Complete Guide to Launching a Cloud Kitchen: Benefits, Uses, & More

The food business has always been amid a wave of technological innovation because of the ever-increasing rivalry and sophistication of the sector’s technical tools. One such idea that has lately made its way into the culinary sector and is sweeping the world’s restaurants is the Cloud Kitchen.

The Cloud kitchen idea, widely regarded as the most efficient method to manage a restaurant company, is reportedly growing at the most significant CAGR (Compound Annual Growth Rate) of any subset of the restaurant sector. Traditional restaurants have to switch quickly; look at the below stats.

A cloud kitchen, often called a dark kitchen, ghost kitchen, or virtual restaurant, is an online eatery that does not physically exist. Most of their business comes from online channels such as meal delivery apps, websites, and phone orders. The value of the worldwide cloud kitchen market is expected to increase from an anticipated $56.71 billion in 2021 to $112.53 billion in 2027.

This shows how the food delivery market is also booming. The Indian market for cloud kitchens is expected to develop at a CAGR of 15.5% to 17.5% between 2024 and 2028, potentially reaching a value of USD 2.5 billion by the end of the forecast period.

The market is expected to expand as more people get comfortable using these services. In the next five years, the Indian cloud kitchen industry is expected to expand because of rising disposable income among the younger population and lifestyle changes.

What is a Cloud Kitchen?

The notion of a restaurant that offers solely delivery and has no dine-in areas, takeout counters, or other physical locations is called a cloud kitchen. It is a restaurant kitchen that does not have a traditional restaurant or dining-in facilities. Still, it instead just takes orders for delivery of the food. These are entirely different from traditional restaurants.

A fully-functioning kitchen for the preparation of meals also serves as a manufacturing unit. There is no posh infrastructure; wait for staff, tables, furnishings, and nothing else. The ability for customers to make their orders online via either the restaurant app or an online food aggregator app gives rise to the term “cloud kitchen.” These kinds of kitchens are often referred to as “ghost kitchens,” “black kitchens,” and “virtual kitchens,” among other names.

How Does a Cloud Kitchen Work?

The several cloud kitchens each have their unique methodology. But, all operational models of cloud kitchens have one thing in common: they only provide delivery of food items to the house.

Let’s go through an example to get a better grasp.

Let’s say you’re considering launching a venture called “Take Away & Eat.” Since there is no need to invest in expensive hardware, setting up a cloud kitchen is a breeze. Just a suitable cooking area remains to be located.

Let’s pretend you’ve outfitted a 10 ft by 15ft room with everything you need to make a meal. Customers may place orders online, and you can fulfill them as quickly as a few minutes after preparing the food in the kitchen, wrapping it in branded materials, and delivering it. Take & Treat is your brand name and how your food is marketed to consumers.

One of Cloud kitchen’s most appealing features is its ability to support several brands out of a single facility, allowing businesses to reach a wider audience for no extra cost.

The cloud kitchen is a one-of-a-kind tech-enabled space. Apps like Uber Eats, Grubhub, and DoorDash, which deliver meals to your home, are used. They achieve this by crunching massive quantities of data to determine what meals to make and when they will be most in demand in different areas.

With the advancement of technology, new services have evolved to centralize the numerous delivery applications in one place, making it simpler to place multiple orders and coordinate deliveries, and smart food purchase and production software to reduce food waste and boost per-meal unit economics. The potential for new developments in this field has barely scratched the surface.

What are the Benefits of Cloud Kitchens for Businesses?

While discussing the advantages of the cloud kitchen and why it is a revolution in the future of the food business, it is essential to note that the central emphasis of a cloud kitchen model is on food delivery. It is a delivery-only business without a dining area. Food is mass-produced daily at these establishments, which might be compared to factories.

Here’s why cloud kitchens are usually ahead of the curve when it comes to food industry rumors and gossip:

It has a Very Low Cost in Terms of Investment

Since a cloud kitchen eliminates the need to put up a front, there is no need to spend much money on interior design, tableware, and signage, nor is there any need to find a physical site. Suppose you want to lease a kitchen from virtual kitchen suppliers. In that case, there are no obligations for the building, inspections, or zoning compliances, so your startup expenses will be cut even more.

Because of this, you should need a few weeks to have your business up and operating.

There are Lesser Overhead Charges for Ghost Kitchens

Staffing expenses and compliance with increasingly stringent labor rules are significant obstacles for the hospitality industry. Cloud kitchens don’t need wait staff, so that they may take advantage of on-demand workers.

Ghost kitchens have a far lower entrance barrier than traditional restaurants. In theory, ghost kitchens may save money by cutting out the front of the home, where expenditures for seats and rent tend to be higher.

Using economies of scale may also help reduce the price of ingredients. One example is putting in bulk orders for many delivery-only brands using the same kitchen. Because of these cost advantages, online eateries are increasingly challenging brick-and-mortar establishments.

Dark Kitchens Offer Flexibility for Menu Items

Cloud kitchens allow restaurateurs to modify menu items and product mix more quickly than in a physical location. Also, the need to update and reprint traditional menus is eliminated thanks to cloud kitchens.

Even a slight change to the printed menus demands a new print run, which is inconvenient and expensive. But, the menus of cloud kitchens may be changed on the website/app in a matter of minutes at no additional cost. Cloud kitchen entrepreneurs may try out new dishes to see what their customers like.

For instance, if you run out of a crucial component or discover that the profit margin on a particular item isn’t high enough, replacing that item on the menu with something else using the online ordering system is simple.

Cloud Kitchen Business Can Increase Productivity

Ghost kitchens can function efficiently because they use purpose-built facilities and have streamlined their procedures to focus on delivery. The kitchen may be designed to emphasize the speed of preparation and the procedure of turning over meals to delivery drivers if many brands are being operated out of the same space.

Since they don’t have to deal with the hassles inherent in running a typical dine-in restaurant, cloud kitchen staff can get their job done quickly, efficiently, and without as much strain as usual. Possessing this trait may pay dividends and help you achieve your goals.

More Brand Exposure at Lower Marketing Spending

Instead of spending time and money advertising, virtual restaurant chains may quickly expand their customer base by partnering with food delivery services. The delivery app business model includes advertising costs for new virtual restaurant concepts. However, this may still work out cheaper than traditional restaurant marketing strategies.

You Can Have Real-time Alterations Based on User Input and Data Availability

Cloud kitchens are built with technology to adjust workflow, inventory, and employee schedules in response to customer preferences. Over time, the model may be optimized by adjusting the menu to meet customer needs and boost profits.

Having no physical storefront implies being more flexible in responding to market demands, such as adjusting hours or the menu. Making more informed choices about ordering and preparing meals may also aid in reducing food waste.

Because of the malleability of virtual eateries, it is also possible to introduce a temporary brand for a limited time. You might, for instance, capitalize on the cyclical demand for salads in the summer and poutine in the winter by launching a salad brand and a poutine idea, respectively.

You Can Run and Manage Different Brands at Reasonable Costs

As the running costs of a ghost kitchen are substantially lower than those of a restaurant that offers delivery in addition to the dine-in option, the dark kitchen company may serve high-quality meals at far more affordable prices. It gives enterprises operating in the virtual kitchen an advantage in the market and helps them earn more money.

Having separate restaurants for each brand involves a significant investment of capital. Dark kitchens, sometimes known as virtual restaurants, allow for the operation of several brands out of a single location with little overhead.

Who Uses cloud kitchens?

Popular restaurants of all sizes and types, from mom-and-pop shops to big chains, are increasingly looking to Cloud kitchens to help them grow.

These are a few examples of businesses using ghost kitchens to expand their online food delivery network.

Catering Agencies

Are you the owner of a catering business needing a cheap private kitchen with enough refrigeration and dry storage? The answer lies in the use of cloud kitchens.

Restaurants that are Designed for Delivery

Cloud kitchens geared for delivery enable you to fulfill orders without incurring additional costs or effort. Cloud to source orders and manage delivery logistics. Afterward, customers place orders through their smartphones and wait for their meals to be brought to them at home or the workplace.

Packaged Food Companies

When scaling up their operations, manufacturers of packaged foods may benefit significantly from cloud kitchens’ resources and storage capacity.

By using a cloud kitchen, market testing new food items and brand ideas may be done with little to no investment in time or money.

Meal-Preparation Service

Several enterprises that specialize in meal preparation only require access to a kitchen a few days a week. Virtual kitchens provide you with that kind of freedom.

Cloud Kitchen Business Models

The operation of a successful cloud kitchen business may be carried out in several different ways, ranging from the simple addition of an opportunistic delivery-only brand to the kitchen of an existing restaurant to the operation of a purpose-built commissary kitchen that houses several different brands.

Let’s take a deeper look at how today’s cloud kitchens operate their businesses.

Shared Cloud Kitchen Business Model

Operating a cloud kitchen as a company in and of itself is an excellent method to capitalize on the current surge in the market for food delivery services and generate a profit.

An increasing number of startup businesses are renting out kitchen space to be used by numerous companies as a kind of coworking area and incubator for food manufacturers. Our team at The Food Corridor has created turn-key shared kitchen management software to assist these aspiring business owners.

This business model calls for more focus on property management than food production. Suppose you want the companies who rent your kitchen space to be successful. In that case, you may need to get more involved in helping to advertise and offer services for those companies.

This model often involves the upkeep of the property, which may include providing services such as pest treatment, equipment maintenance, and security.

Combining a Traditional Restaurant with a Delivery Service

It’s been challenging to figure out how everything should flow. That’s version 1.0 of the cloud kitchen. Several restaurants are capitalizing on the growing popularity of online ordering and delivery by incorporating delivery-only brands into their current operations.

With this method, they can maximize the profits from their current workforce, inventory, supplies, and cooking space. Orders may be placed online and picked up at the store.

The restaurant’s delivery-only menu may be comparable to or vastly different from the regular menu. The same kitchen of an Italian eatery could also turn out a delivery-only pizza brand, or the establishment might expand its menu to include gyros for pickup or delivery.

This strategy may have some unintended consequences. Secondly, the kitchen isn’t designed to handle delivery so the orders may be pushed to the back burner at peak times. Having drivers from different services come and wait for restaurant orders might disrupt the dining experience. When the two halves of a firm collide, keeping track of all the orders coming in at once may be difficult.

Have Your Own Ghost Kitchen Space

A cloud kitchen exists when all contact points with customers occur digitally rather than at a brick-and-mortar facility. By simultaneously preparing many brands and catering to each one based on customer demand, dedicated cloud kitchens may alleviate some of the problems listed above.

One business concept is to operate a kitchen that solely serves delivery orders for one or more of these “virtual restaurants.” When a customer places an order, each virtual concept seems to operate independently. Still, all restaurants share a typical warehouse or food factory.

A licensed brand or idea, a commercial kitchen to rent during business hours, presence on a delivery app or chef-to-consumer marketplace, coordinated labor, delivery supplies, and ingredient ordering are all required to operate a successful virtual restaurant. A cloud kitchen may meet all the infrastructure requirements of a digital eatery.

How to Run a Cloud Kitchen Restaurant?

While there’s a lot of potential for profit in the cloud kitchen industry, getting started might be challenging. Let’s investigate what it takes to create and maintain a successful cloud kitchen eatery.

Taking Orders at a Cloud-Based Restaurant or Delivery Service

A cloud kitchen POS is essential for running a cloud kitchen since online ordering is the primary method of receiving orders. Orders may be taken over the phone, in person, or through different internet food aggregators.

As each online food aggregator offers its device for order-taking, it becomes difficult to accept and manage the orders. Managing orders from several locations at once is next to impossible without POS.

Processing Orders in the Cloud

Cloud-based kitchen orders are handled in the same way as regular ones. Each order is different since it may come from a different brand, and that brand’s flavor profile must be preserved.

Different chefs for each brand or separate kitchens for each brand’s crew working under the same chef may address this problem.

If you want to improve efficiency in the kitchen, consider purchasing a point-of-sale system that also includes a kitchen display system. The Kitchen Display System shows the order data to your personnel as soon as the order is accepted. The chef may mark the order as complete on the Kitchen Display System and have it packaged once it is ready.

Manage Your Partners, Suppliers and Appoint A Cloud Kitchen

Due to the absence of a dining area or takeout counter, a cloud kitchen can operate without wait personnel but still needs a competent culinary crew. The only thing your consumer will experience is your cuisine. Therefore, it better be perfect. So, it is crucial to financing experienced cooks who can choose the menu items and quickly prepare them.

It’s possible that multiple brands’ meals are prepared by the same chef in a cloud kitchen or that separate chef are assigned to each brand. Two or three chefs and a handful of assistants to run a successful cloud kitchen.

Otherwise, you’ll want delivery guys and kitchen assistance if you intend to have an in-house delivery system.

Finding the optimum mix of suppliers for a cloud kitchen is similar to finding them for a traditional commercial restaurant kitchen. The same supplier may be used for the essential ingredient across all your brands. At the same time, you can shop around for the other components.

Ensure you have good leverage in negotiating with the supplier before signing a deal.

Want to Run a Successful Restaurant Business? Try Moon POS

A sophisticated POS system for restaurants is essential for the smooth operation of any cloud-based eatery. From receiving orders to completing the delivery procedure, it simplifies the life of a restaurant owner. Point-of-sale systems may also manage sales and collect orders from various food delivery services. Point-of-sale (POS) systems allow businesses to track consumers’ purchases and preferences in real-time.

To aid cloud kitchen company owners in integrating their everyday cooking and billing activities, Moon POS provides an extensible online restaurant software solution. This will give them a solid foundation to compete with comparable and larger restaurants.

FAQs