The world’s most complex and diverse global industry – the food industry, is forecasted with a growth rate of 8.3% during the period from 2020 to 2025. With rapid growth and development comes challenges and risks into any business; with the global growth of the food industry is also facing challenges regarding food safety, sustainability, reduction of plastic product packaging, regenerative agriculture, and the list gets longer. Nowadays, Cloud kitchen business is increasing day by day!
Taste and sensibility are two things that one can never be certain about. They keep changing with a shooting star’s speed.
People today are driven by a sense of missing out. They always want to experience new things, explore the world, and experience a change of taste with various cuisines, flavors, and beverages.
There still lies a sense of denial in customers who want to connect with the food on a more personal level. There is a curiosity to know the place of origin of a dish or beverage, they want to be a part of the locality themselves to feel connected. This becomes challenging for the food and beverage (F&B) operators to stay up to the customers’ tastes and demands with their products. They have to maintain their standard of quality but, at the same time, make their service and product unique. They not only have to face competition with the same product maker but also with the global industry. Customers demand freshness and quality in their food; environmental concerns in their food services.
The digital market and technology are always growing with other sectors. Traditional owners are going digital due to the changes taking place around the world. Customers know how, where, when and what they want, and they’re just one step away from getting those services due to the access to digital platforms and services. Home delivery services have become quite a thing now. 24 hours services are provided by restaurants and cafes, and it is much more suitable for the customers to order online than dine-in.
In recent years, statistics have also suggested that 67% of restaurant owners would prefer to make future investments in cloud kitchens. The impact of 2020 created a major inclination towards food delivery services available through various local and global platforms.
What Is A Cloud Kitchen?
A simple definition of cloud kitchen is it is a type of restaurant that provides only take-aways, no dine-ins. It can run various outlets and cuisines under one kitchen.
It is also known as “virtual kitchen” or “ghost kitchen.” They create and deliver products with minimal overhead. Recent data indicates that cloud kitchen has grown from 35 billion dollars to 365 billion dollars in the last decade. Restaurant owners and entrepreneurs are moving to cloud kitchens as an ideal solution to meet the increasing demand in food delivery.
Cloud kitchen provides a better commercial place at a reduced cost which is advantageous for new food start-ups and other restaurants.
It allows food businesses to prepare several dishes with limited staff with minimal in-hand resources but maximum outlet facilities.
Traditional Kitchen Vs. Cloud Kitchen
Cloud kitchen adds a modern twist to the traditional kitchen with increased cost savings. Below are a few differences between the two.
1. Cloud Kitchen Is Hassle-Free
Traditional kitchen offers dining space, waiting area, kitchen, serving spaces, bars, etc., which utilizes a lot of space. More space means greater expenses and maintenance. Cloud kitchen, on the other hand, provides delivery or takeaway services only and hence can work in small spaces or private commercial spaces with low maintenance.
2. Start-Up Cost
Traditional kitchens require a higher start-up cost as compared to cloud kitchens.
Traditional kitchens require commercial kitchen equipment, good furniture, subtle ambiance, along with commercial space. Cloud kitchen requires only the kitchen equipment and some administrative features for the kitchen.
3. Profit Margins
Profit margin is the amount that a company earns after paying all the expenses. Cloud kitchens have higher profit margins as compared to traditional kitchens. Cloud kitchens have less staff, less maintenance, and less space, which reduces the rent, staff salaries and wages, and other utility expenses. It is vice versa for traditional kitchens.
4. Staff Requirement
Cloud kitchens require less staff and workers as compared to a traditional kitchen.
Traditional restaurants require chefs, cleaners, servers, hosts, bartenders, restaurant managers, etc., whereas cloud kitchens require only the chefs and a person to manage the order requirements. This is one of the most advantageous factors of the cloud kitchen because it saves money from the staff salaries, which isn’t the case in traditional restaurants.
Benefits Of Cloud Kitchen
1. Affordable Cost Of Capital
Cloud virtual kitchens require less capital investment (or start-up cost) because of the reduced space and less equipment, reduced ambiance, electric fixtures, etc. the only expense incurred is on cooking staff’s salaries, food ingredients, packaging costs, and electricity bills, and other minimal expenses.
2. Reduced Overhead Costs
Cloud kitchens do not have time-consuming administrative hassle, which is usually present in the traditional kitchen. Overhead costs like staff salaries, taxes, rent, and maintenance costs are reduced in the cloud kitchen.
3. Expansion Opportunities
Cloud kitchen helps to reach a restaurant larger audience as compared to the traditional ones because one can simply place an online order from their favorite restaurant. Several delivery apps and social media play a very important role in gathering and creating a network for any business start-up and its expansion.
4. Fulfilling Customer Needs And Delivery Expectations
Cloud kitchens serve various cuisines from one kitchen, and hence it becomes easier for the customers to order a different type of food from one place at affordable costs. The home delivery service makes it easy for the customers to serve their taste buds to a satisfactory level. The efficient logistics, easy delivery options, and fair delivery charges with multiple offers on the delivery apps make it more convenient for the customers to order food online.
Who Can Open A Cloud Kitchen?
Anyone from a home kitchen service to a small-sized food business or a popular restaurant can open or convert into a cloud kitchen. For small food businesses to expand, a ghost kitchen is an ideal solution.
A list of a few business types that can convert into cloud kitchens are
1. Home Food Providers
Home-cooked food is an ideal option for people who live on their own but aren’t good enough at cooking or do not find time for cooking on their own. A tiffin service can reach a greater audience with a larger radius when converted into a cloud kitchen.
2. Fast Food Restaurant
Fast food is often opted by people on a large scale. They’re located in crowded places. Converting the fast-food trucks into dark kitchens would reach out to a greater audience and will be profitable for the business and also convenient.
Food truck operators have an advantage. The truck itself, the wheels can help you reach different places and connect to a different audience at a larger pace.
Speculators or entrepreneurs who want to set up a new business venture in the food sector can consider a ghost kitchen as an ideal option that can be started with less capital and can earn more profit down the line.
Apart from the above-mentioned business types, caterers and food product testing services can also quickly turn into cloud kitchens.
A major takeaway from cloud kitchen is that it is affordable, easy to convert, easy to set up, has fewer expenses, and more profit. For someone who wants to get into the food sector and start their own business, cloud kitchen is where you can start. It will help you to reach a bigger audience, serve your food to areas where it is difficult to set up restaurants.
This was just an overview of cloud kitchen and its benefits. For more information and marketing strategies for cloud kitchen business owners, check our Workshop on demand from the expert Harry Kosato only on Book A Workshop.