The food and restaurant industry is evolving for the future. Higher startup costs, burdensome regulations, and slow business due to COVID-19 have left many restaurants struggling to keep their doors open. Cloud kitchen startups have emerged as one of the most innovative solutions to this challenge.
What is a Cloud Kitchen?
A cloud kitchen is also known as a dark kitchen, ghost kitchen, or virtual kitchen and refers to a commercial space that prepares food and delivers it without offering any dining space. Unlike a brick-and-mortar restaurant, a cloud kitchen startup allows you to design and deliver food with minimal overhead.
According to recent statistics, the food delivery orders from cloud kitchens increased by more than 150% in 2020. What’s more, research from UBS shows that the food delivery market will grow by 10X over the next decade. That is why more and more restaurant owners are showing interest in understanding this new concept and asking questions such as “are cloud kitchens profitable?”
What Is a Cloud Kitchen Business Model?
The Cloud kitchen business model has numerous variations, and here is a brief description of them all for you.
A Restaurant Owned Cloud Kitchen
An already established restaurant business owns this type of cloud kitchen. The company offers a dine-in facility for walk-in customers. However, now you can incorporate a cloud kitchen business model and offer food delivery to expand your outreach to the customers in your locale.
Third-Party Commercial Grade Cloud Kitchen
Skip the hassle of property hunt, massive risk, and capital investment for equipment. A cloud kitchen business model allows you to use an existing commercial-grade kitchen facility to prepare food. However, you still have to bear certain costs, including
- Rent
- Staff (limited)
- Maintenance
- Delivery assistance (mostly third-party app)
- Integration of technology such as automated restaurant ordering system
- Utilities
Delivery Only Cloud Kitchen
Now you can skip the need and expense of a brick-and-mortar facility to serve food. You can save all that money and start the restaurant business at a minimal cloud kitchen cost.
Whether you are opening your cloud kitchen or using someone else’s kitchen space, your upfront investment and overheads will be considerably lower than a fully operational restaurant with dine-in services.
Cloud Kitchen cost eliminates the following expenses.
- No need to hire front-of-house staff, including servers and hosts
- Aesthetic, décor, and lighting
- Bathroom facilities and toiletries for the guests
- Furniture and cutlery for the bar, dining room, and waiting area
- Electricity required to light up all that square footage
Shared Cloud Kitchen
Another cloud kitchen business model allows you to share a single commercial-grade kitchen with several food preparation businesses. You can all create a parent company while sharing a single kitchen to create your signature cuisines.
This type of cloud kitchen may be a shared kitchen between 2 individuals or multiple brands to share the cost of cloud kitchen requirements.
How Much Does a Cloud Kitchen Cost, and How Long Until It’s Profitable?
Unique restaurant ideas such as loud kitchen startups provide food franchises and eateries with a perfect launching pad to get your food delivery business up and running in no time. Two of the leading cloud kitchen requirements are equipment and chefs. Once you have these two in, you can promote your service and see the orders flow in.
However, the estimated kitchen cloud cost may vary by the size of the business and the variety of food delivery services you are offering. The cost of equipment and labor will depend on the size of your food prepping operations.
Is Cloud Kitchen Profitable?
Cloud kitchen offers you a perfect revenue generation model, whether targeting your existing customers at their homes or entering a new market. Once you start, you will break even on your initial investment as soon as six months, whereas a brick-and-mortar restaurant takes several years to accomplish the same goal.
Cloud kitchens are certainly profitable and require minimum investment. The Cloud kitchen business model will allow you to expand your outreach to new locations and markets. This, in turn, will increase the revenue as more orders start flowing in quickly.
A Tip to Implement Cloud Kitchen Business Model
Cloud Kitchen comes with myriads of benefits for both businesses and customers. However, here are some of the advantages the cloud kitchen will experience right from the start.
Incorporating Automation Technology
Thanks to the evolution of social media and the Internet of Things (IoT), the food and restaurant industry leverages technology to increase its efficiency. Automation and technology play a vital role in ensuring the efficiency of your restaurant operations while fostering the growth of a cloud kitchen startup.
Cloud kitchen relies heavily on the increasing volume of orders coming through the online food ordering portals. This makes the implementation and integration of cloud kitchen software an ideal solution. The software enables faster food order processing and optimizes your food production while minimizing efforts.
Suppose you are considering upgrading your existing kitchen to a cloud kitchen or simply combining the two to offer a hybrid service. In that case, you must use an automated restaurant ordering system and cloud kitchen software for seamless order management.
A robust POS solution is another one of the vital cloud kitchen requirements for streamlining your internal operations. As more restaurants shift towards a cloud kitchen business model, the advanced technology will also evolve to meet the industry’s demands.
The future of cloud kitchen-based restaurants seems brighter. Using the right tactics with the right technology will help you set up and run a successful cloud kitchen restaurant.
Conclusion
COVID-19 certainly impacted every sector you can think of, but it hit the restaurant industry the hardest. This brought in the need for innovation and gave birth to the cloud kitchen concept. If you are a restaurant struggling to bring in walk-in customers, you should look into the cloud kitchen business model.
This will help you enter a new market and retarget our existing customers by enticing them into ordering food from home. This is something that does not require months to transpire. You will start noticing a considerable boost in your revenue within weeks.
As you start setting up your cloud kitchen, you will need a partner to advise you on the best possible solutions and someone to help you automate your operations. Whether you are an existing restaurant expanding into a cloud kitchen market or a cloud kitchen startup, GRUBBRR can help.
Speak to our team at GRUBBRR for advice on all your business needs.
