bn last year, and it is expected to reach the value of $112.53 bn in the next five years with an increasing CAGR of 11.50%.
Online delivery has given a new rise to the restaurant business. It is the most promising and innovative ghost kitchen with a food delivery business model to expand business at a lower investment. Cloud kitchens do not have a storefront, but they can manage and produce more output. These have enormous potential with economic benefits.
Although it does not take much to start this business, there are challenges that might ruin your venture. It is necessary to know the prerequisites and ideas that increase the sales of your cloud kitchen business.
Let us start with the concept of a cloud kitchen that stands out from the traditional restaurant business.
What is Cloud Kitchen, and Who Is Eligible to Use it?
A cloud kitchen is a private space for a restaurant at lower costs. It is similar to a traditional brick-and-mortar restaurant; you only need a license and a chef to cook delicacies.
There is no physical outlet, but every cuisine is prepared and delivered. One company can start serving more than one cuisine; for example, if a delivery kitchen serves Chinese cuisine and decides to start Mexican food delivery, it can create another brand under the parent company and operate from the same delivery kitchen.
So who can choose cloud kitchens?
Well, local restaurants are turning into cloud kitchens to expand their business. Check out a few business types eligible to start a food truck business like cloud kitchen.
- Caterers-
Are you a caterer and need huge storage space without more investment? Cloud kitchen is the ideal solution.
- Meal Preparation Companies-
Cloud or virtual kitchens can help these companies as they need space only a few days a week.
- Packaged Foods-
Ample warehouse space with a cloud kitchen can upscale packaged food producers.
- Food Testing-
Cloud kitchen is a low-risk and less investment solution for companies trying to only test the products initially for branding purposes.
- Delivery Restaurants-
Delivery cloud kitchen allows you to accommodate orders without hassle. Online food delivery businesses like DoorDash, Postmates, and UberEats or any business with their white label solutions are used for cloud kitchen delivery. Food lovers then order from their mobile devices and deliver the food to their doorstep.
Even traditional restaurants can start cloud kitchens for easy food delivery. But which business model would you invest in?
Let’s find out.
Cloud Kitchen Business Model- Where Does Your Restaurant Fit?
A cloud kitchen is a virtual kitchen also known as a ghost kitchen where orders are received; food is prepared and packed to deliver to different locations.
Delivery optimization is nothing new, and it is the cornerstone of the food industry’s success. This delivery-only model has gained traction since users have started ordering online food rather than visiting restaurants for dine-in.
Let us discuss different cloud kitchen business models.
Brand-Owned Cloud Kitchen Model
This business model gets one location, one brand, and only one kitchen. There is no takeaway and no dine-in, and the kitchen is not too far from the densely populated areas—a small and streamlined crew to handle exposure and self-delivery for a well-known brand.
For example, a waffle company joins with DoorDash; the benefit is that it drives sales and promotes the business more through the app.
Separate In-Location Delivery Model
These cloud kitchen or food truck business models are stand-alone kitchens with no physical location. The restaurant takes the menu hits and tweaks for delivery.
Located in a high-rent area, the delivery is exclusively created to scale up revenue. Such kitchens follow only single cuisine and are self-sufficient to receive bulk orders and deliver food.
Dine-In Brand Operating from One or More Shared Kitchens
The most complex business model for a cloud kitchen relies on demographics, cuisine, and location-based supply data. The ultimate goal is to meet the demand of people for various cuisines in the nearby area.
A well-known restaurant will rent kitchen space for a cloud kitchen. The staff will rotate between the restaurant and the space to handle orders and deliveries from various locations.
Running operations from several kitchens can lead to unscalable logistics. Instead, expanding to one location and popup storefronts to grow your reach is better.
Hub and Spoke Model
Different paradigm variations, like single brand, multi-brand or communal kitchen, and so forth, are under the hub and spoke models. Each of these variations provides a centralized system to produce the items. The manufacturing unit is situated in a low-cost neighborhood where food is prepared and delivered to places for final finishing.
Furthermore, labor costs increase with the popup location, and it will need to hire staff. So, expect to incur more expenses for a couple of months. This model is preferable to providers looking to expand their business in only specific city locations.
Multiple Virtual Brands Model
This model is highly recommended where one setup caters to different brands or cuisines in the same shared cloud kitchen. No dine-in or takeaway; there’s only one delivery option. It is usually a large kitchen with several production lines and brand items prepared.
These brands are closely related or made with the same ingredient, so they need only one team. It helps buy the raw materials in bulk, keeping the price down.
Outsourced Food Preparation and Delivery Model
Kitchen as a service is another word for this model, essentially an empty area with built-in kitchen equipment, ventilation, and gas pipelines. These cloud kitchen business models are owned and operated by restaurant companies, and a working place with a cooking area and refrigerator space is also shared.
Now that you have the list of cloud kitchen business models, it is easy to choose one that suits your restaurant business. Next comes the steps to implement one of them to enhance the business.
You May Also Like: How Does a Food Delivery App Work?
Things to Consider While Implementing Cloud Kitchen
While you know what a cloud kitchen is and who can use it, it is essential to keep in mind key points before you start a cloud kitchen. A successful food trucking business will need precisely the same passion and mindset as it requires for cooking.
Location
The first thing is to pick a location. By location, it does not mean a physical location like a brick-and-mortar restaurant business. You don’t have to invest a lot of money paying huge rent to rent out the pricey location to attract customers. Just a student-dominated place or a suburb is all you need to start the cloud kitchen business.
License
Every country, state, and city has different legal requirements for the food industry. Depending on where you want to set up the cloud kitchen business, you must follow the legal guidelines and permits, including FSSAI license, fire, and safety, certificate of environment clearance, etc. These permits may take some time, but it is mandatory. Also, keep a tab on yearly renewals.
Inventory Management
What is the essential thing in starting a food delivery business? It is to ensure the best quality of raw materials. Food is crucial in this business, so it is essential to invest in choosing the right vendor.
Determine the exact quantity and the product specification of the raw material requirement while delivering the stock.
Online Orders
While starting a cloud kitchen, an online ordering system must be set up. This will add options to your business; one is partnering with food delivery apps or launching your app. The first option has a hefty commission to pay the app owner, but it fetches the maximum number of orders as they would get to know about your restaurant. The second option may have trial and error, but it is an ideal path in the long run.
You would need the right team of developers and software management with the right POS system for your erestaurant solutions to make the entire process a worthwhile investment.
Database Management
This online billing software requires sign-in from the company to manage and operate the restaurant or cloud kitchen database. They act as the manual bookkeeping that you used to spend hours behind completing. The billing software includes,
- Online invoice
- Client data
- Purchase orders
- Order tracking
- Tax calculations
- Revenue management
- Vendor and stock management
The above points are clear enough to understand what to consider while implementing a cloud kitchen.
But are you still wondering why to invest or how will your cloud kitchen expand? Let us find out that in the next section of our blog.
How to Expand your Restaurant Business with a Cloud Kitchen?
Traditional business is rooted in a place generally to attract customers to the dining room even if they have delivery service open.
In contrast, the cloud kitchen encourages widening the customer base, and your food menu does not target a specific zone but pushes the customers from multiple locations. With the help of food delivery apps, users can select their favorite cuisine from options provided by nearby localities.
Food trucks make the most of the online solutions that will help to brand more. If you think sensibly, companies can do marketing and advertising at the least expense. If you are already running a food truck, extending the services to the people becomes more accessible.
Conclusion- Become the Best Player In The Cloud Kitchen Space
The on-demand food truck business is determined by various features, platforms, development, etc. In the future, more than half of the traditional restaurants will occur outside the physical location, and business models will tend to provide low cloud kitchen costs and uniformity.
It is safe to say that cloud kitchen has a massive role in the tech and food industry. Not hampering the restaurant business, cloud kitchen will provide delicacies in time with a rich food experience to the customers.
If you want to know how to manage your food truck business with a cloud kitchen app, our team at aPurple has the exact solution. You can directly contact us from here.
FAQs
How to start a cloud kitchen?
All you need is a space to open the cloud kitchen and run your virtual kitchen, and develop a cloud kitchen app to create wonders. This will help to reach a wider audience and enable businesses to expand at a minimal cost.
How to build an app for erestaurant?
With the right app development company, you can start an e-restaurant business. It is nothing but a transformation of your traditional restaurant business digitally. There are steps to build an app from planning, and ideation to development and launch. You can also create a clone of any top-ranked restaurant app.
Cost to develop a cloud kitchen app?
There are two ways to build an app for your cloud kitchen. You can either build an app from scratch or go for the easiest and most affordable way of creating a clone. With minimal changes or color or adding a few features, you can get a ready-made application as quickly as possible.
How much do I need to open a cloud kitchen?
It all depends on the space you need to open the cloud kitchen. There are different cloud kitchen business models that can help you decide on the space and how big or small you need for the food business. You can also open more than one cloud kitchen at different locations to expand your business.
