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How to Start a Cloud Kitchen? Ins and Outs of Affordable and Future-Proof Online Food Business

Who should read this blog? 

Anyone who wants to jump into the food business or already owns restaurants. 

Why? 

Because this blog will solve all of your questions related to the cloud kitchen concept which is an affordable, easy, and future-proof online food business idea. 

We will also share the cost to develop a food delivery app for your cloud kitchen. 

Let’s start with the first and most important question. 

What is a cloud kitchen? 

Let’s assume a scenario. 

You’re running a big restaurant with a dine-in capacity of 100 people. 

The land property where you’re running your restaurant with a 100-people dine-in capacity is on lease and you are spending 30% of your revenue on rent only. 

Due to pandemic, your customers prefer to order food online rather than opting for the dine-in option.  

So, on one great day, to reduce your operating cost, you decide to close the restaurant’s dine-in area and serve your customers through the home-delivery option only. 

Here, you’re technically called running a cloud kitchen! 

In the cloud kitchen model, you don’t offer dine-in service and only offer food home-delivery service from your food preparation and cooking facility. 

To run the cloud kitchen, it is not necessary to have a professional kitchen. You can run the cloud kitchen from your home too. 

Many times, a cloud kitchen is called a delivery-only restaurant, online-only restaurant, ghost kitchen, virtual restaurant, and shadow kitchen. 

How big is the cloud kitchen market? (Don’t worry. You’re going to invest in a billion-dollar market!) 

According to the report, the global cloud kitchen market was valued at USD 0.65 billion in 2018 and it is anticipated to reach USD 2.63 billion by 2026 at a CAGR of 17.2%. 

If we talk about the cloud kitchen market size by region, the USA and Asia are leading the chart. 

The top factors fueling the growth of the cloud kitchen market are, 

  • Rising adoption of online food delivery platforms 
  • Eliminating the need for physical infrastructure and equipment 
  • Increased standard of living and urbanization
  • The low-cost implementation

Understand the working of the cloud kitchen with this Indian brand – a pioneer of cloud restaurant  

If you’re from India, you must have ordered food from any of these restaurants – Faaso’s, Oven Story, Sweet Truth, Behrouz Biryani, and the Good Bowl. 

Do you know these restaurants are operating on the foundation of the cloud kitchen model? 

Yes. These restaurants only offer food delivery services through their dedicated apps and 3rd party apps such as Zomato and Swiggy. 

To be precise, they are following the multi-brand cloud kitchen model. 

One single restaurant or company named REBEL Foods hosts these all restaurants or brands. 

So, here’s how REBEL Foods is leveraging the cloud kitchen model. 

  • REBEL Foods owns a kitchen area in a city. 
  • They prepare different dishes under different brand names such as Oven Story for pizzas, Faaso’s for kebabs – in the same kitchen area. 
  • So, for customers, these all are different restaurants, but for REBEL Foods, it is the same restaurant with different brand names for different cuisines and dishes. 
  • Customers place orders from dedicated apps of these restaurants or the 3rd party food delivery apps such as Zomato and Swiggy. 
  • These cloud restaurants deliver the food through either their hired drivers or drivers of the Zomato and Swiggy – based on the app they get orders from. 

Different cloud kitchen models you should know before deciding to start one 

According to the mode of operation, revenue streams, and size, the cloud kitchen model is divided into several sub-models. 

  • Uni Brand Cloud Kitchen:

Here, the single restaurant with a single brand name prepares and delivers food.  This is the best cloud kitchen model for beginners as this requires minimal investment and effort. 

  • Multi Brand Cloud Kitchen: 

A single restaurant having several different food menus with different brand names is called multi brand cloud kitchen. 

Running such a cloud kitchen without experience can be a costly mistake as it requires great coordination skills, a large fleet of hired drivers, and knowledge of the restaurant industry. 

  • Restaurant Combined With Cloud Kitchen:  

In such a cloud kitchen model, a typical restaurant with dine-in facilities runs a separate cloud kitchen to multiply their revenue stream and utilize their staff in a better way. 

  • Co-Working Cloud Kitchen:

Here, many cloud kitchen owners prepare and deliver food from one kitchen place. They all pay the equal operating cost of the kitchen.  

CloudKitchens, Kitchen United, and Food CoWorks are some examples of shared kitchen spaces.

  • Aggregator Cloud Kitchen:

This is a kitchen hosted by a food delivery aggregator such as Swiggy, Zomato, etc. The aggregators create an ecosystem where they invite their top-performing restaurants to prepare food from a single co-working space. 

“Would you tell me the top reasons why I should start a cloud kitchen?” Yes, here are those real reasons! 

  • Serving Exactly What Customers Want!

The cloud kitchen leverages online channels to take food orders and later delivers them. 

By using the mobile app, the customers can easily explore the menu, select the food items, request for customization, add the address, make the payment, and track the driver. 

Due to this pandemic era, they’re being least interested in dine-in options and opting more for safe contactless food deliveries. 

Since the cloud restaurant by default serves the same purpose, it is more likely to succeed with a cloud kitchen than with a full-service restaurant. 

  • Less Investment

This is one of the most significant benefits of a cloud kitchen. 

Since it does not require a large space for a dine-in option, you don’t require to buy or rent a large property and pay huge. 

The ‘rare’ advantage of a cloud kitchen is that you can start it from your home too as it requires only enough space to cook and pack food properly. 

  • Better Customer Service With No Efforts 

When a customer enters your restaurant for a dine-in option, you have to allocate one of your floor staff members for your customer until he finishes with his meal. 

In other words, you have to invest more time, money, and effort to deliver good customer service to your customers visiting your restaurant. 

But in the case of the cloud kitchen, you need to allocate your staff only when the customer has some query related to a payment dispute or the order misplaced (which happens rarely!)

“I finally want to start the cloud kitchen, but how?” Here are the top resources you would require. 

Indeed, starting a cloud restaurant is much easier and cost-effective than starting a dine-in restaurant. However, it still requires some of the very important resources. 

  • A Cooking and Food Preparation Space

This is the most basic requirement for starting a cloud kitchen. However, the best part is you don’t always require a professional kitchen to start a cloud restaurant. 

You can even start it from your home. However, taking a small property on lease from where you can cook professionally and manage the fleet of drivers is advisable. 

This will also help you get the required permits from the government easily. 

  • Delivery Drivers

Since cloud kitchens are delivery-only restaurants, you would require a fleet of drivers to deliver the food to your customers. 

To gain control over drivers and utilize them also in the kitchen, you should hire your own drivers rather than going for a gig model where drivers work for you but independently and you don’t have greater control over their working time and working method. 

  • App for Delivery Drivers

An app makes it easy for drivers to receive delivery jobs from you, get delivery instruction from customers, navigate to customers’ location, communicate with customers, etc. 

The other very significant benefit of having an app for delivery drivers is that both you and your customers can track the live location of the drivers while they are on delivery. 

  • App for Your Customers

Using the app, the customers can explore your menu, place the orders, manage the addresses, track the driver, pay for the food, and give ratings to both restaurants and drivers. 

  • App for Admin or Cloud Kitchen

To receive orders placed by the customers, to assign delivery jobs to drivers, to track drivers’ location, to update the menu, to validate the payment, to communicate and coordinate with drivers & customers, you will seriously need an app.  

Because an app makes running a cloud kitchen very effortless and profitable. Everything from customers to their orders, delivery drivers, and payments come to your fingertips. 

Here, it is worth mentioning that we provide apps for delivery drivers, customers, and admin in a single package. We don’t charge individually. Continue reading to know the cost! 

  • Licenses or Permits 

In order to start a cloud kitchen, you need to receive various important licenses or permits which vary depending on the countries. 

If we talk about India, you will require FSSAI, GST registration, and Health/Trade license.  

GED will solve your all business, legal and technical issues with our business & legal consulting and app development services 

At GED, we accommodate app designers, app developers, business experts, and even legal experts who all work together to develop apps for you, define business models, solve your legal pain areas, and to start the cloud kitchen business from scratch. 

Yes, we have dedicated experts for each of your business, legal, and app development requirements. 

We develop the food delivery app including the app for drivers, customers, and restaurants within $3k to $7k – depending on your requirements. 

You can ask us for a free demo of the food delivery app so that you can see it in action and get an idea of how it works. 

We have proven expertise in digital space with developing and delivering more than 100 apps only in 2020. 

Most importantly, we’ve given free business consultations to more than 300 individuals in 2020. 

In fact, we start the first conversation with anyone wanting to develop the app with free business consultation!