What is Cloud Kitchen? Advantages and Disadvantages of the Concept
advantage and disadvantage of cloud kitchen

Cloud computing has come a long way since its inception almost a decade ago. Once limited to the corporate world, cloud computing has been used in nearly every aspect of day-to-day life. It is used to store images, stream online movies, and even operate businesses and, now increasingly used to order food online. There are different types of restaurants but In this article let’s try to understand the concept of cloud kitchen and the advantages and disadvantages of cloud kitchen.    

The Cloud kitchen, also called ghost or dark kitchen, is a delivery-only food business with no brick-and-mortar dining space. Since the client order and interactions happen through a third party food aggregator app or the restaurant’s app, cloud kitchens are the application of cloud technology in the food business.

The global market size of ghost kitchens was valued at over 40 billion U.S. dollars in 2019 and is expected to grow in the future.

Ghost kitchen global market
Image Source: Valuates Reports

How do Could kitchen operate and the reason for their rapid growth?  

  • The two main reasons for the growth of Could kitchen are the ever-increasing reach of the food aggregators and the fear of a pandemic, which has led to a steep decline in the dine-in food business, which indirectly led to the growth of the food delivery model.
  • A cloud kitchen uses food aggregators and online apps to take food delivery orders and have cut off the dine-in space business that would have been unimaginable a few years before.
  • A cloud kitchen may operate many brands or digital restaurants within one roof by sharing the space. Imagine a vast storehouse with multiple stations (mini-restaurants) of stainless-steel preparation stations, hood vents, burners, ovens, and basins, each with its own set of orders flowing in from customers. 
  • The menu options in the Cloud Kitchen are designed to be delivered with consistent meal quality. All of this is done to get food out the door and into customers’ hands as quickly as possible.
  • Technology and a cost-effective business model have created a conducive environment for growth in the Cloud kitchen business, which will continue for a while. However, all the business has its pros and cons; hence you should consider the benefits and challenges of a cloud kitchen before opening one.  

Advantages of a Cloud Kitchen     

Cost-effective business model

The most significant benefit of the cloud kitchen business is eliminating costs such as restaurant space, decor, dining tables, chairs, high-end cutlery, and electrical fixtures. Cloud Kitchen functions on a price effective business model with expenditure limited to food ingredients, kitchen equipment, and minor maintenance costs such as energy bills.

Greater Expansion Possibilities

Compared to opening a traditional restaurant, creating a cloud kitchen will not cost you a fortune. And after you’ve constructed your virtual kitchen, it’ll be even easy to expand. Cloud kitchen businesses don’t need to rent or buy a lot of space when they grow; hence scaling up is possible with low investment.  

Elimination of overhead cost

Unlike a traditional restaurant, you won’t have to bother about restaurant design, extra parking space, or serving personnel. These extraneous expenditures are reduced in a cloud kitchen, lowering your overall cost dramatically.

Flexibility

A cloud kitchen business model is flexible and can change the menu; cuisine’s themes much easier than the dine-in restaurant. If a cloud kitchen finds some menu item not very profitable, the same can be swapped without reprinting the menu and avoiding extra cost.

Disadvantages of a Cloud Kitchen

Low-profit margin

A cloud kitchen business does not have a dine-in business hence is dependent on the delivery model business. Most of the cloud kitchens collaborate with food aggregators to get food orders. Food aggregators charge anywhere between 20-30% of commission, which eats heavily into a restaurant’s profitability. 

Increased Competition

While there is no denying the convenience of running a cloud kitchen and the numerous benefits it provides, this has increased competition as many players jump into the market expecting easy profit and, in return, increasing the competition in the market.

A lack of interaction with customers

The ambience and interactions with the restaurant staff are two factors that contribute to consumers being more engaged to a restaurant where they routinely dine. In a cloud kitchen, these aspects are absent, and clients have limited or no interaction with the cloud kitchen.

To summarise, the restaurant business has gone through significant changes. Cloud kitchens are a relatively new concept; however, they help fill a critical market gap that traditional restaurants previously ignored.

As singletons shift to big cities, and food delivery business is here to grow, opening new avenues for cloud kitchen business. Hope you find the article on advantages and disadvantages of cloud kitchen fruitful.

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