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Do you always crave good food?
What do you do if you have food cravings?
Order online, right?
But locations are always a huddle between your cravings.
What if you have cravings for original Spanish churros and chocolate sauce? But, how will you get it in the city of Rajasthan, India?
Readers, thank the digital age and technological advancements.
With the internet, the online way has become a faster source of earning revenue.
And so the food market is also gaining momentum, and traditional outlets are transforming into cloud kitchens.
This blog is going to be the be-all-end-all post on the topic of cloud kitchens.
If you are a foodie and want to become a food entrepreneur, this blog is a must-read.
Let’s start with understanding cloud kitchens.
About Cloud Kitchen?
With no traditional dine-in option, a cloud kitchen—also referred to as a virtual kitchen, ghost kitchen, or delivery-only restaurant—prepares and delivers food only for online orders. Cloud kitchens don’t have a physical storefront; instead, they work out of a large kitchen facility and reach customers through online ordering and delivery systems.
Due to its lower overhead expenses, increased efficiency, and flexibility, the cloud kitchen business model has grown in popularity in recent years. Cloud kitchens can cut costs on rent, utilities, and staffing by doing away with the need for a physical storefront, freeing up resources to concentrate on producing high-quality food with prompt service.
To reach consumers, cloud kitchens frequently collaborate with online food delivery services like Uber Eats, Grubhub, or DoorDash. These platforms offer cloud kitchens access to a large customer base as well as marketing and promotion opportunities to draw in new clients.
The growing demand for online food delivery and the convenience it provides is particularly well-suited to the cloud kitchen model. Additionally, since the business is not constrained by the physical location and constraints of a traditional restaurant, it permits more experimentation with various cuisines and menu items.
The Cloud Kitchen Market: How Big is it?
This year, the global market of online food delivery services is predicted to grow from $128.32 billion to $143.05 billion at a CAGR of 11.5%.
In the year 2022, the online food delivery market only in India reached $ 7.4 billion.
Not similar to traditional kitchens, the cloud or virtual kitchens make food solely for delivery or takeout not for dine-in.
Cloud kitchen demands minimal investment and open opportunities for multiple brands to operate concurrently under the same roof.
Since the year 2016, the delivery industry is seen as the fastest-growing space in the food sector. Before COVID half of the Americans were ordering food delivery almost once a week.
But during the pandemic things got different. Due to the lockdown and everything restaurant owners had to look for a way to operate properly. That is when cloud kitchen models became a hit.
It has become so hit that there are popular cloud kitchen brands now like Fasoos, Behrouz, Oven Story, and more.
Companies like Zuul Kitchens and Kitchen United have created virtual food halls all around Chicago and New York City, where diners can order from their local favorites all at once.
Even big celebrities like Wiz Khalifa and Rachael Ray made an entry into the Cloud Kitchen business with HotBox and Rachael Ray to Go.
Today, in the US alone, there are hundreds of cloud kitchens running successfully.
How To Start Cloud Kitchens
For starting a cloud kitchen, you have to consider a lot of things. Here, we are making things easy for you.
We gonna mention it in detail about all things so make sure to read it till the end.
To start a cloud kitchen of your own, you have to select three prime things viz-
- A cloud kitchen model
- Operational consideration of cloud kitchen.
- Technical Requirements of Cloud Kitchen
Choosing Cloud Kitchen Model
1. Standalone Kitchen
This is one of the popular cloud kitchen models that run on a single idea where only one or two food items are provided.
Think of a pizza or burger joint where the menu only contains less than 10 items.
2. Cloud Restaurants
Cloud restaurants are usually brands that function inside a restaurant. It means the facilities of existing restaurants are used to work around a range of food menus. The majority of these kitchens are listed on third-party food aggregators apps like Dunzo, Ubereats, and Grubhub.
3. Co-working Cloud Kitchen
In the co-working cloud kitchen model, there are individual kitchen units of each brand. All brands operate under one kitchen space. Since there are many brands under one roof, the kitchen size also will be very large with ample space to rent out to multiple restaurants.
4. Aggregator Cloud Kitchen
The aggregator kitchen model is kind of an extension of the coworking cloud kitchen system. The main motive of aggregator cloud kitchen is to offer facilities to restaurants that have to make food for delivery only.
Operational Considerations of Cloud Kitchen
It is right that cloud kitchens don’t need any high-end location or space to match the users’ vibes. But it should be closer to the targeted group. After all Ghost Kitchen is all about making faster deliveries.
License is always considered an important part of any kind of business. In the case of clod kitchen, customers can not personally visit the outlet to ensure food hygiene and safety so certification and license will be a big help.
Cloud kitchens require specialized equipment and technology to manage orders, track inventory, and monitor food safety. Investing in quality equipment and technology to meet the demands of your busy kitchen and help streamline your operations is key
Cloud kitchens require fewer staff than traditional restaurants, but it’s important to hire experienced chefs and kitchen managers who can meet the demands of a changing environment. It’s also important to provide ongoing training and support to ensure your employees are prepared for any challenges that may arise.
Technical Requirements for Cloud Kitchen
1. Cloud-based software (POS System)
A cloud-based point-of-sale (POS) system is essential for managing orders, inventory, and sales data in real time. It’s important to choose a software provider that can integrate with other systems, such as accounting and inventory management software.
2. Online Ordering Software
Online ordering software is a crucial component of any cloud kitchen, as it enables customers to place orders remotely and ensures that orders are accurately processed and fulfilled.
Now, when you collaborate with a third-party integrator to host and manage your menu and deliveries, you end up giving them 12-18% of online orders and around 18-25% for deliveries. So, it gets crucial to have your own online order software like a web or mobile app. The best part is this software can be linked to your POS.
3. Delivery management software
Delivery management software is essential for managing delivery logistics, such as tracking drivers, optimizing routes, and providing real-time updates to customers.
4. POS hardware
In addition to software, cloud kitchens also require POS hardware such as tablets or touchscreens for order-taking and payment processing. It’s important to choose hardware that is reliable and user-friendly, and that can integrate with other systems.
5. Inventory Management System
Inventory management is a critical component of any cloud kitchen, as it helps to track and manage the flow of ingredients, supplies, and finished products. The inventory management system should provide real-time tracking of inventory levels, including alerts for low stock levels and automatic re-ordering. The system should provide accurate cost tracking for each ingredient and menu item, allowing for better analysis of food costs and menu pricing.
Recently, Indian Government introduced ONDC – Open Network for Digital Commerce, which allows small to medium businesses to provide their services directly to their customers. ONDC removed middle man or third parties from the chain and ultimately helped both parties in reducing costs.
Now that the ONDC platform is on the market, your path to entering the cloud kitchen business has gotten easier. ONDC stands for Open Network for Digital eCommerce. It is a network based on an open protocol launched by the government to standardize operations like cataloging, inventory management, order management, and order fulfillment.
With ONDC, small businesses, and startups would be able to use any kind of ONDC-compatible application instead of being governed by specific platform-centric policies.
How Extern Labs Will Help You Launch Your Cloud Kitchen Business?
As an IT and software service-providing company Extern Labs will be of great help in all your necessary technological infrastructure and support that is essential for the success of the business, be it the inventory management system, POS software, or delivery management system.
When you invest your time and money in cloud computing service-providing companies like Extern Labs, you will realize that they have experience in building cloud kitchen apps. Extern Labs have the technical expertise to scale your brand.
We have tried to cover everything related to cloud kitchens in this article. This knowledge is enough to get you started with your cloud kitchen business.
The only thing that is left now is to reach out to Extern Labs and kick-start your journey.