Why should you start a cloud kitchen?
14 Oct 2020, 14:39
Owing to the pandemic’s effects, the world has been witnessing an immense change in the way people dine. With restaurants being closed for months (and some entirely), and the hesitation still being present despite all the necessary precautions being taken after the “Unlock” procedures, many have resorted to order food to their homes instead. With the focus set on delivery, it is even more essential to be aware of the benefits and pros of a “cloud kitchen”.
A cloud kitchen, alternatively called a ghost or a dark kitchen, is a “virtual restaurant” – a unit of space being used to prepare food with zero physical space for dining in, making it delivery-only, which means that food can only be ordered online, via either food ordering platforms like Zomato or applications specifically designed for the cloud kitchen, or by traditional ways of ordering food home such as a phone call. There can also be multiple brands (often owned by the same companies) working under one roof, which is an advantage of the cloud kitchen concept in itself.
In many ways, the trends that the pandemic has reflected shows us that cloud kitchens are the present and the future of the food industry.
Listed below are a few reasons as to why you should open a cloud kitchen, owing to its various advantages:
1) Labour force – less in number, more in efficiency.
Social distancing and other precautions in mind, a labour force of lesser people is much better as compared to a huge one, guaranteeing safety and adequate implementation of protocols. With the need for a physical dine-in space eliminated, so is the cost for anything that enables a conventional “dine-in experience”. In a cloud kitchen, there is a sole focus on only one product – the food itself. There is absolutely no requirement for waiters and delivery boys (unless the kitchen is not tied to delivery services), which means that the focus on food does call for great chefs who can prepare quality food, as it is the only product being provided, making it essential to have the end product as near-perfect as possible. Thus, with the lesser number of people working, cloud kitchens prove to be easier to manage, especially during the times of the pandemic, in which the benefits amplify.
2) Lower real estate costs save a lot of investment.
Most businesses have taken a hit to their pockets due to the pandemic. With unemployment growing and “job security” being taken away, one can clearly understand why a person would be hesitant while investing a large sum into a business, but luckily, cloud kitchens have a much lesser initial investment. Cloud kitchens can be set up anywhere as long as there are efficient delivery services present. Unlike conventional restaurants, it does not require a “prime” or “grand” location to attract customers. Such prime locations have extremely high rent prices, making the investment much higher as compared to cloud kitchens. These costs also put a limit on scalability, whereas cloud kitchens place zero barriers.
In cloud kitchens, is no requirement to come up with lavish interior designs and expensive furniture unlike traditional restaurants. It is also important to keep in mind all other costs of running a large one, such as ventilation. However, in cloud kitchens, the only need is to have good chefs making good food – and that’s all. This contributes to a great reduction in the operating cost of a cloud kitchen,.
3) Easy Expansion & Scalability
This year, Rebel Foods, the cloud kitchen company behind major cloud kitchens such as Faasos and Behrouz raised $50 million from Coatue, a US firm. This comes after last year’s funding of $125 million as the company continues to expand its business in various countries, such as Thailand, Brazil and in the Middle East. For instance, with partnership, cloud kitchens can expand into other international markets through collaboration. Established brands can also manage to expand easily through cloud kitchens as the cost of setting up one is drastically lower as compared to traditional restaurants.
A cloud kitchen can easily expand into a great network of cloud kitchens operating in different areas of a particular city. For example, if one is placed near you in Patel Nagar in New Delhi, it will mostly serve customers within a particular defined radius. Placing one in Tilak Nagar, keeping the lower investment in mind, would allow you to build your brand name across the city and serve a larger number of customers. One could even think of expanding to Chennai, and even Jakarta!
As the pandemic changes food trends globally, cloud kitchens stay on top of all of them.
4) One Kitchen, Multiple Brands
In the point above, we have talked about Rebel Foods, which operates various brands (such as Faasos and Behrouz) under the same cloud kitchen. Behrouz Biryani, as the name suggests, is solely focused on making quality biryani, Fasoos on delicious wraps, whereas Oven Story prepares pizzas.
However, despite there being this concrete separation of branding, they run in the same place!
With cloud kitchens set in place to run multiple brands (most of which are owned by one single company), there is a tremendous amount of investment saved, due to there being no need to add additional staff (if the present one is skilled in all dishes) or fancy infrastructure.
This “separation” of brands makes customers associate one brand with one product, giving it complete reputation in providing excellence in the sole product it creates. This creates an advantage which is unlike any other, the fusion of multiple businesses operating in the same fashion in the same location, following the same universal standards set by the company.
The trend that we see repeatedly is the association of one brand with one particular dish. For example, “Pizza Hut” and “Domino’s Pizza” are mostly known and reputed for their pizzas. If they were to start selling burgers or chocolate, it is anyone’s guess how much they would sell. Thus, this ease of diversifying into multiple brands under the same cloud kitchen does wonders for marketing.
According to Real Foods, using this strategy of “one kitchen, multiple brands” has allowed them to generate 5 times the revenue while only increasing cloud kitchens by 30 percent.
5) Sole Focus on the Product – FOOD!
With mostly all operational costs being eliminated, the only thing that the cloud kitchen is responsible to present to their customer is the biggest product itself – the food. Since the customers have no relation to the infrastructure, ambience, or the “vibe” of these virtual restaurants, the only factor that would come into judgment is the quality of the food – the hygiene (which is now more important than ever), packaging and finally, the taste.
It is anyone’s guess that if there are less things to worry about, the SoPs and precautions that are to be followed during the pandemic would be much easier to implement perfectly.
Thus, there is only one, albeit quite a decently big expectation on providing food of immense quality. This is much easier to deliver (pun intended).
6) The Advantage of Third-Party Food Aggregators
Third party food aggregators, such as Swiggy, Zomato and Foodpanda allow and ensure a suitable amount of visibility and reach for the cloud kitchens within a defined radius. Thus, it is extremely advantageous for your cloud kitchen to be listed on these platforms, alongside having its own delivery service to increase the amount of sales. With most of the delivery being taken care of, the cloud kitchen, of course, must also have a strict procedure of defined preparation time, as the quickness of delivery is also a major factor in the building of the brand.
In conclusion, as technology grows and evolves more than ever as digitization in India has taken off and as dining and lifestyle trends change due to the pandemic, there will be and already is a growing focus and switch to the cloud kitchen model. The mobility, delivery app integration, ease of expansion and a much lesser quantity of upfront investment being needed make it an extremely attractive and profitable option. Several challenges to food business have been eliminated solely due to the concept of cloud kitchens and the ease of setting one up is unparalleled, even during the pandemic ties.
The future of food is shining in front of our eyes. It is time to cease the opportunity and switch to delivery! (Make sure you wear a mask, though!)