A remarkable transformation had taken place in the Indian technology industry after the pandemic. Due to it, the delivery-only model has accelerated to a great extent and cloud kitchen has played an important role in it. According to an Economic Times article, “The number of cloud kitchens in India has shot up since the pandemic. A Redseer report estimated the size of the market would touch $3 billion by 2024, from just $400 million in 2019”. Today, both small and large restaurants have started online food delivery services due to cloud kitchen which has indeed made online food delivery the latest trendsetter in the culinary industry. Read below to know what is cloud kitchen and how you can open one in India.
What Is Cloud Kitchen?
A Cloud kitchen is a kitchen that has no physical outlet or a dining area. They are also called the virtual kitchen, takeaway restaurant or ghost kitchen that accepts food demand via electronic medium, through calls or online food aggregators. Although the food delivery concept was there before pandemics, cloud kitchen popularity grew as it proves more lucrative. Cloud Kitchens witnessed huge demands as people got stuck in their homes and missed their favourite food. While those kitchens served their purpose well then, it still continues to be a favourite food delivery option for the masses.
How does cloud kitchen work?
As discussed, cloud kitchen works on the delivery-only model which means, they take orders from their individual website, through customer calls or delivery apps such as Zomato and Swiggy. Since they deliver food directly from the kitchen rather than having a physical outlet, the owners save a lot of money that could have otherwise been needed for building a restaurant-like facility. All the cloud kitchen owners need is a properly and hygienically built kitchen, chefs for preparing food and a good digital network for food delivery orders.
Why should you consider opening a cloud kitchen in India?
Affordable and low overhead costs
Unlike restaurants or physical food joints, a cloud kitchen requires less infrastructural setup costs. It does not need any huge expense for attractive furniture or a prime location to invite customers. Furthermore, a cloud kitchen does not require waiters, service taxes or maintenance costs, which traditional kitchens have to pay.
Easy to expand
Since cloud kitchen requires fewer set-up costs, it is easy to expand as per owners’ preference and location availability. They are the virtual kitchen and depend completely on websites and apps which makes cloud kitchens easy to expand.
Low labour costs and high-profit margin
Cloud kitchens are more profitable as compared to physical food outlets because of less overhead costs. Even labour requirements are limited as compared to the traditional kitchen which makes profit margin high.
How to open a cloud kitchen in India?
Choose a good location for establishing kitchen infrastructure
Although cloud kitchen does not have to be located in prime or expensive locations, you must look for some basic needs such as water availability and proper sanitation. Before choosing a location, you must also research customer demographics and the type of food loved by people around. It will be better to choose a location that is surrounded by people who demand the online food delivery you will be offering rather than a completely isolated place with less population.
Establish an online food delivery model
After you have chosen your cloud kitchen location, you must decide upon the technology or medium through which you can accept orders. India has had various online food delivery apps running successfully for the past few years. You can register your kitchen with those apps so that they can deliver food to your customers on your behalf. The food delivery company usually charge 18-35% of your profits per order but it will prove effective initially. To grow your market reach, focus on developing an online presence that can help you attract new customers. Build a website with an option to order food directly with the help of a website developer.
Obtain food licenses for cloud kitchen
To work seamlessly, you need to fulfil every legal requirement while setting up your virtual kitchen. In India, an FSSAI license along with GST registration, fire license, municipal health trade license and a few others are essential. You can also hire an agency or a lawyer who knows how to apply for various permits since it might prove tedious and time taking. Once all the legal paperwork is complete and you are allowed to start your cloud kitchen, ensure that your license and taxes are maintained properly by paying annual fees.
Buy good kitchen tools, raw materials and packaging materials
All the above-mentioned items depend on the culinary choice of the cloud kitchen owners. Cloud kitchens serving fast food may not require equipment worth more than two lakhs, but if you prepare desserts or operate multi-cuisine restaurants, the costs may rise. If you want to save money, you should also choose electronic items, racks, shelves, and others strategically. If you buy heavy materials like deep freezers or burners, the establishment costs may rise further. To save money, you can choose to run multiple brands in the same kitchen to leverage your kitchen equipment and labour costs.
Choose a good packaging system for prepared food
In a cloud kitchen, preparing good quality food is very important besides offering good packaging. This means you need to allocate a significant budget for food packaging to ensure prepared food is not spoilt or leaked during the food transit. The packaging must also maintain the food quality during delivery. Overall, good packaging leaves a good impression on consumers’ mind and act as an important advertisement mode. Since you do not meet your consumers physically, keep your packaging sturdy with your restaurant logo reflecting the core theme of your virtual restaurant.
The most important part of cloud kitchen’s success is food taste which can be guaranteed only if you have good chefs and food masters. They not just prepare food for your kitchen but also helps in designing a good menu. You may not need many chefs but helpers and housekeepers who can follow the chef’s instructions and manage other petty jobs like purchasing fresh fruits and vegetables daily from the market. Apart from the kitchen staff, you will require employees who can manage online delivery portals and telephonic orders, if present.
What is the point of sales technology in cloud kitchen?
In order to maintain a cloud kitchen successfully, you need to manage a good point of sale or POS system. This will help you in streamlining your business operations starting from receiving and accepting orders to the final delivery of food. An effective POS system also helps in collecting and managing food orders from multiple sources while managing orders directly from takeaway outlets and information about consumers’ preferences. But to ensure an effective POS system, cloud kitchen owners must employ the following features:
Food delivery management and ordering software: choosing a reliable technology provider is essential so that third-party apps and custom solutions can be managed flexibly. You can hire third-party aggregators that can ensure larger market coverage with little investment.
Scalable and reliable digital equipment: for startups, having a good tablet is also enough which can host the kitchen, receive orders, and show food preparation timeline. You will also need to keep good printers and Wi-Fi connectivity that supports digital transactions.
Buzzer system: this is optional for the small-scale kitchen but essential if your cloud kitchen space is large. Buzzer helps in notifying chefs about new orders or any customer preference attached to them. To ensure timely delivery of food, chefs must be notified without delay through sound-based buzzers having a digital display with order content.