End-to-End Guide for the Cloud Kitchen Business – Be 100% Prepared Before You Start

What Is A Cloud Kitchen?

To begin with the actual Guide For Cloud Kitchen however here’s a short introduction on cloud kitchen. A Cloud Kitchen is a backend operated kitchen that accepts incoming orders only through online ordering systems for home delivery, having single or multiple brands setup in the same kitchen with no dine-in facility.

Starting a cloud kitchen is a great idea certainly even in a low footfall area, since there is no dine-in facility. These are also termed as Virtual Kitchens or Dark Kitchens or Ghost Kitchens or Delivery Kitchens. It can be a multi-cuisine operated restaurant kitchen or a particular specialty cuisine, the major standout feature is its operated with 100% focus online.

Guide For Cloud Kitchen : Future of Cloud Kitchens!

With an immense increase in use of technology by the end user, there is a swift rise in use of food ordering platforms like Zomato, Uber Eats, Swiggy and more. The shift to delivery-only model has become possible with this substantial growth of use of food technology apps.

Let’s think about a customer for a while now for instance dining out Research shows a customer steps out of house 70% of times because he was hungry & 30% of times when he wanted a casual outing experience. When food ordering is available with an ease of 3 clicks on phone, he would skip out dining out 70% of times now. Dining out would be more of an experience than the food.

Millennial’s drive this trend with disposable income demanding digital having phone-friendly solutions. The Next-generation will make it more pronounced, who have grown-up with the internet and smartphones enter the E-Marketplace food-tech. Looking further forward, advances in kitchen automation, drone delivery & the continued growth of the digital economy seem to give cloud kitchens an advantage over age old traditional buying methods.

Rise To Digitization

This gives a rise to cloud kitchen concept in hospitality industry with maximum number of seats reserved by the technology-beings. In 2020, because of the pandemic Novel Corona virus, technology-beings have shifted their businesses online, with work-from-home being the new normal. Online food ordering has further seen a hike not only in corporate areas but now in residential areas as well.

Guide For Cloud Kitchen : Pros & Cons of Starting A Cloud Kitchen

PROS

1. Technology Driven Business
2. Scope to multiply revenue by just adding multiple cloud brands in same kitchen.
3. Operating with a low monthly operating cost, low rent.
4. Lesser risks of loss, with easy-to-operate SOP’s
5. Better online visibility
6. No on table service hassle
7. Lesser Staff to operate
8. Lower Capital Investment. No extra investment on interior or look-n-feel
9. Scope of designing a smart kitchen with custom-made heavy duty and low-cost equipment.
10. Great online feedback mechanism. 100% focus on food, delivery & packaging for a best customer experience. 
11. With great branding positioning and concept, quickly noticeable in market.
12. With great food quality and taste, quickly gaining loyal customers.
13. Access to user data and real-time adaptability
14. Digital Awareness without spending very high on online marketing

CONS

1. Dependency on food ordering online aggregators for sales
2. No physical customer interaction
3. (Avoidable) Ignorance in maintaining kitchen hygiene
4. High dependency on logistics support
5. (Avoidable) Higher risk on online reputation and sales, with a few negative feedback.

Guide For Cloud Kitchen : Types of Cloud Kitchen Models

There are very new concepts of cloud kitchen that are emerging day by day in the Indian market. Following are all 7 types of models, you can look for as per your budget and concept that fits best to you.

1. Standalone Cloud Kitchen
2. Cloud Kitchen Chains
3. Shared Cloud Kitchen
4. Restaurant plus Cloud Kitchen
5. Home Based Cloud kitchen
6. Co – Working Facility Management Cloud Kitchen
7. Super XL Cloud Kitchen

Guide For Cloud Kitchen : Standalone Cloud Kitchens

Standalone cloud kitchen is nothing but a single location operated business with single/multiple brands running under the same facility. This is the way most of the startups get involved in the cloud kitchen business, with only starting with single location. The Concept of Multi Brand Cloud Kitchen was first established by DNY Hospitality in Year 2013.

You also need to refer to the 5 ultimate hacks to start a cloud kitchen under 5 lacs.

Cloud Kitchen Chains

Investors with high budgets to infuse in the concept of cloud kitchen business, usually start with multiple locations/cities. There are many food brands who have started with standalone model and now have become a big size, multi-location/ multi city organization.

Shared Cloud Kitchen

If you are new to the hospitality industry and don’t want to invest in your own facility and setup of a kitchen, sharing cloud kitchen is the best option for you. This is one of the ultimate hack we suggest, where you don’t invest anything in setting up the place and get a ready cloud kitchen at a fixed Rent + Maintenance. What you invest here is only on creating your brand and marketing it. However, we have also seen cloud kitchen chains being operated in shared cloud kitchen concept and expand quickly.

Restaurant kitchen plus Cloud Kitchen

Many existing restaurants/cafes/ QSR’s in India are working on this concept. This is a concept where you have a physical location where customers walk in, but there are multiple other brands being operated under the same premises kitchen. As per the restaurant interiors and brand language, you can only find the primary brand. A Very famous and legendary brand “Hardeep Punjab” can be a right example of this concept. Hardeep Punjab is a 35 Year + Old North Indian brand which is seen in the front end, but also has two other brands “Flavors of Punjab” and “Red Bell-pepper” running online under the same premises. Which a customer would not find it from the interiors and restaurant setup.

Home Based Cloud Kitchen

Home makers can now operate their brand from home, with a very short and sweet menu, minimal capex & running cost. There are few brands who are working on a similar concept like “Sugarlipss”. Sugarlipss is a unique home-based cloud business for premium cakes & bakes. With having very low capex / Opex cost this concept gives a very High ROI within 6 months. Home based cloud kitchen can also be a one man show.

You may also read, easy process to start a home based kitchen business

Co-Working Kitchen Facility

Mostly with growing awareness, now businesses have started to adopt co-working, which is not only a shared cloud kitchen concept but a very unique way of real estate investment.

Co-working kitchen spaces are large kitchen infrastructures setup with all Equipment and utilities required to run multiple Cloud kitchen businesses. These are sectioned as per different cuisines, so can be used by multiple restaurant brands. This concept can be setup anywhere from 1000 sq ft – 2500 sq ft space with 5 – 12 restaurant brands running comfortably. In this concept we’d help you setup the facility and lease out to multiple Restaurant Brands. Source of revenue is fixed Rent and revenue sharing.

For Small business owners, it’s a win-win model because they would just plug-N-Play their brand into ready space. Here the commercial investment for them is almost negligible, however they deal in with shared revenue / fixed rent with facility owners.

Super XL Cloud Kitchens

This is again a brand-new concept for cloud kitchens, where you need a minimum of 1000 square feet space with 10 plus brands in different cuisines running under single entity.  In this concept your one-time cost of facility setup and brands is higher, but you have multiple sales-channel for revenue.

What is the Investment Required for a Standalone Cloud Kitchen?

This comprehensive Cloud Kitchen guide breaks down the investment for you. For a standalone setup—be it a single or multi-brand cloud kitchen—in a 300 square feet space, you'd require an investment ranging from 6 to 8 lakhs. Interestingly, if you opt for multiple brands, the investment increases by 20–30% per brand, not multiplied by the number of brands. Unlocking ultimate hacks to set up a Cloud Kitchen under 10 lac rupees, DNY Hospitality, led by Yash Dalwani, provides invaluable assistance in making your venture cost-effective and successful.