You Should Know These 6 Cloud Kitchen Business Models and How They Work.

Cloud Kitchen
February 8, 2022

Our dependency on technology is rising rapidly; whether it is storing our photos, streaming movies, or even running a business, everything being digital has made our lives simpler.  The food we consume is also controlled by the eye-catching advertisements we see on social media pages and is often prepared in cloud kitchens. Whether it is a lip-smacking biryani or a delicious death by chocolate dessert you are craving, you are just one tap away from satisfying those temptations.

The concept of cloud kitchens was conceived about a decade ago, but it has boomed in recent years. A study has predicted that the global online food delivery market’s revenue might reach $137,596 million by 2023. You might be wondering what cloud kitchens are? How do they work? It’s your lucky day. We’ll help you understand everything about cloud kitchens in this article.

What Is A Cloud Kitchen?

A cloud kitchen is an industrial facility that is explicitly designed to produce food for delivery. These kitchens are also called ghost kitchens or shared kitchens. They house multiple delivery-only food brands or virtual restaurants under one roof, often operated by one restaurant, like an incubator, shared by various purveyors.

Cloud Kitchen

Why Should You Open A Cloud Kitchen And Why Opening A Cloud Kitchen Is A Good Idea?

How do cloud kitchens function?

Once the orders are received, the meals are prepped, packed, and immediately carted to their delivery locations by the assigned delivery person. How is this efficient? It reduces the overall costs incurred on the operations and instead focuses on providing the best food. There are more advantages to having a cloud kitchen, which are –

1. Lower real estate costs

Traditional brick-and-mortar restaurants involve a massive amount of continual capital investment. The owner has to squander money to build seating areas for customers, create parking areas, set up kitchen spaces, etc. In addition to this, the salaries of the employees are added to the costs. But when it comes to a cloud kitchen, the additional costs are deducted, as the only investment is the kitchen equipment and supply chain. You can concentrate on having enough kitchen space in a decent area near your target market. By taking advantage of economies of scale, you can also save up on the ingredient costs!

2. Opportunity to expand quick

Cloud kitchens do not need heavy investments to start. You can start small and grow quickly. Once brand loyalty is acquired from customers, it is easier to set up new branches in different localities. Faasos, the beloved brand of Rebel Foods, runs over 160 kitchens while operating other brands like Firangi Bake, Behrouz Biryani, and Oven Story.

3. Improved efficiency

Cloud kitchens ensure that maximum attention is paid to delivering quality products as factors which a traditional restaurant has to focus on are eliminated.

Ghost kitchens can operate very effectively using custom-built spaces and designing their processes specifically for their operations. Suppose you run several brands from one kitchen. In that case, you can also batch prep ingredients for several different menus and design the kitchen to prioritize the pace of preparation and the method of handing over meals to delivery drivers.

6 Cloud Kitchen Business Models To Keep An Eye On

Independent or Standalone Kitchen Model

Single Brand, Single Kitchen, No Storefront

Kitchen Size: 500 – 600 sq ft.

Things to know about the model:

  • Orders are received online.
  • Delivery only
  • Usually offer only one type of cuisine.
  • Primarily aggregator dependent

As the name suggests, these are independent kitchens, where one brand owns or rents a single kitchen location without offering a dine-in space. Many home chefs are choosing this model to grow their businesses.

Multi Brand Cloud Kitchen/Faasos Business Model

Multi-brand (cuisine), single kitchen, multiple outlets, no storefront

Things to know about the model:

  • Single kitchen used to operate multiple brands.
  • Every brand specializes in a single cuisine.
  • Delivery only
  • A blend of aggregator dependency and self-reliance for orders and deliveries

This model involves kitchens that are focused on supplying the most ordered cuisines (Biryani, Chinese, Pizza and Pasta, Burgers, etc.) in a particular area (10 km radius), where there are relatively fewer options serving the same cuisines. This model is brilliant because it has a very strategic outlook towards running cloud kitchen as a business, as it is based on data.

A firm starting something like this studies the demographics of the people residing in a neighborhood and decides what to start based on that analysis. It also provides individual establishments for separate brands, which in turn helps to keep operational costs low. It can be termed a specialized cuisine-based cloud restaurant, owned by one mother brand, which shares the same kitchen.

The Operator Managed Cloud Kitchens/Kitopi Model

Cooking and delivery are completely outsourced.

Things to know about the model:

  • Orders come in via the call center or through your own online channels and third parties.
  • The raw material is bought and stored by the operator.
  • Food prepared in a centralized kitchen
  • Final touches are added in your kitchen.
  • Picks and delivers to your customer

The ‘Kitopi’ model is involved in outsourcing everything, be it the call center operations, the kitchen, or delivery. So how does this work? The majority of the kitchen prep is almost ready to be served, but you can add some finishing touches after it comes to you, further delivering it to your customers.

cloud kitchen
Young man (Baker) holding digital tablet near a oven with some breads inside.

The Swiggy Access Cloud Kitchen Business Model

Aggregator owned, Multi-brand rented Co-working Kitchens, No storefront.

Average kitchen size  – Each kitchen is 100-500 sq ft within a larger kitchen

Things to know about the model:

  • Orders received through Swiggy.
  • Single kitchen, multiple restaurant ‘partner’ brand
  • Menu, kitchen equipment, and staff are taken care of by the restaurant.
  • Delivery and fulfillment are done by Swiggy.

This business model involves an optimally located kitchen with bare minimum infrastructures like gas pipelines, drainage, and ventilation systems. New businesses lease kitchen spaces and collaborate with Swiggy’s system of ordering, delivery, and menu intelligence to establish a restaurant. In short, the restaurant does all the cooking, and Swiggy takes care of the rest!

The Freshmenu Cloud Kitchen Business Model

Single brand, Single Kitchen, Multiple outlets with a storefront

Kitchen size – 1200 – 2000 ft

Things to know about the model:

  • Orders are received online.
  • Single kitchen, single brand
  • The menu keeps changing, which consists of seasonal dishes and bestsellers.
  • Delivery and takeaway
  • A mix of aggregator dependency and self-reliance for orders and deliveries

This is a mashup of a takeaway restaurant and cloud kitchen. It is very similar to a cloud kitchen, but it has a storefront. It lets customers walk in and witness the preparation of food if they wish to. The functioning is like a cloud kitchen for the most part, but with a ‘real’ window to interact with customers.

The Zomato Infrastructure services Cloud Kitchen Business Model

Aggregator owned, multi-restaurant brand, rented kitchens, with a storefront.

Kitchen size: 250-500 sq ft.

Things to know about the model:

  • Orders received through Zomato.
  • Single kitchen, multiple ‘partner’ restaurant brands
  • The restaurant decides the menu.
  • Zomato manages other functions.
  • Customers can walk into physical storefronts.

Similar to the Freshmenu business model, the Zomato model consists of a cloud kitchen and a storefront.  With the exception that it also provides their know-how about the comprehensive processes and order demand management with built-in kitchen equipment, fuelled by Zomato’s insight. These restaurants also have a storefront where customers can walk in.

Now that you know about different cloud kitchen models make sure you don’t make these mistakes when starting your own cloud kitchen business.

cloud kitchen business

The Final Word

With the pace at which the restaurant industry is growing, cloud kitchens are the next big thing. They bring the dream of serving good food closer and make it accessible by eliminating high rental and investment challenges. If you properly plan your cloud kitchen, implement the latest technology, and provide quality food and services, you will definitely ace the game!

If you’re looking to build your home chef brand, we have a great recorded workshop on-demand that you must check out!

 

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