Cloud Kitchen Concept – should you make the shift?

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Cloud Kitchen Concept – should you make the shift? | Restolabs
May 8, 2019

Restaurant and food industry is one of the most dynamic business industries there is, with something new popping up every day. They change rapidly according to the change in demand and behavior of the customers. With the millennials and the Gen Y and Gen Z generations forming the major portion of the adult population, trends in online delivery industry are changing more rapidly than ever. Cooking or dining out is now a favorite option for the millennials and thus, there are hundreds of restaurants coming up with cloud kitchen concepts. What exactly is a cloud kitchen? Why is it a big 'go-to' option for you if you want to increase your revenue from your restaurant business? Who does cloud kitchen concepts suit the most? Know all about these in this blog. Let's dive right in.

What exactly is a cloud kitchen?

Cloud kitchens are basically take-away outlets providing no dine-in facilities. They function as a single production unit with a kitchen space where food is prepared, thereafter packed, and whisked around to the locations of customers who place their orders online. According to a recent survey conducted by us, 67% of the restaurant owners would want to open a cloud kitchen as their next outlet. Besides, Cloud kitchens are easier to run than traditional restaurant setups. They need less investment to start and maintain

Why are cloud kitchens a big 'go-to' for restaupreneurs? (and why you should consider them too!)

Cloud kitchen concepts are increasingly growing and the revenue made by such outlets are turning the heads of restaupreneurs. Online food delivery market is estimated to grow into a million dollar industry by the year 2020 - now, think about a food business model which came into existence purely to target this market! Sounds interesting? Here are more convincing reasons as to why you should seriously consider starting a cloud kitchen.

Reason # 1 - Low investment costs on land

One of the biggest chunks of initial set up costs for any restaurant is the real estate. By introducing cloud kitchens, you no longer have to spend tons of money on large spaces. Since dine-in is totally out of the picture, and all you'll need is a decent kitchen space, you can look for the smallest spaces and utilize the space efficiently, thus eliminating huge costs. Moreover, you no longer have to hunt for a space that is in a prime location, and instead set up your very own cloud kitchen in an area very close to prime areas.

Reason # 2 - Huge savings on overheads

With a cloud kitchen, you eliminate major overheads associated with restaurant business like client servicing staff, interior decorations, attractive themes and menus, parking spaces and the like. Good chefs to cook the best food, support staff, and a few delivery boys - this is all the staff that you will need to run the day to day operations. This gives you an assurance of high returns with low investment.

Reason # 3 - Cloud kitchens provide price leverage

Since your set up costs and overhead costs cut down to a bare minimum with cloud kitchens, you can provide a low cost menu as compared to your peers in the industry. This gives you pricing leverage while also justifying the higher profit motive. At the end of the day, customers just cannot say no to good food at good prices! (yes, this shall always remain a golden rule)

Reason # 4 - Greater opportunities for expansion

The amazing thing about cloud kitchens is that they require minimal initial set up costs. You can start with just one outlet, see how things are working out for you and expand as per your convenience. All you have to do is get the first outlet right by building a good customer base and a brand for yourself. Once you've done that, stretching your arms to newer localities and better menus become a cake walk. Do you want to know how to market your Cloud kitchen? Read more about Restaurant marketing

Reason # 5 - Lets you concentrate on what you do best - Cook great food!

Cloud kitchens do not take your concentration away from the one most important thing needed to win customers' hearts - great food! You can drive all your focus on making the best food, and leave the rest to your delivery partners and online food ordering portals. (of course, you'll need to look into how well you can position your brand - but this won't take most of your time or effort, believe us)

Who does cloud kitchen concepts suit the most? (Should you start one soon?.. Find out!)

  • Aspiring food entrepreneurs

If you're a food entrepreneur at heart with amazing unique ideas, entering cloud kitchen business is probably your best bet! Here's why - they demand less investment, have high profitability and gives you the freedom to experiment with the menu. It lessens the burden and lets you solely concentrate on the quality of food with minimum effort, time and money. 

  • Food truck operators

As a food truck operator, your investments and overhead costs are already quite low compared to mainstream dine-in restaurants. If you want to expand to newer localities or try out new varieties of food, Cloud kitchen is a great place to start.

  • Home-cooked foodpreneurs

If your small home-cooked food business is the talk of your town, you should seriously consider opening a cloud kitchen. You can set up your cloud kitchen outlet with little investment, and can get the business of your home cooked food rocking and rolling. Start by having an in-house online ordering system in place. 

  • Well established restaurants

Adapting to the change is one of the biggest things that help businesses survive the raging sands of time. The truth is - people now love their food coming in right at their doorstep. This is the big change in the restaurant industry and you should open a cloud kitchen soon, at least a couple of them, before the name of your brand flies into thin air. The simple rule is: to be in the business, you got to first be what your customers love!

  • Established QSRs

If you're an established Quick-service-restaurant, you're already way ahead in the restaurant business race. Up your ante by investing in a delivery-only cloud kitchen model and stretch your arm's reach of customers.

 

Key things to bear in mind before building a cloud kitchen

Building a restaurant and building a cloud kitchen might seem similar on the surface, but they stand significantly different. That is majorly true because you build cloud kitchen essentially for the newer generation - the millennials, the Gen Ys and the Gen Zs. Understanding their demands and preferences is paramount for the success of your cloud kitchen. You will eventually lose out if you don't understand and fill their appetite. Here are some things to know to start with:

Ease of usage

They like their things to be easy. Period. The main reason why cloud kitchens became so popular because they provide end-to-end control and well-defined processes. Your goal must always be to make things as simple and convenient as possible. The millennial are dependent on technology and online ordering is a convenient and quick option for many. It also works well when you want to offer seasonal services.

Customer experience continues to count!

Not having a dine-out option does not mean you are free from living up to the expectations of a brand experience. You can still make a difference and stand out from the lot, by focusing on micro-level customer experience aspects like good packaging, feedback notes, quick service (note that most delivery partner businesses are quick in their work, so just ensure you cook and pack real fast), and most importantly - providing best food! 

Conscious and aware

People these days are conscious about their eating habits, what would be their calorie intake, is it a nutritious meal, is it organic perhaps and so on. You need to think in these lines before you plan your menu. For the most, they're trying to move away from the fast-food junk and embracing a more healthy approach towards eating. So it goes without saying that everything that you do - from the menu to marketing strategies and event the events must resonate with your customers' need. 

Online ordering and delivery management

As cloud kitchens do not have any physical presence and solely run on taking orders, it is important to set up a credible online ordering system. In today’s scenario, most restaurants prefer to have their own online food ordering website or app to reach a wider population. Having an in-house online food ordering and delivery system is a bold move yet rewarding in the long run. A reliable online ordering system can do everything for you right from taking orders to providing insightful data on your customers and getting feedback immediately. This gives an opportunity to have full control over the data that restaurant owners can leverage to improve their services.

Final words

The days where most of the restaurant business happens outside the restaurant are certainly not far. The basic business rule is to feed the need. The need is to serve the best food on time. Cloud Kitchens will (and are already starting to) massively disrupt the food industry. Are you prepared to feed this need? If you are, Restolabs can help you open your own cloud or delivery kitchen restaurant.

Need assistance with the tech part of setting up of your Cloud Kitchen? Let us help you out!

 

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