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Cloud Kitchen Business Plan

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Online food delivery has become the new norm. People are favoring home delivery over dine-out, so starting a cloud kitchen in this increasing demand is a great idea.

Anyone can start a new business, but you need a detailed business plan when it comes to raising funding, applying for loans, and scaling it like a pro!

Need help writing a business plan for your cloud kitchen business? You’re at the right place. Our cloud kitchen business plan template will help you get started.

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Free Business Plan Template

Download our free business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

  • Fill in the blanks – Outline
  • Financial Tables

How to Write A Cloud Kitchen Business Plan?

Writing a wholesale business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section planned to offer an overview of the entire business plan. However, it is written after the whole business plan is ready and summarizes each section of your plan.

Here are a few key components to include in your executive summary:

Introduce your Business:

Start your executive summary by briefly introducing your business to your readers.

Market Opportunity:

Cloud kitchen menu:.

Highlight the cloud kitchen products or services you offer your clients. The USPs and differentiators you offer are always a plus.

Marketing & Sales Strategies:

Financial highlights:, call to action:.

Ensure your executive summary is clear, concise, easy to understand, and jargon-free.

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business plan for cloud kitchen

2. Business Overview

The business overview section of your business plan offers detailed information about your company. The details you add will depend on how important they are to your business. Yet, business name, location, business history, and future goals are some of the foundational elements you must consider adding to this section:

Business Description:

Describe your business in this section by providing all the basic information:

Describe what kind of cloud kitchen company you run and the name of it. You may specialize in one of the following cloud kitchen businesses:

  • Single-brand cloud kitchen
  • Multi-brand cloud kitchen
  • Aggregator cloud kitchen
  • Delivery-only restaurant
  • Virtual restaurant
  • Describe the legal structure of your cloud kitchen business, whether it is a sole proprietorship, LLC, partnership, or others.
  • Explain where your business is located and why you selected the place.

Mission Statement:

Business history:.

If you’re an established cloud kitchen business, briefly describe your business history, like—when it was founded, how it evolved over time, etc.

Future Goals

This section should provide a thorough understanding of your business, its history, and its future plans. Keep this section engaging, precise, and to the point.

3. Market Analysis

The market analysis section of your business plan should offer a thorough understanding of the industry with the target market, competitors, and growth opportunities. You should include the following components in this section.

Target market:

Start this section by describing your target market. Define your ideal customer and explain what types of services they prefer. Creating a buyer persona will help you easily define your target market to your readers.

Market size and growth potential:

Describe your market size and growth potential and whether you will target a niche or a much broader market.

Competitive Analysis:

Market trends:.

Analyze emerging trends in the industry, such as technology disruptions, changes in customer behavior or preferences, etc. Explain how your business will cope with all the trends.

Regulatory Environment:

Here are a few tips for writing the market analysis section of your cloud kitchen business plan:

  • Conduct market research, industry reports, and surveys to gather data.
  • Provide specific and detailed information whenever possible.
  • Illustrate your points with charts and graphs.
  • Write your business plan keeping your target audience in mind.

4. Products And Services

The product and services section should describe the specific services and products that will be offered to customers. To write this section should include the following:

Describe your menu:

Mention the cloud kitchen menu your business will offer. This list may include,

  • Main courses

Quality measures

: This section should explain how you maintain quality standards and consistently provide the highest quality service.

Value-added Services

In short, this section of your cloud kitchen plan must be informative, precise, and client-focused. By providing a clear and compelling description of your offerings, you can help potential investors and readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Unique Selling Proposition (USP):

Define your business’s USPs depending on the market you serve, the equipment you use, and the unique services you provide. Identifying USPs will help you plan your marketing strategies.

Pricing Strategy:

Marketing strategies:, sales strategies:, customer retention:.

Overall, this section of your cloud kitchen business plan should focus on customer acquisition and retention.

Have a specific, realistic, and data-driven approach while planning sales and marketing strategies for your cloud kitchen business, and be prepared to adapt or make strategic changes in your strategies based on feedback and results.

6. Operations Plan

The operations plan section of your business plan should outline the processes and procedures involved in your business operations, such as staffing requirements and operational processes. Here are a few components to add to your operations plan:

Staffing & Training:

Operational process:, equipment & machinery:.

Include the list of equipment and machinery required for a cloud kitchen, such as cooking equipment, food preparation equipment, refrigeration & storage, food holding & warming equipment, etc.

Adding these components to your operations plan will help you lay out your business operations, which will eventually help you manage your business effectively.

7. Management Team

The management team section provides an overview of your wholesale business’s management team. This section should provide a detailed description of each manager’s experience and qualifications, as well as their responsibilities and roles.

Founders/CEO:

Key managers:.

Introduce your management and key members of your team, and explain their roles and responsibilities.

Organizational structure:

Compensation plan:, advisors/consultants:.

Mentioning advisors or consultants in your business plans adds credibility to your business idea.

This section should describe the key personnel for your wholesale services, highlighting how you have the perfect team to succeed.

8. Financial Plan

Your financial plan section should provide a summary of your business’s financial projections for the first few years. Here are some key elements to include in your financial plan:

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:.

Determine and mention your business’s break-even point—the point at which your business costs and revenue will be equal.

Financing Needs:

Be realistic with your financial projections, and make sure you offer relevant information and evidence to support your estimates.

9. Appendix

The appendix section of your plan should include any additional information supporting your business plan’s main content, such as market research, legal documentation, financial statements, and other relevant information.

  • Add a table of contents for the appendix section to help readers easily find specific information or sections.
  • In addition to your financial statements, provide additional financial documents like tax returns, a list of assets within the business, credit history, and more. These statements must be the latest and offer financial projections for at least the first three or five years of business operations.
  • Provide data derived from market research, including stats about the industry, user demographics, and industry trends.
  • Include any legal documents such as permits, licenses, and contracts.
  • Include any additional documentation related to your business plan, such as product brochures, marketing materials, operational procedures, etc.

Use clear headings and labels for each section of the appendix so that readers can easily find the necessary information.

Remember, the appendix section of your cloud kitchen business plan should only include relevant and important information supporting your plan’s main content.

The Quickest Way to turn a Business Idea into a Business Plan

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This sample cloud kitchen business plan will provide an idea for writing a successful cloud kitchen plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready business plan to impress your audience, download our cloud kitchen business plan pdf .

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Frequently asked questions, why do you need a cloud kitchen business plan.

A business plan is an essential tool for anyone looking to start or run a successful cloud kitchen business. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your cloud kitchen business.

How to get funding for your cloud kitchen business?

There are several ways to get funding for your cloud kitchen business, but self-funding is one of the most efficient and speedy funding options. Other options for funding are:

  • Bank loan – You may apply for a loan in government or private banks.
  • Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
  • Crowdfunding – The process of supporting a project or business by getting a lot of people to invest in your business, usually online.
  • Angel investors – Getting funds from angel investors is one of the most sought startup options.

Apart from all these options, there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your cloud kitchen business?

There are many business plan writers available, but no one knows your business and ideas better than you, so we recommend you write your cloud kitchen business plan and outline your vision as you have in your mind.

What is the easiest way to write your cloud kitchen business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any cloud kitchen business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software .

How do I write a good market analysis in a cloud kitchen business plan?

Market analysis is one of the key components of your business plan that requires deep research and a thorough understanding of your industry. We can categorize the process of writing a good market analysis section into the following steps:

  • Stating the objective of your market analysis—e.g., investor funding. Industry study—market size, growth potential, market trends, etc.
  • Identifying target market—based on user behavior and demographics.
  • Analyzing direct and indirect competitors.
  • Calculating market share—understanding TAM, SAM, and SOM.
  • Knowing regulations and restrictions
  • Organizing data and writing the first draft.

Writing a marketing analysis section can be overwhelming, but using ChatGPT for market research can make things easier.

About the Author

business plan for cloud kitchen

Upmetrics Team

Upmetrics is the #1 business planning software that helps entrepreneurs and business owners create investment-ready business plans using AI. We regularly share business planning insights on our blog. Check out the Upmetrics blog for such interesting reads. Read more

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  • Menu Engineering
  • Procurement

What Is A Cloud Kitchen & How To Run One Successfully

  • September 20, 2023

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Welcome to the era of Cloud Kitchens, a culinary innovation that’s reshaping the landscape of food delivery and redefining the very essence of how we consume food. As the online food delivery market in the US alone surged to a staggering $221 billion in 2022 , it is no surprise that more and more cloud kitchens, also known as virtual restaurants, are growing by the day across the world.

But, what are they and what does it take to launch one ?

This article covers all you need to know about cloud kitchens : what are cloud kitchens, how do they work, what are their pros and cons, how you can start your own cloud kitchen, and what you should absolutely nail to get it right.

Table Of Contents

  • What Is A Cloud Kitchen ?
  • How Does A Cloud Kitchen Work ?
  • The Benefits Of A Cloud Kitchen
  • What Are The Challenges Of Cloud Kitchens ?
  • Transforming Your Brick And Mortar Kitchen Into A Cloud Kitchen
  • How To Set Up Your Own Cloud Kitchen, Delivery-Only Brand

1. What Is A Cloud Kitchen ?

A cloud kitchen, also known as a ghost kitchen or dark kitchen, is a type of commercial food preparation facility designed for virtual food brands operating on a delivery-only business model. Unlike traditional restaurants, cloud kitchen concepts do not have a physical dining area or storefront where customers can dine in. Instead, they operate primarily through online ordering platforms, mobile apps, or phone orders.

There are several benefits to a cloud kitchen, with the most compelling ones being that it allows a new virtual restaurant to start with relatively low costs, it helps established brick-and-mortar restaurants expand fast, and it supports F&B groups save expenses and reduce food waste by operating several food concepts using the same cloud kitchen.

business plan for cloud kitchen

The growth of cloud kitchens isn’t unexplained. Covid19 changed the way consumers purchase food. With people required to stay at home, the online food delivery business boomed, so much so that, in the US alone, the online food delivery market was valued at $221 billion in 2022 and is expected to continue to grow at an annual rate of 10% over the next few years. With this growth in mind and given the shift in consumer behavior, many food entrepreneurs and businesses are turning to cloud kitchens as a sound and exciting investment.

2. How Does A Cloud Kitchen Work ?

A cloud kitchen operates differently from a traditional restaurant. Cloud kitchens are centralized food production facilities that rent kitchen spaces to food businesses. You could find more than a dozen different brands operating within the same cloud kitchen, on either a shared space (1 team cooking for different brands), or private spaces (each brand has its own kitchen, within the same warehouse).

Each kitchen within the warehouse contains the basics you would need in a typical kitchen : fridge, prep area, fryer, oven, and sink. You could subscribe to a cloud kitchen provider based on the equipment and appliances they include in their package, or you could bring your own, if that fits the cloud kitchen provider’s policy.

These kitchens are built specifically for delivery-only models, meaning that you’ll find a dedicated space for your order-receiving hardware, rest and pick-up areas dedicated to delivery drivers, and dedicated item packaging areas, amongst other things.

what is a cloud kitchen

2A. The Primary Steps Needed To Run A Cloud Kitchen Concept

1. Taking Orders In A Cloud Kitchen Cloud Kitchens are digital natives and are heavily tech-reliant.

Orders come in primarily from delivery aggregators, or from a business’s own virtual restaurant’s app or website. In all cases, your team will need an order-receiving hardware and software. These are usually provided by the delivery aggregators (if you choose to work with them), or can be bought from a POS System provider. If you choose to maximize your reach and subscribe to all delivery aggregators, you can also use a delivery app aggregator that centralizes all the orders you’re receiving across platforms.

2. Processing Orders In A Cloud Kitchen

Once an order is placed, the chef will see the order and will understand what item is ordered, from which brand, and from which delivery platform. The chef starts to cook.

It is worth noting that a cloud kitchen can operate in 2 ways : a. A chef will cook different dishes for several brands that share a common space. b. A separate team and space are dedicated to a unique brand.

Either way, you’ll need a skilled chef who will ensure consistency. 2 or 3 chefs and a few helpers should be enough if you’re leading a high-demand brand.

3. Delivering The Orders From A Cloud Kitchen To Customers Once the dish is prepared, it is moved to the packing staff. Each virtual restaurant needs to think about its food package and packaging method. Think about packaging a drink in a way that it does not fall during transport, or adding an ice pack around ice cream so that it doesn’t melt on the way to the customer. Nailing the packaging is an important step for any virtual restaurant, as how an item is received plays its role in the reputation of your business. The item is then handed over to the delivery driver.

2B. The Secondary Steps Necessary To Run A Cloud Kitchen Concept

1. Don’t Forget Your Suppliers ! There’s not much of a difference when it comes to managing suppliers in a cloud kitchen compared to a traditional restaurant. You’ll still need to build your relationships and find the handful of reliable suppliers to run your business with. If you operate several brands, it is advised to list the ingredients you share across brands and to consolidate your orders with just a few suppliers. You’ll end up benefiting from more attractive prices due to bigger orders, which benefits your bottom line.

View this post on Instagram A post shared by Supy (@supy.io)

Opting for a smart procurement software is also something to seriously consider. A smart procurement software would help you order ingredients based on your Par Level, which reduces shortage and over-ordering risks. This is in addition to the hours it saves your staff in filling out purchase orders, which can be done digitally with ease and speed.

2. Managing An Inventory For Cloud Kitchens What is thought to be “the most complicated of tasks” for cloud kitchens isn’t actually that difficult – when you choose the right software. An advanced inventory management system will save you hours of work, headaches, and frustration. When provided with a best-in-class inventory management software built specifically for cloud kitchens, and that provides the insights you need to stay in the know of your cloud kitchen’s health, managing your inventory will be a breeze.

3. The Benefits Of A Cloud Kitchen

business plan for cloud kitchen

1. Low Rental, Operating, & Labor Expenses Cloud kitchens cut costs down significantly by eliminating the need for a physical dine-in space. This translates to lower expenses like rent, utilities, and maintenance, and more capital to invest in marketing your products and improving your recipes, which increases your chances of success in an F&B world that’s more competitive than ever.

Also, since cloud kitchens focus solely on food preparation and delivery, they do not require service staff and don’t need to deal with the admin work that comes with staffing compliance . Cloud kitchens can leverage on-demand labor, whenever needed.

2. Reduced Food Waste, Increased ROI Cloud kitchens often host multiple virtual restaurant brands in the same kitchen space. This shared-resource model allows for efficient use of kitchen equipment and ingredients, reducing waste and boosting efficiency. The savings generated from this model can then be passed down to the customer, which gives virtual brands a competitive advantage over traditional restaurants.

3. Informed Decision-Making Cloud kitchens are digital-native by design. Since cloud kitchens rely heavily on delivery platforms, they’re born with data flowing within their operations, which gives them insights onto everything, namely data related to menu performance and sales analytics . This allows them to optimize ordering, processes, marketing, and staff schedules based on consumer behavior. Access to clear and accurate data means cloud kitchens can also change their menu or operating times in a way that not only suits business needs, but maximizes sales and resource management.

4. Wider Market Reach Cloud kitchens can operate in and serve premium locations at a fraction of the cost – were they to launch a traditional restaurant with a storefront and dining space. Food brands can increase their reach significantly by simply cooking their recipes closer to where a considerable part of their customer base lives. This extended reach can lead to increased sales and better brand exposure.

5. Lower Barrier To Entry & Lower Risk For Entrepreneurs Starting a cloud kitchen typically requires a smaller initial investment compared to launching a traditional restaurant. This reduced financial burden makes it more accessible for aspiring chefs and entrepreneurs to enter the food industry.

Cost of Launching a restaurant or cloud kitchen in Dubai

With lower overhead costs, adaptable concepts, and data-driven insights, cloud kitchens are often less risky than traditional restaurants. This flexibility allows entrepreneurs to experiment and pivot more easily.

6. Rapid Scaling Cloud kitchen concepts can expand quickly by launching additional virtual restaurants in various locations or by partnering with existing kitchen facilities. This scalability enables faster growth compared to opening multiple physical restaurants.

4. What Are The Challenges Of Cloud Kitchens ?

Challenges of Cloud Kitchens

1. Tough Online Competition The cloud kitchen space is becoming increasingly crowded, with numerous virtual restaurant brands and cloud kitchen operators vying for customer attention. And since cloud kitchens aren’t physically visible to the public, they could be losing potential customers to brick and mortar locations that happen to be where their customers are.

Competition can make it challenging to stand out and attract a consistent customer base, which is also why many cloud kitchen concepts run on a discount-based business model. For smaller brands with little visibility to start with, numerous marketing tactics will need to be employed in order to differentiate yourself from the competition. It’s important to build loyalty for your cloud kitchen by building a strong digital brand, namely through social media and online advertising.

2. No Direct Feedback Or Customer interaction Cloud Kitchens separate themselves a little from the hospitality business. Indeed, no human interaction goes in the business model of cloud kitchens, meaning that cloud kitchens do not get a chance to build loyalty through its service or customer service. Becoming a restaurant regular and being known by your name does have its effect, and is a reason why many people go back to their favorite spots.

Furthermore, feedback cannot be given directly. Instead, cloud kitchens have to resort to limited feedback (a 1 to 5 star rating system) that often lacks constructive criticism, which is in part due to low user patience when it comes to providing feedback on apps.

3. Dependence On & Profits Cuts From Delivery Platforms Paying for a cloud kitchen is one thing, and paying for the delivery aggregator is another. With profit cuts up to 35% per menu item sold , cloud kitchen concepts must take into consideration the lowered profit margins they’ll experience compared to dine-in restaurants. Cloud Kitchens also have little control over the last-mile delivery experience. This means that any bad experience (slow delivery, cold food) may be reflected on their brand, rather than on the delivery aggregator.

The only way to counter this would be to build your own delivery service, however, this will require a tremendous investment in marketing, since you’ll have to compete with delivery aggregators and their already well-established presence, rather than other virtual restaurants present within these platforms.

4. Solid Quality Control Cloud kitchens means business owners focus mostly on building tasty recipes, and producing them with ultra-high consistency – since the rest of the logistics is taken care of for them. It is crucial to nail operational efficiency, quality control, preparation, and consistency in order to deliver your dish with the same standards, over and over again.

This means business owners will need to try out different packages and packaging methods. You may want to invest in more premium packaging that will better preserve your food. Although it will cost more, it’ll undoubtedly beat receiving room temperature, soggy, leaky items. Keep in mind that a single accident may turn off a customer for life.

5. Supply Chain Disruptions Like traditional restaurants, cloud kitchens can be affected by supply chain disruptions, such as ingredient shortages or price fluctuations.

5. Transforming Your Brick And Mortar Kitchen Into A Cloud Kitchen

Many restaurants have seen the shift in consumption behavior and have invested in their existing kitchens to serve the delivery arm of their operations. Some have gone further by creating brand new food brands that operate out of their existing brick and mortar kitchen.

This strategy enables these restaurateurs to make the most out of their existing staff and facilities (inventory, kitchen equipment, storage area, location). Furthermore, with delivery apps now offering pick-up options for a discounted price (10% to 15%), these brick and mortar restaurants – which are often located in prime locations – can easily promote pick up services; an attractive proposition for nearby customers.

However, you should keep the following in mind : your kitchen won’t be as advanced and optimized for a delivery business model as a cloud kitchen would. As your restaurant experiences busy dining-in hours, delivery may suddenly become a second-tier priority, putting your delivery operations – and therefore delivery reputation – at stake.

6. How To Set Up Your Own Cloud Kitchen, Delivery-Only Brand

Starting a cloud kitchen concept involves several key steps and considerations. Here’s a general overview of what it takes to establish and launch a successful cloud kitchen concept:

1. Business Concept & Branding

  • You’ll need to build your concept from the ground up. You’ll need to analyze the market, identify gaps, and decide what kind of cuisine and concept you will launch to fill that gap.
  • You’ll need to create a unique and appealing brand identity, including a name, logo, and visual elements that resonate with your target audience.

2. Select The Location Take into consideration the delivery radius, accessibility to delivery drivers, and proximity to target customers. Take into account the cost of renting kitchen spaces in different areas.

3. Develop Your Menu Aside from engineering a menu that you think will perform, it is key to think about the deliverability of the menu items you will propose, and the packaging investment you will need to make to ensure they’ll reach your customers in perfect condition. Engineer your menu in a way that your food cost percentage will make the entire operation profitable for you.

4. Choose Your Cloud Kitchen Provider

You’ll need to choose a cloud kitchen provider to rent a kitchen space from. You’ll need to take into consideration several key factors:

  • Location : Cloud kitchens are typically located in strategic areas to reach a wide customer base. Choose the cloud kitchen provider that serves the areas you want to operate in.
  • Business Package : are staff, maintenance, utilities included in your contract ? Make sure to clearly understand what is in your package to not get surprised when the bill shows up.
  • Do they have the equipment and appliances you need to produce your menu items, or will you have to invest in some of your own ?
  • Do they have a strong track record of compliance with local health and safety regulations?
  • Whether or not they provide a delivery fleet and ordering platform – if you choose to subscribe to theirs instead of third party providers.

5. Hire Staff These are the people that will turn your vision into reality. With food quality and consistency being a key factor in the success of your virtual food business, opt for a chef that is both skilled and consistent.

6. Subscribe To Best-In-Class Restaurant Software The entire cloud kitchen business model runs on data, and it is crucial that you be data-driven from the start. You can either opt for an all-in-one platform or a portfolio of best-in-class tools , although, in most cases, a suite of best-in-class is usually advised, especially when it comes to your back-of-house and inventory management . Running an efficient inventory, maintaining the right amount of stock, and monitoring your operations easily will save you hours of painful work and thousands of dollars in food waste, low menu performance, and shortages.

7. Choose Your Delivery Partner You can choose to build your own fleet of delivery guys, or join a delivery aggregator to either receive orders or deliver them, or both. Joining a delivery aggregator will take away the need to think of an entire delivery logistics operation, and will give you immediate access to a large customer base. Yes, running a paid ad campaign or having a profit percentage taken out of the items you sold will cost you, but it will provide a lower barrier to entry for you to launch your business.

8. Measure The Feasibility Of Your Business Model Prepare a detailed business plan that includes startup costs, operating expenses, revenue projections, and break-even analysis. Secure funding if necessary, whether through personal savings, loans, or investors.

9. Promote Your Business Create a digital presence early-on on social platforms. Run a paid ad campaign on delivery aggregators to get your brand to be at the top of the list. Consider offering promotions and discounts to attract initial customers. You can also choose to distribute flyers in order to redirect customers to your website for example, if you choose to start taking orders and delivering them independently. Flyers are a great way to also promote new dishes you’ve produced that your customers can find on their favorite ordering apps.

10. Monitor Customer Feedback & Overall Operations Performance Use customer insights to make improvements to your menu, service, and operations. Look into the performance of each aspect of your business, from procurement to sales, and from inventory metrics to menu performance. Understand how your business is doing and optimize each department every time you can. Scale once you’ve nailed down on your first cloud kitchen operations.

“Supy’s built-in dashboards  give us real time data for real time decision-making

business plan for cloud kitchen

Starting a cloud kitchen concept requires careful planning, a clear understanding of the market, effective branding and marketing, and a commitment to providing high-quality food and service. Flexibility and adaptability are essential as you navigate the challenges and opportunities in the evolving food delivery industry.

7. Conclusion

Cloud kitchens aren’t just a trend: they’re a culinary game-changer. From cost-effective operations and resource optimization to the freedom to experiment with menus, they have a lot to offer. But, they’re not without their challenges, namely an intense online competition and the reliance on delivery platforms. Yet despite their challenges, these delivery-centric kitchens are opening doors for budding chefs and seasoned restaurant pros alike. They offer food entrepreneurs a chance to explore culinary passions, and give established brick-and-mortar restaurants a chance to expand their business without breaking the bank.

A cloud kitchen business needs 3 essential parts to function : the ability to receive, produce, and deliver orders efficiently. Marketing the business, staying on top of procurement, and keeping the inventory healthy are also key pillars for the business to run smoothly. Luckily, numerous tools and processes have been tried and tested, making running such a business easier than expected.

8. About Supy

Supy is the data-driven restaurant inventory management software  designed to help cloud kitchens run efficient back-of-house operations. With several integrated back of house modules, namely procurement, menu engineering, inventory management, and reports and analytics, Supy’s the tool of choice for anyone looking to launch their own cloud kitchen business. Furthermore, with numerous integration to the leading POS systems , Supy helps running businesses leverage the front-of-house data even further, thanks to our built-in analytics module, which inputs and mixes sales data with back-of-house insights.

Related Resources

  • The 7 Cloud Kitchen Business Models & When To Choose Which
  • 22 Restaurant Marketing Strategies In 2024
  • The Ultimate Guide To Restaurant Operations Management
  • Restaurant Expansion : When & How To Expand Your Restaurant Business

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What is Cloud Kitchen

What is Cloud Kitchen & How to Start a Cloud Kitchen with Amazon Business?

If you're considering starting a cloud kitchen, congratulations! You're about to embark on an exciting new business venture. But before you get ahead of yourself, it's important to understand what is cloud kitchen and the factors that go into running a successful cloud kitchen.

In this blog post, we have covered everything from what are cloud kitchens, how to start a cloud kitchen business, to the essentials required to run it. Brace yourselves, we will walk you through the key steps in setting up and operating a cloud kitchen from start to finish.

Before that, Register with Amazon Business to start a cloud kitchen without much ado.

What is Cloud Kitchen?

A cloud kitchen represents a commercial kitchen used solely to prepare food for delivery. These kitchens are often located in remote or densely populated areas and typically do not have any dine-in or take-out options. Instead, they focus on delivering fresh, made-to-order meals to customers promptly.

Cloud kitchens often work with third-party delivery services to ensure their food reaches customers hot and fresh.

A cloud kitchen setup eliminates the need for dining space. They are smaller and more efficient than traditional restaurants. They are popular among entrepreneurs looking to start their own food businesses.

How Does a Cloud Kitchen Function?

A cloud kitchen business does not have a physical dining area for customers. Instead, customers order food from the restaurant online or over the phone and then pick up their food when ready. Cloud kitchens typically have multiple cooking stations and large kitchen space to prepare multiple orders simultaneously.

As concerns of waiting staff or dining area preparation are not pressing in a cloud kitchen business, they can operate with a smaller staff and lower overhead costs than traditional restaurants. In addition, because customers order food in advance, cloud kitchens can often prepare food more quickly than other restaurants.

The easy to manage aspects of such ventures are a big turn on for people wondering how to start a cloud kitchen.

What are the Benefits of Cloud Kitchen?       

Now that you have understood the meaning of cloud kitchen let's explore some benefits of cloud kitchen next.

Organic and Internal Business Growth

Strategic Business Growth

Strategic business growth is the reason organic business growth happens. Strategies to grow a business are extremely crucial for any business. Basically, it means you are strategically planning your business growth by mixing product management, engineering, marketing, advertising, leadership and innovation. You can commit to strategic business growth only when you have worked on a plan for business growth.

Strategic Business Growth

Mergers and Acquisitions

Mergers and acquisitions refer to a company merging its business with another company or acquiring the business of the other. This is one of the ways to expand business. However, do not confuse a merger and acquisition with each other.

  • Merger: A merger refers to two or more companies coming together and combining into one new company. They will have one name as a corporation. This is one of the good ideas to grow business.
  • Acquisition: An acquisition is a company purchasing/ acquiring another, thereby taking over everything in their business.

10 Tips to Grow your Business

How to grow a business exponentially, you ask? If business growth is your goal, we are here to help you out! Here's a list of the top 10 tips to grow business:

Build a Sales Funnel

Building a sales funnel is important for your business growth. This should be a part of your business growth plan. The sales funnel dictates the process of converting a potential lead into a customer. How to grow a business with a sales funnel? There are three stages involved here. Take a look:

  • Top funnel refers to the marketing and advertising strategies you apply to attract a consumer to your business.
  • Middle Funnel refers to the strategies you implement to begin or increase your business's sales.
  • Lower funnel refers to the stage where an individual has gone through the top and middle funnel to become your customer finally. It is safe to say your marketing and advertising attracted the consumer, who has understood your offering and is now willing to purchase.

Get a Customer Management System

The customer is the King. It's crucial to provide outstanding service to your customers. To aid this, you can opt for a tool to help you manage your customers well. What is a customer management system and how to grow a business with a customer management system, you ask?

A customer management system is a fantastic solution that develops a straightforward user interface for a set of data that will aid your company in scalable customer identification and communication. Basically, a customer management system aids companies in developing relationships with their clients, fostering loyalty and client retention. This is one of the best small business growth strategies. Invest in customer management ideas to grow business.

Analyze the Competition

Analyzing the competition is essential for any business because you will be able to create better strategies for business growth. It will not only help you get a competitive edge over your competitors but also help you formulate ideas that will retain customer attention. This is how to grow your business.

Increase Customer Retention   

Customer retention refers to the company's ability to have loyal customers over a period. It also refers to engagement customers enjoy with the business, repurchasing and the emotional attachment to the brand. For any business to succeed, customer retention is mandatory. Customers can make or break your business. This is one of the best strategies to grow a business.

Participate in Networking Events

Networking events are important, especially when you want to develop a good understanding of your business and also understand the market competition. This is how to grow your business. Attending such events will help you develop new relationships and gain potential customers and clients while enabling you to develop a fresh perspective for your business. This is a great business expansion strategy.

Understand the Risks & Rewards

Risks and rewards are part and parcel of any business. The more risks you take, the more rewards you can expect. But do remember that it's important to take calculated risks. Jumping into any risk could hamper your business activities. Assess, understand and then act before venturing into any risk. This is one of the strategies to expand business.

Provide Great Service

The secret to maintaining a client relationship and customer loyalty is great service. It's one of the best tips to grow business. Your after-sales service, customer support and redressal mechanisms are as important as your products and services. This is one of the ways to expand business. Register with Amazon Business to provide excellent marketing services to your customers.

Use Social Media

Social media is an important platform for business success in today's interconnected world. Like seriously, how to grow a business without social media? It's impossible! Many companies worldwide have created a unique space in the market despite global competition because they were able to pitch innovation through their social media marketing and advertising strategies. Social media gives you the freedom to communicate directly with your customers or potential customers. This helps people feel more connected to your business. This is how to grow your business.

Host Events

Hosting events is as important as attending networking events. It's a great business expansion strategy . It will be a great way to forge new relationships with other businesses and create an environment of innovation for your business. Don't ask how to grow a business without hosting events. It's not possible.

Identify New Opportunities

How to grow a business? Be on the lookout for new opportunities every day. This will help you make the right decisions for your business while also enabling you to eliminate any existing business practices that could threaten you. This is one of the best small business growth strategies.

How to Grow your Business (Steps)

How to grow your business in the most incredible way possible? We have created a list of steps you need to follow to turn your business growth into reality. Take a look: 

Increase Your Leads

Increasing leads will lead to increased sales. You have to get a customer or client to communicate with you about your product or service. For this, you will need to engage with them through social media, emails directly, employ advertising strategies like targeted pay-per-click, write blogs, ask your customers to share feedback about your product or service, etc. This will boost your business growth!

Turn Prospects into Buyers

You can turn prospects into buyers with the right marketing and advertising strategies. Use social media for blog posts, day-to-day posts, engaging with clients, solving customer queries, etc. Direct engagement with individuals will help you turn your prospects into customers. Ask existing customers to spread the word by introducing referral discounts, bonuses, etc.

Increase Sales

For any business to succeed, sales are important. It's one of the oldest business growth ideas. The entire cycle of business success involves customers, clients and sales. Get more leads, get more sales opportunities. Formulate great sales pitches and strategies to convince potential customers and clients to engage with you.

Grow your Profit Margin

It would be best if you cut down on unwanted expenses to increase your profit margin. Inventory management and control is a great way to manage your inventory. You may increase your order value, prices or order quantities depending on the context of your business operations. Make sure you have great supply chain management to grow your profit margin.

Remember Customer Referrals

Don't ever underestimate the power of customer referrals. It's an age-old practice that still does the magic- maybe even better than other marketing strategies. When people hear their loved ones refer to a product or service, they are bound to try it out. Who knows, you may be gaining a potential loyal customer. This is one of the best business growth ideas.

How can Amazon Business Help to Grow Your Business?

Amazon Business is the right place to meet millions of potential customers to steer you onto the path of success. Enjoy marketing on the largest shopping destination in the world and turn your dreams into reality. Register with Amazon Business to enjoy bulk discounts, GST Input Tax Credits and much more.

Growing your business today is easy because of the multiple opportunities and platforms available online. With Amazon Business, you don't have to ask how to grow a business. You can sell your products and services for a great profit margin and also buy products to meet all your business needs at discounted prices, doorstep delivery and peace of mind. Register with Amazon Business to expand business today!

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What is Business Growth Plan?

A business growth plan is a plan companies create to help their business grow and achieve its objectives within a specified time limit. A business growth plan has business growth strategies. Usually, companies set 2-5 years to achieve their short-term and long-term goals.

Can we grow a business online?

Yes, you can. With Amazon Business , you can start marketing and selling your products online. Businesses are creating a strong website and social media presence with the internet to create a customer base. Social media will aid in growing business ideas.

How does customer experience impact a Business's Growth?

Customer experience is all that finally matters to a business. The business manufactures products and services to cater to a customer's needs and demands. If the customer has a negative experience with the business, the company's success is bound to slow down.

Is technology a catalyst for Business Growth?

No. Technology caters to business growth. Because of technological advances, we have newer machines, gadgets, software and various functions to help manage business more efficiently. You can buy printers , CCTV Camera s , speakers, wifi range extenders , office chairs , etc., for the smooth running of your business because of technological advancements. Start an online business in India with Amazon Business!

How to manage your cost during Business Expansion?

You can manage your costs during a business expansion by following these five tips:

  • Reduce Production Costs
  • Reduce Supply Costs
  • Cut down on wastage
  • Improve your Marketing Strategies
  • Invest in growing business ideas
  • Sell products online through Amazon Business

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How to Start a Cloud Kitchen Business: 8 must-known steps before launching

Are you intrigued about how to start a cloud kitchen business but unsure where to begin? let's explore why starting a cloud kitchen is a promising venture. The advantages are manifold. By eliminating the need for a physical dining space, cloud kitchens significantly reduce overhead costs, including rent, utilities, and decor. This cost-efficient cloud kitchen business model allows entrepreneurs to allocate resources to other crucial areas, such as high-quality ingredients, skilled staff, and innovative marketing strategies. Moreover, cloud kitchens offer unparalleled flexibility and scalability. With a virtual presence, you can reach a wider audience without being limited by geographical constraints. Additionally, the rise of online food delivery platforms has made it easier than ever to reach customers, establish brand recognition, and ensure efficient order management.

In the following sections, we will explore the cloud kitchen business model in depth and guide you through the 8-step-by-step must-kown process of starting your own cloud kitchen, ensuring that you have a strong foundation for a successful cloud kitchen business.

Do Your Research before thinking about how to start a cloud kitchen:

Cloud Kitchen business research

Before diving into the process of starting a cloud kitchen business, it is crucial to emphasize the importance of conducting thorough research. Research forms the foundation of any successful business venture , and starting a cloud kitchen is no exception. By dedicating time and effort to comprehensive research, you can gain valuable insights, make informed decisions, and increase the likelihood of success.

Understand the cloud kitchen business model: The cloud kitchen business model revolves around operating delivery-only kitchens that cater to the growing demand for online food delivery. Here are the key aspects of the cloud kitchen business model:

  • Virtual Presence: Cloud kitchens don't have a physical dine-in area. Instead, they focus solely on preparing food for delivery.
  • Multiple Brands: A single cloud kitchen space can house multiple food brands or concepts, each operating independently within the shared kitchen infrastructure.
  • Cost Efficiency: By eliminating the need for a storefront and dining space, cloud kitchens significantly reduce overhead costs associated with rent, decor, and utilities.
  • Online Ordering: Orders for cloud kitchen meals are primarily placed through food delivery apps or websites, offering convenience to customers.
  • Delivery Logistics: Cloud kitchens typically partner with third-party delivery services to ensure efficient and timely order delivery to customers.
  • Menu Experimentation: Cloud kitchens have the flexibility to experiment with different menus, cuisines, and culinary concepts to cater to diverse customer preferences.
  • Scalability: With the absence of physical constraints, cloud kitchens can quickly scale their operations by adding more brands or expanding into new locations.

Choose a niche: When starting a cloud kitchen, it's crucial to define your niche. Choosing a specific focus or cuisine helps you stand out in the competitive food delivery market. Consider your passion, expertise, and target audience when selecting your niche. By specializing in a particular cuisine, dietary preference, or food category, you can attract a loyal customer base and differentiate yourself from competitors. Carefully research the market, analyze customer preferences, and identify gaps or untapped opportunities. This strategic decision will shape your menu, branding, and marketing efforts, allowing you to create a unique and appealing proposition for your cloud kitchen business.

Research your target market: Before starting a cloud kitchen business you should conduct thorough research on your target market to gain valuable insights which can shape your cloud kitchen business strategy. Understanding your customers and their preferences is essential for delivering exceptional experiences and building a loyal customer base. Here are key points to consider when researching your target market.

Identify your competition: Know your competitors, how they are managing the orders and how many orders they are getting on a daily basis, these are the most required information that a cloud kitchen owner needs to think of before setting up a cloud kitchen business. 

Find a Location to start your cloud kitchen business:

Cloud Kitchen Location

Location selection plays a crucial role in the success of your cloud kitchen business. When choosing a location for your cloud kitchen, there are several factors to consider. Proximity to suppliers and ingredients is another important factor. Choose a location that is in close proximity to reliable and quality food suppliers. This will help you ensure a steady supply of fresh ingredients and reduce transportation costs.

Consider your target market: you need to identify your target market and select a location that is easily accessible to your customers. Analyze the demographics and preferences of your target audience to ensure that your cloud kitchen is located in an area where there is a demand for your cuisine.

Look for a space that is accessible to delivery drivers: Accessibility for delivery drivers is crucial as well. Ensure that your location is easily accessible for delivery drivers to reach various areas efficiently. This will help optimize your delivery operations and ensure timely deliveries to your customers.

Make sure the space is large enough for your kitchen equipment: Consider the infrastructure and facilities available in the area. Your cloud kitchen needs adequate space for food preparation, storage, and delivery operations. Look for a location that offers the necessary utilities and amenities to support your business needs.

Set Up Your cloud kitchen business:

Cloud Kitchen setup

Setting up your cloud kitchen business requires careful planning and execution. Follow these essential steps to establish a solid foundation for your cloud kitchen venture.

Define Your Concept: Determine the type of cuisine or food concept you want to offer. Research market trends and identify unique selling points to differentiate your cloud kitchen.

Conduct Market Research: Analyze your target audience, competition, and local market demand. Gather insights on customer preferences, delivery platforms, and pricing strategies.

Create a Business Plan: Develop a comprehensive business plan that outlines your goals, target market, marketing strategies, operational processes, and financial projections. This plan will guide your decision-making and attract potential investors.

Secure Funding: Determine the required capital to launch and sustain your cloud kitchen. You need to explore various funding options, such as personal savings, loans, investors, or crowdfunding platforms.

Choose the Right Location: Select a suitable location with proximity to your target market and efficient delivery logistics. Consider factors like rent, space requirements, zoning regulations, and accessibility.

Acquire Equipment and Supplies: Invest in commercial-grade kitchen equipment, appliances, and utensils tailored to your menu. Source high-quality ingredients and establish reliable supply chains.

The equipment you'll need will depend on the type of food you'll be serving. However, some basic equipment you'll need includes:

  • Refrigerator
  • Cooking Utensils 

Build a Team: Hire skilled chefs, kitchen staff, and delivery personnel. Emphasize the importance of hygiene, speed, and customer service in your team's training.

Set Up Technology Infrastructure: Utilize cloud-based order management systems, POS systems, and online delivery platforms to streamline operations, track orders, and manage customer feedback. You can also have your own website and food-ordering app that help your business to track in an effective manner.

Develop a Menu: Design a menu that reflects your concept, offers variety, and caters to different dietary preferences. Consider pricing strategies that balance profitability and customer value.

Establish Partnerships: Collaborate with food delivery aggregators, third-party logistics providers, and online platforms to reach a broader customer base and streamline delivery processes.

Implement Marketing Strategies: Develop a compelling brand identity, create an attractive website or online presence, and leverage social media and digital marketing channels to promote your cloud kitchen.

Ensure Compliance: Understand and adhere to local regulations, permits, licensing requirements, and food safety standards. Prioritize hygiene and sanitation practices to build trust with customers.

Monitor and Adapt: Continuously monitor customer feedback, sales data, and market trends. Use this information to refine your menu, optimize operations, and stay ahead of competitors.

Market Your Cloud Kitchen Business:

Cloud Kitchen marketing strategy

Marketing plays a crucial role in the success of any business, and cloud kitchens are no exception. To ensure that your cloud kitchen reaches its target audience and stands out in the competitive food delivery landscape, a well-planned and executed marketing strategy is essential. In this section, we will explore effective marketing tactics specifically tailored for cloud kitchen businesses.

Get listed on food delivery apps: One of the first steps to market your cloud kitchen is to get listed on popular food delivery apps. These platforms have a large user base actively searching for food options, making them a valuable channel to reach potential customers. 

Ensure that your cloud kitchen is listed on popular food delivery apps in your area, complete with an appealing menu, attractive food photography, and accurate information. Optimize your listing by highlighting unique selling points, such as special offers, unique flavours, or dietary preferences catered to. This will enhance your visibility and increase the chances of attracting customers to your cloud kitchen.

Promote your business on social media: Social media platforms are powerful tools to create brand awareness. Share visually appealing images and videos of your dishes, behind-the-scenes glimpses of your kitchen, and customer testimonials. Engage with your audience by responding to comments, running contests or giveaways, and encouraging user-generated content.

Run marketing campaigns: Create effective marketing campaigns to generate buzz and attract customers to your cloud kitchen. Consider running advertisements (Online & Offline) to target specific demographics or geographical areas. Leverage email marketing by building a customer database and sending regular newsletters with updates, special promotions, and personalized offers.

Tie-up with Aggregators: Partnering with food delivery aggregators can significantly expand your reach and increase order volumes. Collaborate with popular delivery aggregators in your area to leverage their existing customer base and delivery infrastructure. Ensure that your cloud kitchen maintains consistent quality and timely delivery to establish a strong partnership with the aggregators and build a positive reputation.

How to Optimize Your Cloud Kitchen Business:

Cloud kitchen business also involves optimizing your operations to maximize efficiency, streamline processes, and enhance customer satisfaction. utilizing a cloud kitchen POS system, tracking your inventory effectively, and managing your deliveries efficiently.

Use a cloud kitchen POS system: A cloud kitchen POS system helps you efficiently handle orders, track sales, manage inventory, and monitor customer data. It simplifies the entire ordering process, ensuring smooth communication between your kitchen staff and the delivery team.

In India, several POS systems are available specifically designed for cloud kitchens. Some popular options include:

  • Zomato Base
  • eZee Optimus

Track your inventory: Effective inventory management is essential for cost control, minimizing wastage, and ensuring smooth operations in your cloud kitchen. You can optimise your ordering process, prevent stockouts, and reduce food spoilage by accurately tracking your inventory.

To optimize your inventory management:

  • Categorize your inventory: Divide your inventory into categories like perishable and non-perishable items.
  • Use technology solutions: Utilize inventory management software or cloud-based tools to track inventory levels, automate reordering, and generate reports for analysis.

Manage your deliveries: Efficient delivery management is vital for ensuring timely and seamless service to your customers. To optimize your delivery operations:

  • Partner with reliable delivery services: Collaborate with reliable third-party delivery aggregators or develop an in-house delivery fleet to ensure efficient and timely deliveries.
  • Communicate effectively: Establish clear communication channels between your kitchen staff and delivery team to ensure smooth coordination and avoid delays.
  • Monitor and track deliveries: Utilize tracking technology to monitor deliveries in real-time. This allows you to address any issues promptly and keep customers informed about their orders.

By managing your deliveries effectively, you can enhance customer satisfaction, build trust, and maintain a positive brand image for your cloud kitchen.

The article you may also like:

12 High-Profit Small-Scale Manufacturing Business Ideas

Analyze Your Cloud Kitchen Profitability:

Cloud kitchen business analysis

Assessment of profitability ensures long-term sustainability and growth. By analyzing the financial performance of your cloud kitchen, you can identify areas of strength, address weaknesses, and make informed decisions to maximize profitability. Following are the key steps to effectively analyze your cloud kitchen's profitability.

Track your expenses: It's important to track your expenses to ensure your business is profitable.

  • Determine direct costs: Calculate the expenses directly associated with food preparation, such as ingredients, packaging materials, and staff wages. This will help you assess the cost of goods sold (COGS).
  • Factor in overhead costs: Consider indirect costs such as rent, utilities, marketing expenses, and administrative costs. Allocate these expenses appropriately to understand their impact on profitability.
  • Monitor variable and fixed costs: Differentiate between variable costs (expenses that fluctuate with sales volume) and fixed costs (expenses that remain constant regardless of sales). This distinction helps in understanding the cost structure and potential areas for cost optimization.

Set realistic goals: You need to create realistic and simple goals for your cloud kitchen. In doing so you need to consider the different streams that contribute to your cloud kitchen's revenue. This can include direct orders, partnerships with food delivery platforms, catering services, or even the potential for ghost kitchen collaborations.

Make adjustments as needed: Research industry standards and compare your cloud kitchen's financial performance against relevant benchmarks to identify areas where improvements can be made.

Conduct regular profitability analyses to track your progress over time and assess the effectiveness of any operational changes or strategic decisions.

Cloud Kitchen Business Trends, Industry Insights, Profit Margins, Licensing and Budget Requirement:

Cloud kitchen business has great potential with approximately 14% CAGR growth can be observed in FY27. According to data $54 billion market size in FY 2022 and by 2026 it would touch $90 billion. 

The average profit margin is roughly 25-40% but it can scale further if your research is bang on. Initially, if you achieve 20-25 orders per day at an average cost of INR 250 then you would roughly get an average income of INR 4L. 

Tie-up with an aggregator would additionally deduct your margin approximately 20% plus tax. 

Machinery and equipment costs for small or medium scale would be between INR 1-2 Lakh. This cost can be minimized if you buy second-hand equipment.

Now coming to space, where you would require a minimum area between 150-250 sqft and monthly rent would cost between INR 10000-40000. Don’t go for luxury or expensive space for your cloud kitchen initially. It can vary from state to state.

For Licensing this is the most important part if you are planning to set up your cloud kitchen. 

  • Company Registration
  • FSSAI License
  • GST Registration
  • Trade License 
  • Gas Connection
  • Electric Connection

This would cost you between INR 40000-50000. These are mandatory for your cloud kitchen business.

For procuring raw materials you have a tie-up with local vendors. This comes under your operating cost. INR 30000-100000 will be the monthly raw material procurement budget. If your cloud kitchen is scaled then this can further go up.

Apart from raw materials packaging is the most attractive part of your cloud kitchen business. Roughly INR 40000-50000 initial cost you have considered.

Manpower - Helper, Chef, cleaning and managing the counter you need manpower to start your cloud kitchen business. The chef's cost will be higher compared with the rest of the people.

Chefs cost INR 14000-15000 each and other staff salary range from approximately INR 6000-8000. Roughly monthly salary costs INR 70000. 

If you haven’t tied up with any aggregators and you have your own website/app then the delivery cost is roughly INR 8000 approximately excluding fuel per person. 

My suggestion is to tie up with aggregators and start the initial journey and then you can further scale it up and expand your cloud kitchen business further. The profit margin in this model is between 10-25% which is not bad for your initial days.

After breaking all the element-wise costing the initial investment is look like approximately INR 5-6L for small and medium scale but in a larger format, you would require INR 20-30L.

Pros & Cons of Cloud Kitchen Business:

Conclusion:.

Starting a cloud kitchen can be a great way to start a restaurant business. However, it's essential to do your research and understand the cloud kitchen business model before you get started. If you're willing to put in the work, a cloud kitchen can be a very profitable business.

How to start a cloud kitchen business is super easy when you as an owner have considered its future then only you can plan your journey accordingly. This helps you to understand the market feedback and customer choice along with information about your local competitors.

What is a cloud kitchen?

A cloud kitchen is a restaurant that only offers delivery and takeout. There are no dine-in customers, meaning cloud kitchens can save money on rent, labour, and other expenses.

How can I learn more about cloud kitchens?

There are a number of resources available to help you learn more about cloud kitchens, including: 1. Online articles and blogs 2. Industry publications 3. Trade shows and conferences

What is the cloud kitchen business model?

The cloud kitchen business model is a delivery-centric approach where food is prepared in a centralized kitchen facility without a physical dine-in option, focusing solely on online orders through food delivery platforms.

How do I optimize operations in a cloud kitchen?

To optimize operations in a cloud kitchen, focus on efficient inventory management, streamline order fulfilment processes, and leverage technology solutions for automation and real-time monitoring. Additionally, prioritize menu engineering, staff training, and maintaining a smooth communication flow to ensure seamless operations and enhance customer satisfaction.

What is the profitability analysis of cloud kitchens?

It depends on the revenue streams, and your pricing strategy mainly. The profit range can be observed between 25-30% and it can see approximately 50%. But in the aggregator model, it varies between 10-25%.

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6 Most Popular Cloud Kitchen Business Models (& the Only Two We’re Betting On to Thrive)

Geert Merckaert

  • Food Delivery , Restaurant Management

Cloud kitchen business models

Here’s the thing — this was supposed to turn into a be-all-end-all post on the topic of cloud kitchen business models.

At least, that was the plan until I hit the research equivalent of a brick wall.

The fact of the matter is that cloud kitchen business models are still evolving. They are a smörgåsbord of moving parts, pivots, and changes.

I counted anywhere between 20 and 40 different iterations of the concept . And what’s making the situation more muddled is the fact that some operators are transitioning between concepts (and sometimes back). 

I found ghost kitchens that are:

  • Brand-owned, with self-delivery, no partnerships, and takeaway… that turn into…
  • Brand-owned, with self-delivery, aggregator partnerships and no takeaway… that morph into a…
  • Shared kitchen with a mix of self-delivery and aggregator partnerships.

And on and on it goes. This adds up, trust me.

Just so you know, you might see different names pop up. Don’t let them confuse you. Cloud kitchen, dark kitchen and ghost kitchen are synonyms. They all mean the same thing. It’s a food production unit built exclusively for, and optimised for, food delivery. There is no dine-in area.

So… why are there so many different types of ghost kitchens?

Well, blame the ‘amazonification’ of consumer experience and the concept of last-mile delivery.

Consumers want everything right this minute, which gave rise to aggregator and delivery platforms. It also pushed restaurants to invest in their own delivery fleets. Couple that with the fact that fast delivery can only be profitable if it’s also a short run delivery (a couple of kilometres, at most), and you get a lot of business model experimentation.

Restaurants that add delivery to their offer; restaurants that open pop-up stores to be able to service a particular area; aggregators that break into the restaurant business grow profits…

It’s a Wild West situation.

Oh, and did I mention the global pandemic? It really accelerated the rise of ghost kitchens.

This begs the question: are ghost kitchens a sustainable business model?

The answer is less straightforward.

While this obviously can’t be the ‘ultimate guide’ it still packs everything there is to know about the cloud kitchen game, to date.

You’ll walk away with an in-depth understanding of:

  • 6 main cloud kitchen models
  • How they work
  • How difficult to scale they are, and
  • How profitable you can expect each one to be.

And we’ll start with the OG of cloud kitchens… the pureblood cloud kitchen.

Recommended Reading : How Will Off-premise Dining Evolve in Europe?

Cloud Kitchen Model #1 – Brand-Owned Cloud Kitchen

This is as clean-cut as cloud-kitchen models get.

One location. One brand. One kitchen. A brand-owned single-cuisine ghost kitchen is a delivery-only operation, with no takeaway and no dine-in.

Cloud kitchen business model 1

Typical setup : The kitchen is usually located in a lower-end rent area but not too far from densely populated spots.

It’s relatively small and streamlined and employs a skeleton crew. Orders and deliveries are handled by several different aggregators to maximise exposure. Sometimes, the kitchen parallelly operates self-delivery, especially if it’s a well-known brand.

Profit potential : ★★★★

Upfront investment — low.  This is true if we’re talking about a new entrant that’s choosing between a dine-in restaurant and a cloud kitchen. A cloud kitchen is always a less substantial investment. However, an owner of a dine-in restaurant is often better off running a joint dine-in/cloud kitchen operation, at least until they’ve tested out their concept and the demand.

Business scaling — doable with effort. The best scaling tactic requires a slight tweak in the model — expanding the original operation and creating a centralised kitchen. The brand can then cover more ground through pop-up locations while keeping costs under control.

Recommended Reading : Cloud Kitchen Management Software: 17 Systems That Improve Efficiency And Profitability

Cloud Kitchen Model #2 – Dine-in With a Separate In-Location Delivery Production Line

In this cloud kitchen model, an existing dine-in restaurant creates a side-hustle dedicated to delivery/takeout. Basically, the restaurant takes its menu hits and tweaks them for delivery.

Despite appearances, most of these cloud kitchens are not thrown up ad hoc — there’s a system behind how this is done.

Cloud kitchen business model 2

Typical setup : The kitchen is located in a high-rent, frequented area. The delivery side of the operation is almost exclusively geared towards creating an additional revenue stream. Sometimes, it’s a measure to bridge a cash flow problem or a way to test out new menu ideas and concepts.

Dine-in and delivery production lines are separated, with similar (but different) menus. The restaurant partners with a few aggregators to handle orders and delivery (but can also run its own delivery).

Profit potential : ★★★

Upfront investment — low.  In a pinch, most existing restaurants can pull this off to increase volumes and stave off layoffs and financial ruin. This is why it’s so popular as a stop-gap measure during pandemic-related lockdowns.

The investment goes up when the operator focuses on growing the delivery side — new processes, extra employees, robust software.

Business scaling — very difficult. Scaling this iteration of a ghost kitchen is a pain, mainly because it’s not a true cloud kitchen. When scaling, this model usually morphs into a hub-and-spoke or a shared kitchen model because opening a dine-in storefront at new locations wouldn’t make financial sense.

Recommended Reading : 24 Cost-Reducing Tips for Cloud Kitchen Operators

Ghost Kitchen Model #3 – A Dine-In Brand Operating from One (or More) Shared Kitchen Locations

In this particular model, the business has a dine-in operation set up already, but the cloud kitchen aspect is physically removed from it and ran from a shared kitchen space.

Cloud kitchen business model 3

Typical setup : A well-known dine-in restaurant rents out kitchen space in a low-rent area to separate operations and expand reach.

In most cases, this cloud kitchen only operates during peak times (weekends, holidays, evenings). The staff rotates between the restaurant and the cloud kitchen, and orders and delivery are handled by several aggregators. The semi-prepared items are sometimes delivered to the restaurant in a bid to service a larger area.

Upfront investment — medium.  You’ll need a bit more money at the start to get this ghost kitchen model of the ground. That’s because you’ll be renting an additional space (likely a shared kitchen operation that’s already equipped). If the operation grows, you’ll also need to hire extra staff.

Business scaling — doable with effort but depends on how you set things up, and which direction you decide to take.

Running operations from several shared kitchens can morph into an unscalable logistical nightmare. However, if you expand your operations in one location, and then simply open up pop up storefronts to grow your reach, then scaling becomes easier.

Recommended Reading : Cloud Kitchen Best Practices (& What Pitfalls to Avoid)

Cloud Kitchen Model #4 – Hub & Spoke

A hub and spoke cloud kitchen model has several variants — single brand, multi-brand, shared kitchen, and so on.

The point of each one of them is to have a centralised production unit where most of the items are premade, and then pop-up locations that facilitate reach (and where items are finalised).

Ghost kitchen business model 4

Typical setup : The centralised kitchen is located in a low-rent area (owned or rental). It’s the production hub where most items are prepared in advance and sent off for finishing touches to smaller pop-up locations (strategically placed to cover more ground under the last-mile delivery concept).

Profit potential : ★★★★★

Upfront investment — high.  Diving straight into a hub and spoke model is expensive because of the high volumes involved. In most cases, the centralised kitchen space will be business-owned or rented (so not a shared kitchen).

Additionally, labour costs tend to go up with every pop-up location, and you need time to recruit and train employees so that means extra cost for at least a couple of months before you deliver your first order.

Business scaling — easy. A smooth centralised operation with low-cost pop-ups lends itself to scaling. It’s just a matter of finding 8 square meters in a residential area and hiring one additional person to run that specific operation.

Keep Track Of Internal Orders

Order, Deliver & Receive From Central Kitchen To Stores. Your inventories are updated automatically on both ends.

Cloud Kitchen Model #5 – Multiple Virtual Brands In a Shared or Business-Owned Kitchen

This is a slightly more elaborate setup where one business runs several different brands (generally different types of cuisines) in an owned or shared kitchen space. There’s no dine-in option and no takeout — it’s exclusively a delivery operation.

Ghost kitchen business model 5

Typical setup : If there are no pop-up locations injected into this model, then the kitchen is in a prime real-estate area that’s densely populated.

It’s usually a large kitchen (but it doesn’t have to be) with several production lines where different brand items are prepared.

These brands are closely connected (sushi, poke, and chirashi, for example), which means that they can be prepped by one team. This also means that ingredients are bought at volume to keep the price down.

Ordering and delivery are mostly handled through aggregator partnerships.

Upfront investment — low/medium.  This model is more expensive to set up than a cloud kitchen serving just one cuisine. For one, you’ll likely need a larger space, either owned or rented (in a relatively high-rent area). In addition to that, you might need some expensive equipment, depending on your volumes and cuisines.

However, this type of cloud kitchen is not as expensive as the hub and spoke cloud kitchen model because we’re still talking just one location.

Business scaling — easy/doable. Replicating a winning multi-brand cloud kitchen in a different area/city should be relatively easy, as long as what’s on offer resonates with the population.

Processes, know-how, and software solutions can be transferred, which helps to keep the costs on par or lower than the original location.

It will, however, depend on where you’re expanding. Before scaling (and especially before trying to break into a new market), it’s important to do a thorough deep-dive into the demographics and ordering/eating habits.

Recommended Reading : What Is The Host Kitchen Model And How To Get In On It?

Cloud Kitchen Model #6 – Shell Kitchen /w Outsourced Food Prep/Delivery/Support

This one is… slightly complicated. Imagine a cloud kitchen that only does final touches. It can offer one cuisine (most common), or several of them — but the offer is often really slim and uninspired.

Overheads are kept to a minimum, and the biggest concern is how to get maximum volumes with minimal costs.

Cloud kitchen model 6

Typical setup : What you have here is, basically, a pop-up location that’s not served by a dedicated centralised kitchen.

This pop-up orders semi-prepared dishes from a shared kitchen (or buys them from a grocery store), doubles the asking price, and partners with aggregators for orders and delivery.

The partner takes care of the orders, delivery, and food preparation. The operator only owns a great central location that serves as a base of operations for the final leg of delivery.

Profit potential : ★★

Upfront investment — very low.  This is an extremely low-cost model, especially if we’re talking about a partnership with an aggregator.

However, places like this have a difficult time capturing their slice of the market (and holding on to it). More often than not, the menu items are neither innovative nor high-quality.

Business scaling — easy. Scaling this model is easy if you can find a centrally-located place without too much competition (processes, know-how, and software solutions are easily transferable).

Okay, now, let’s talk about why you are here, the reason you have scrolled all the way down to the bottom of the page, the answer to the question:

which type of cloud kitchen has a sustainable business model. 

Here we go:

The Two Ghost Kitchen Models That Will Come Out on Top

Thanks to their current boom, virtual restaurants are expected to grow to a US 1 trillion industry by 2030 .

There’s no doubt that the disparate models listed in this article are contributing to that growth.

However, not all of them will survive to celebrate that whopping 1 trillion milestone. If you ask me, most will flop long before that as two cloud kitchen models become predominant.

Those two models are: 

…(imagine a drumroll right about now)…

  • The business-owned hub and spoke multi-brand cloud kitchen, and
  • The multi-brand shared kitchen model.

Why? Well, I’ve identified two main reasons:

  • Both models are easily scalable (after a heftier initial investment). They deal in large volumes, which means that they can keep their food cost down. And they don’t put their eggs in one basket (multiple brands and cuisines).
  • Innovation, experimentation, and pivoting potential are all built into these models. They can test out various brands without committing to anything (and without spending too much money in the process). What works, stays. What doesn’t, goes.

But hey… as I said, this is an educated guess.

What I know for sure is that whatever ghost kitchen model comes out on top, it will get there through business optimisation and cost control , because that is exactly what successful cloud kitchen operators are doing right now.

And that’s where Apicbase comes in.

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Tell us about your project and we’ll show you how to get more control over costs and processes .

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Cloud Kitchen Business Model | How Do Cloud Kitchens Make Money?

cloud kitchen business model

The on-demand economy has disrupted traditional businesses across industries, and the food business is no different. With customers wanting their food faster and more conveniently, restaurants have had to scramble to keep up. Some have turned to technology, others to delivery services, and still, others have gotten creative with their menu offerings.

But there’s one solution that’s become increasingly popular in recent years, particularly in urban areas: the cloud kitchen – a restaurant that exists only for delivery, with no dine-in option.

Thanks to the Covid pandemic, the food and beverage industry have been forced to re-evaluate the way it does business. And one of the most popular trends to emerge has been the cloud kitchen.

So, what exactly are they? How do they work? And perhaps most importantly – how do they make money?

What is a Cloud Kitchen?

A cloud kitchen, also referred to as a ghost kitchen or virtual kitchen, is a fully or partially equipped commercial kitchen space in a strategic location, used by multiple food businesses to prepare their food for delivery. These kitchens are often smaller and do not have seating arrangements or dine-in facilities. Instead, it is a delivery-only restaurant where the online ordering and delivery are done via food aggregators or the restaurant’s app. 

This way, the restaurant can do away with the expensive overhead costs associated with running a dine-in establishment, such as rent, waitstaff, decorations, etc. And since they save on these costs, they can pass on the savings to the consumer in the form of lower prices and high quality.

Cloud Kitchens are becoming popular in the food sector because of their ease of establishment and operation, minimal investment, capacity to manage various brands under a single roof, and less space consumption. In fact, according to statistics, the global cloud kitchen market , valued at USD 51.96 billion in 2020, is expected to rise by 12.4 % CAGR from 2021 to 2028 and can create  a $1 trillion global opportunity by 2030.

The Idea Behind Cloud Kitchen Business Model 

The idea of delivery-only restaurant facilities isn’t new. In fact, Grubhub and Seamless were already operating 10% of their New York business from cloud kitchens as early as 2015.

However, with the COVID-19 pandemic and the resulting lockdown, people’s dining habits have changed drastically. More and more people are now opting to order in food rather than dine out.

While the dine-in business took a hit due to the pandemic, the on-demand delivery business model saw a surge in demand.

The on-demand startups like Zomato , Swiggy, and Uber Eats saw a boom in their business and accelerated their growth plans by including cloud kitchens in their portfolio.

All this accelerated the growth of dark kitchens by five years within three months in 2020 .

Today, a single company may run five different cloud kitchen brands dealing in different cuisines out of a single location.

Who Are The Customers Of Cloud Kitchen?

Cloud Kitchens targets to garner a significant share of working professionals and youth mass willing to spend on high-quality food delivered to their doorsteps. The independent cloud kitchen’s primary customers are those who prefer a single cuisine without going out of their houses and rely heavily on third-party applications for food delivery.

What Value Do Cloud Kitchens Provide To Their Customers?

Millennials and Gen Z are heavily conditioned to technology-enabled convenience. They demand more variety of quality food but are unwilling to spend time cooking it themselves or going out to eat. They also prefer not to pay the high service charges that come with dine-in restaurants.

This is where Cloud Kitchens comes in. Combined with the on-demand economy, they provide a solution that is tailored to the needs of this target audience.

  • Customers get food with just a few taps.
  • It’s less pricey than the dine-in alternative.
  • They get a variety of cuisines to choose from.
  • The process is simple and easy to follow.
  • Several cloud kitchens operate 24×7.
  • Customers also get hassle-free payment options such as UPI, Credit or Debit Cards, Internet banking etc.

How Do Cloud Kitchens Operate?

Cloud kitchens operate on a delivery-only basis. To deliver meals for off-premises eating, these restaurants rely on orders from their website or delivery apps like UberEats , Grubhub , Deliveroo , Zomato , Swiggy , etc.

This business strategy enables restaurants to diversify and extend their customer base while reducing the highest operating costs—rent and labour. With cheap overhead and just kitchen staff, restaurants save expenses while increasing orders.

Moreover, since customer acquisition is handled through digital channels, cloud kitchens substantially invest in technology that leverages the entire business operation. Besides technology, other significant expenditures include well-equipped kitchen equipment and labour, such as chefs and delivery personnel.

Some cloud restaurants use their delivery application to customise their service, while others partner with delivery aggregators.

There are several ways to run a cloud kitchen. It can range from adding a delivery-only brand to an existing restaurant kitchen to running a purpose-built commissary kitchen housing multiple brands. However, the primary reason for the success of the cloud kitchen business is its ability to generate revenue through various business models .

The cloud kitchens operate on the following business models:

  •   Independent cloud kitchen: This is the classic cloud kitchen model. It is a restaurant with no physical presence. As the demand for online food grew, so did this concept. It consists of a single brand that prepares food in a kitchen based on online orders. Typically, such kitchens focus on a single cuisine. It is a self-sufficient business model for receiving orders and delivering packed meals.
  •   Multi-brand cloud kitchen: Rebel Foods developed this business model in 2011. This cloud kitchen business model is slightly more complex and employs data intelligence to develop business strategies. It is based on an in-depth assessment of food consumption trends in a specific location. The most popular or ordered cuisines in a particular area or demographic are identified and catered to using this cloud kitchen model. Food is prepared in a shared commercial kitchen where various brands prepare and package the meals. It is a strategic and efficient model that generates profits while reducing operational costs.
  • Hybrid cloud kitchen: This model is a combination of a takeaway restaurant and a cloud kitchen. It functions similarly to a cloud kitchen but has a storefront where customers can come and get their food. Here, the food delivery process can be done independently or by an aggregator food delivery app like Zomato or Swiggy. The hybrid model employs a single brand in a single kitchen. However, it also has multiple walk-in outlets that provide takeaway and delivery services for food orders.
  •   Co-working cloud kitchen: In this cloud kitchen model, entrepreneurs make a living by renting out space to other cloud kitchen businesses. The kitchen space is rented out to multiple third-party brands, which acts as a co-working space and an incubator for other cloud kitchens. The entrepreneur here acts as a landlord rather than a business owner. Furthermore, the business owner is expected to provide utility services and supplies that make operating a cloud kitchen easier in a shared kitchen.
  • Delivery app-owned cloud kitchen: In this business model, a delivery app company leases or buys a kitchen space and allocates it to various emerging food brands. These food delivery apps manage the orders and the delivery fleet. The delivery app company and the food brand have a symbiotic relationship in this model. Food brands use the app’s reach to gain more customers, and the app uses the food brand to provide more options to its users. For instance, this cloud kitchen model is used by food aggregator apps such as Zomato and Swiggy.
  • Fully outsourced cloud kitchen:  As a novel concept, this cloud kitchen model was introduced by the food delivery aggregator Kitopi . First, most food preparation is outsourced and delivered to the kitchen. Then, the chef only adds the finishing touches. And finally, the delivery of the order is handled by Kitopi.

Key Activities Of Cloud Kitchen

The key activities of Cloud Kitchen include:

  • Developing relationships with restaurants and retail stores.
  • Recruiting delivery companies and suppliers. They can work full-time, part-time, or as freelancers.
  • Acquiring customers and managing their orders.
  • Managing the Payment and Delivery Process.
  • Managing technical operations.
  • Developing and updating the IT infrastructure required to run the business.
  • Resolving customers’ and partners’ queries and concerns.

Key Channels

Cloud kitchens can reach the customers either directly – through their own application or website – or indirectly, through marketplaces such as Zomato, Swiggy, and Foodpanda. They can also partner with delivery companies such as Dunzo, Shadowfax, and Rapido to get orders from customers who use their platforms.

Key Partners Of Cloud Kitchen

The operating model of Cloud Kitchen focuses on two key partners —

  • Enabling Partners: It includes entrepreneurs who provide commercial kitchen spaces to allow cloud kitchens to function and prepare delivery optimised menu items. The kitchen spaces may be either partially or fully equipped.
  • Delivery Partners : These individuals work as partners for the cloud kitchens and help them deliver the food to their customers on time—for example, Foodpanda , Zomato, Swiggy etc.
  •   Packaging Partners: Packaging partners help cloud kitchen businesses optimise their orders’ packaging.
  •   Payment Processors: The Cloud Kitchens must have a payment gateway or processor. Payment gateways aid in the tracking of all consumer payments and the flawless execution of orders. Payment gateways such as UPI, Paypal, and others provide similar services to Cloud Kitchens.

Key Resources Of Cloud Kitchen

Cloud Kitchens build their operations on the following key resources:

  • Human Capital: Human capital is an intangible asset of any business. It boosts productivity and, thus, increases the profits of the company. Hence, cloud kitchens investing in their employees are more likely to be productive and successful.
  • Technical inputs: Technology is essential for the seamless operation of a cloud kitchen business, promoting operational efficiency. A comprehensive technology platform will seamlessly integrate the Point of Sale (POS) system, Integrated Kitchen Display System (KDS), and inventory management. As a result, it will assure operational efficiency and the smooth running of your cloud kitchen business.
  • Financial resources: As the demand for online food delivery is growing, cloud kitchens are becoming popular for starting a new restaurant business. Besides, they require less financial assistance than a traditional restaurant. Hence, the investors in cloud kitchen can meet the financial needs of the cloud kitchen businesses through funding. 

How Do Cloud Kitchens Make Money?

Cloud kitchen revenue model isn’t too different from that of a restaurant. The main difference is that the former doesn’t entertain dine-in customers.

The revenue streams and costs of a cloud kitchen are often similar to a usual restaurant.

Revenue Streams of Cloud Kitchens

A cloud kitchen generates revenue much the way a traditional kitchen does. They earn from the sale of their food per order basis.

The kitchen can also earn money on a subscription basis. For instance, customers who subscribe to meals from the cloud kitchen can pay for their food at regular intervals, like weekly or monthly.

Besides this, cloud kitchens that operate independently may also charge customers certain delivery fees.

Costs Incurred by Cloud Kitchens

The typical costs for a cloud kitchen include the following:

  • Rental space for setting up the kitchen: The cloud kitchen model has a cost advantage over other restaurants. The kitchen space can be cheaper and does not need to be in a prime location commanding premium rentals.
  • Cost of equipment and packaging
  • Ingredient costs.
  • Staff costs include salaries of chefs, delivery personnel, and support staff.
  • Marketing: Brand promotion and marketing costs to ensure customer brand recall.
  • Technology that streamlines operations and automates business processes.
  • POS and Inventory management that focuses on reducing waste and handles lost orders.

For example, let’s see the cost breakdown for setting up a cloud kitchen in the US.

cost breakdown for setting up a cloud kitchen in the US

Bottom-Line?

Cloud kitchens are disrupting the food industry as food lovers are increasingly shifting towards ordering their food online and getting it delivered to their doorsteps. While restaurants will always have a stronghold due to their dine-in experience, cloud kitchens are still emerging as strong competitors due to their convenience and variety.

Moreover, cloud kitchens are here to stay, with social distancing becoming the new normal after the COVID-19 pandemic. They have already started capturing the market and piqued investors’ interest.

Go On, Tell Us What You Think!

Did we miss something? Come on! Tell us what you think about our article on  cloud kitchen business model  in the comments section.

Anwesha Panda

A lawyer and an avid reader with a keen interest in company laws. Anwesha has good experience of writing in the legal and startup industries for well over 10 companies. In her free time, you can find her reading fiction and stargazing.

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What Is Cloud Kitchen Business Model? List Of 5 Cloud Kitchen Business Strategies

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Cloud Kitchen is a disruptive business model in the hospitality industry, which has opened up new frontiers of the food business worldwide. There is a reason why Cloud Kitchen Stocks are in demand, and venture capitalists are making a beeline to invest in them.

A Cloud Kitchen is a restaurant kitchen that only serves and delivers online or call-in orders, with no dine-in facility.

Hence, imagine a large hall-type complex, where food is being prepared and shipped, but no customer can sit there and eat. Cloud Kitchen Business is also known as satellite kitchens or dark kitchens. Ghost kitchens and virtual restaurants are also reasonably popular terms for this concept.

Why is Cloud Kitchen Business Becoming Popular?

As per a 2018 survey, around 67% of India’s restaurant owners wish to open a Cloud Kitchen as a new revenue source. The popularity of Cloud Kitchen has soared immensely in the last few years, mainly because of low infrastructure costs and high margins. Since orders are only accepted via online medium, and in some cases via calls, there are no additional overheads to maintain dining space, employ serving staff, and pay steep rentals.

All you need is a kitchen and expert cooks to make food. In most cases, delivery is handled by a third party, thereby saving a tremendous amount of money for the restaurant owners. Even if the kitchen owner decides to deliver the orders on their own-self, the cost is much less than paying rent for the dining space and employing staff members to serve the food.

5 Key Strategies for Building a Cloud Kitchen Business Model

The Cloud Kitchen business model can be explained in just three steps:

  • Orders come in via online channels, aggregators, or direct call
  • Food is prepared and packed
  • Order is delivered by the 3rd party aggregators or the kitchen themselves.

It’s as simple as this. However, several strategies and Cloud Kitchen business models exist to execute these three steps of delivering food to the end-users. These are:

1. The Stand-Alone Cloud Kitchen Business Model: Single Kitchen, Single Brand, and No Storefront

In this strategy, the kitchen is an independent, standalone entity with no association with any 3rd party aggregators or any association with brands. They own and nurture one single brand of the kitchen, and accept orders directly from their customers. This is considered as the original Cloud Kitchen concept, from where this while business model started.

Typically, a standalone and independent Cloud kitchen has 500-600 feet of the kitchen area. Advantages being full control over your Cloud Kitchen Marketing, customer database, and pricing. Scalability is a significant disadvantage, and so is limited cuisine and limited customers.

2. Multi-Brand Cloud Kitchen Business Model with Multiple Outlets

In this strategy, you open several multiple outlets across multiple Cloud Kitchen Locations, and every outlet will develop its multiple brands and, thus, multiple cuisines. This is an advanced and more scalable Cloud Kitchen version, wherein the outlets and brands are created based on data and analytics.

Typically, such a muti-brand, the single kitchen will analyze the user demographics, find out the demands, the feasibility of hyperlocal deliveries, and then based on these data points, open up outlets and multiple brands of cuisines. They usually focus on developing cuisine brands that are not available in that location and maximize their orders.

Such single kitchens will serve a 5-6 km radius for quick delivery, and every brand originating from the single kitchen will focus on one single cuisine.

For example, suppose such a single kitchen outlet comes up in the Lajpat Nagar area in New Delhi. In that case, they can develop multiple brands of cuisines focusing on the locals’ tastes and preferences. One brand can be, say Non-Veg, with a particular focus on Biryani. The other brand from the same outlet can be Chinese cuisines, with a specific focus on noodles and Manchurian varieties. Delivery can be self-fulfilled, or partnership with 3rd party aggregators.

Fasso’s is a good example of this Cloud kitchen business model.

3. Aggregator-Owned, Multi-Brand, Rented Co-Working Cloud Kitchens

In this Cloud Kitchen Business Plan, a 3rd party aggregator will own a shell kitchen with bare minimum facilities such as gas pipes, ventilation, and drainage. Now, this 3rd party aggregator will rent out this space to multiple kitchens, having brands of cuisines. The kitchen owner needs to bring staff, raw materials, and cook the food. Rest everything will be handled by the 3rd party aggregator: menu selection, marketing, delivery, and payments.

Such co-working kitchens are becoming popular because the Cloud kitchen is shared; hence rents are low, and besides cooking food and bringing in raw materials, the kitchen owners need not do any other business activity.

Swiggy is a good example of this model. The order comes to the multi-brand Cloud kitchen via Swiggy, the kitchen owner prepares the food, and Swiggy handles the delivery and payment.

4. Hybrid Model: Aggregator-Owned, Multi-Brand, Rented Co-Working Cloud Kitchens with Storefronts

In this hybrid model, everything is the same as Swiggy’s Aggregator-Owned, Multi-Brand, Rented Co-Working Kitchens model, but with a storefront. Zomato is a pioneer in executing this model since they already had partnerships with restaurants with dine-in facilities. All they did was induce a co-working Cloud Kitchen Model with multiple brands and cuisines, and it scaled up.

In both the hybrid and non-hybrid models, the major disadvantage for the kitchen owners is that they don’t get to access the customer database, and they can’t control the pricing.

5. Outsourced & Managed Cloud Kitchen Business Model

This is a relatively new Cloud kitchen business concept, wherein the entire process of taking orders, preparing the food and delivery is outsourced to a third party. US-based Kitopi has pioneered this new Cloud kitchen business model and scaling it fast.

This is how it works –

A customer orders a food item from a restaurant called Tasty Foods. This order can come via Tasty Food’s website, social media, or Kitopi’s call center. Kitopi has already bought the raw materials and has a basic kitchen facility. Kitopi pre-prepares the food and sends it to the kitchen of Tasty Foods. Chefs at Tasty Foods give the final touches and informs Kitopi. Kitopi delivery partners pick up the food and deliver it.

It can be described as a hybrid model between traditional restaurant business, Cloud Kitchen Concept, and outsourced food operations.

The very idea of Cloud Kitchen Business is mammoth, and there exist several layers and more layers within each strategy of building a new Cloud Kitchen. You can consult with an expert in Cloud Kitchen Business right now, at MSMEx and take your plans for a Cloud Kitchen to the next level. MSMEx provides a startup learning platform for MSMEs and small businesses to connect and consult with business strategy and growth experts.

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Cloud Kitchen: Meaning, Concept, Business Models, Benefits & Resources

Cloud Kitchen - Main Image

Let us understand the idea of cloud kitchen with this example- 

Did you ever order some food online that you liked so much and so you wanted to go to that place to dine in? And to your surprise, you found that it has no front-of-the-house setting for people to dine-in? It is a place that offers the delivery-only option. That is what a cloud kitchen is.

 By now, you might be thinking that this is what the food delivery apps do. And it means that the restaurants which offer delivery option, also act on a cloud kitchen model. You are thinking in the right direction.

 Let’s have a look at the simple/advanced cloud kitchen business models.

The 7 Cloud Kitchen Business Models

1. independent virtual restaurant model.

It is the original and the simplest cloud kitchen business model. 

  • Single Kitchen
  • Single Brand
  • Delivery-only
  • Low investment: Because no seating place to dine in and front-of-the-house staff is required.
  • Suitable for: Startups, small businesses, and people who want to start a home-based food business.  

2. Shared Cloud Kitchen Model 

It is also known as Commissary Kitchen Model. In this type of model, multiple businesses take a commercial kitchen space on rent on sharing basis.

  • Single kitchen
  • Multiple Businesses operating under the same roof
  • Low investment: Costs are less as a person takes space on a lease on sharing basis with other businesses instead of giving the entire rent of the place himself/herself.
  • Suitable for: Startups and small businesses

3. Traditional Brick-And-Mortar Restaurant integrating Cloud Kitchen Model 

This model is for the restaurants that want to expand their customer base online by offering the delivery option with the traditional dine-in option.

Based on the kitchen location, we can divide this model further into two types:-

 (A) Managing delivery from the restaurant itself

In this type of business model, the restaurants prepare and serve online delivery orders from the in-house kitchen itself. This in-house offering model is helpful for the restaurants that want to earn extra incomes from the same kitchen area, staff & other business resources.

(B) Managing Dine-in at Restaurant, and Delivery from the separate Cloud Kitchen

This model is suitable for businesses that want to manage their in-house and online delivery orders at separate places. This business model is helpful because of two main reasons.

As the kitchen at the restaurant is not custom-built to cater to delivery-only orders, it can affect the order fulfillment efficiency.

During the busy hours of the restaurant, preparing & delivering the online orders and the dine-in orders at the same time can be difficult. Longer waiting times for their orders can impact the experience of both dine-in and online customers.

4. Single Brand, Multiple Cloud Kitchens Model

In this type of business model, a single brand owns multiple cloud kitchens in different areas. This model is suitable for businesses that receive online food delivery orders in bulk. For the efficient management of these orders, they use more than one kitchen to prepare the orders faster.

This model is also helpful to the businesses that offer food delivery services at many different areas/locations. By setting up cloud kitchens at the nearby location to the service area, businesses can ensure the timely delivery of the orders.

5. One Business, Multiple Brands, Single Kitchen Model

This cloud kitchen model is for businesses that offer different types of cuisines. With this model, they can sell each cuisine type with a separate brand name without being worried about the extra costs of a different physical setup for each brand.

6. Ghost kitchen offering Takeaway/Drive-through Model

In this type of business model, ghost kitchens or virtual restaurants have a storefront to give customers the food pickup/takeaway option with the delivery option.

7. Aggregator Model, Offering A platform to different Cloud kitchens

This model is for anyone interested in earning through the cloud kitchens concept on a commission basis. In this type of model, a business person offers an online platform to the restaurants or cloud kitchens to let them accept online orders for food and manage delivery. The business person doesn’t own these kitchens, he/she just charges a fee from the kitchen owners for selling food on his/her platform.

Want to launch an on-demand food delivery business ?

After understanding the different business models, it is time to know the benefits or advantages of a cloud kitchen.

Benefits Of Cloud Kitchens

A) lower investment/overhead costs.

With the cloud kitchen concept, the operational costs of the business are reasonably low. As there is no need for a dine-in setting, one can save money on the seating space, maintenance/interior designing of the place, front-of-the-house staff, and the equipment (like table, chairs, expensive cutlery/utensils, etc.).

b) Competitive Pricing

As the operating cost of a ghost kitchen is relatively lower than a restaurant offering delivery along with the dine-in option, the dark kitchen business can provide quality food at a much lower cost. It helps virtual kitchen businesses to gain a competitive edge and increase their profit margin.

c) Run & Manage Multiple Brands Easily

Running multiple brands with a physical dine-in space for each of the brands requires a large amount of money/a big budget. But, with the concept of dark kitchens or virtual restaurants, one can run multiple brands under a single roof without much financial investment.

d) Shared Kitchen For many Businesses

As no one would visit the place to dine in, many businesses can share a single cloud kitchen. It helps these businesses to cut costs.

e) Easy To Start A Business

As shadow kitchens are based on the delivery-only model, starting a business is so easy that one can even launch the business from his/her home kitchen.

f) Improved Efficiency

Ghost kitchens are specially designed to cater to delivery-only orders. So one can easily place tools, equipment, or packaging material at hand, do batch meal prep and complete orders at a much faster speed than the traditional restaurants offering delivery.

g) Menu Flexibility

A menu available on the food ordering website/app is much easier to update than the physical menus available in the restaurants. For even a minor edit in the physical menus, one has to reprint the new menus, which is both time-consuming & requires extra printing charges. But, the menus of the cloud kitchens can be easily updated on the website/app within minutes, with no extra cost involved. It allows the cloud kitchen business owners to experiment with the menu according to the changing consumer trends.

h) Increased Brand Reach

With the virtual kitchen concept, one can reach a large customer base online. The traditional brick-and-mortar restaurants that optimize their business for delivery can get good business exposure with their website/app. The additional marketing channels lead to more customers and hence increased incomes.

i) Scalable

After looking at the different cloud kitchen business models, you can see how much business scalability this concept offers. No matter how small you start, you can scale up your business with ease. Looking at the immense growth potential, it would be a good idea to invest in the dark kitchen concept.

Famous Examples of Cloud Kitchen Startups:

Cloud Kitchen brands by Rebel Foods:- Fassos, Behrouz Biryani, Oven Story, Firangi Bake, Mandarin Oak, The Good Bowl, Sweet Truth;

EatClub’s Box8, MOJO pizza; 

 Swiggy, Zomato, Foodpanda

Which Businesses Can Use Cloud Kitchens?

  • Catering Business
  • Restaurants offering delivery/takeaway option
  • Meal-Prep Companies or Meal-Kit offering Businesses
  • Packaged food sellers
  • Food truck businesses
  • Home-based food businesses
  • Tiffin service businesses

Start Your Food Delivery Brand

Do you want to build your online food delivery business?

Get Resources to Run a Successful Cloud Kitchen Business

(i) launch your online food ordering website.

Launching a website to accept orders online is the first step to start your business on the cloud kitchen model. For that, you need to connect with the top company/developers to get the best website design & development services .

(II) Capture On-Demand Market With a Food Delivery App

Get your business ready for mobile users by investing in an app.

Watch the video to know how our food delivery app works.

Want more information about our food delivery app solution ?

(III) Integrate in-house and online sales data with POS system

Having a POS system software can make your life much easier if you handle the offline/in-house orders along with online orders.

Watch this video to know how our pos system works.

Want to know more about the pos system ?

Do you still have any queries about the cloud kitchen concept? Or are you interested in starting your business on the cloud kitchen model? Get in touch with us now!

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Recent Posts

  • Why do you need to launch an online meat app for the butchery business? 15 February, 2023
  • What are the benefits of having an online meat delivery app for order tracking? 15 February, 2023
  • Why your traditional butcher shop needs an e-commerce based meat website? 21 January, 2023
  • How farm to fork model is reshaping the meat retailing industry? 2 November, 2022
  • How to start an online meat delivery business? 2 November, 2022

How to Start a Cloud Kitchen Business?

  • Business Plan Cloud Kitchen
  • What Is a Cloud Kitchen?
  • Advantages of Cloud Kitchens for Restaurants
  • How To Run A Successful Cloud Kitchen Business
  • Cloud Kitchen Business Model
  • How Much Will It Cost to Start a Cloud Kitchen?
  • Jignesh Shah
  • October 30, 2023

Summary: Owing to the high competition, excessive startup costs, complex regulations and red tape to start an on-premise restaurant business, people are exploring options in Cloud kitchen. It has huge potential as people find it the safest and easiest way to get their delicious food served and delivered at their convenience. The cloud kitchen aka dark kitchens, ghost kitchens, virtual restaurants seems beneficial for startups who do not want to start and experiment with new initiatives with less upfront opening costs. So, we are here to boost your effort. Explore this guide on how to start a cloud kitchen business and make it successful.

Do you want to start a ghost kitchen or cloud kitchen? Or, are you exploring how to start a cloud kitchen? Or, is it something that you want to know if starting a cloud kitchen is beneficial? Yes…! From skilled staff and kitchen equipment to restaurant locations and interiors, you need to invest a hefty amount of money. Whereas, a virtual kitchen can be the best option with less investment. But, if you want to make a good profit in F&B space without investing a large amount of money, starting a cloud kitchen is the right option at this moment.

Starting a cloud kitchen is the most important beneficial business nowadays. But, not all of them are so successful. The reason is implementation. Many entrepreneurs with great ideas to start a ghost kitchen fail to implement. They just bounce before they leap. Companies are not able to implement business ideas with proper execution plans.

In this article, we have primarily discussed how to set up a cloud kitchen and how much it will cost to start a cloud kitchen business. You will explore the following points;

  • Cloud Kitchen Market
  • How to Start Cloud Kitchen Business
  • How Much Will It Cost to Set Up Cloud Kitchen Business

What is a Cloud Kitchen?

A cloud kitchen is part of the restaurant industry that primarily offers online food delivery and takeout —the same like a common restaurant does. But, a cloud kitchen or ghost kitchen does not need to have a storefront with dine-in space as it can be started in home with a little kitchen space. You don’t need to manage staff or even hire people while eliminating front-of-house labor and overhead. You just need to create a healthy and delicious menu, connect with food delivery partners or build your own food delivery app and start serving people.

In one line, a cloud kitchen is a commercial kitchen that offers online food delivery and takeout services.

Cloud kitchens have several Benefits, including:

You would ask, why the cloud kitchen business model? Well, it’s a quick way to enter the restaurant business and comparatively cheaper. Believe it or not, the revolutionary business is going places with the ease of establishment and simple operation it offers.

Here are some core benefits of the delivery-only kitchen.

  • A cloud kitchen is cost-effective because the business solely engages with the financial investments of kitchen staff and delivery agents. There is no need to spend a handful on hosts, servers, valets, etc. Thus, the operational cost reduces to a minimum.
  • More brand exposure at a minimum cost. With a cloud kitchen business model, restaurateurs can start multiple brands without changing locations or investing a wholesome in a new brand. For example, a cloud restaurant offering Mexican cuisine can now set an entirely new brand for Thai cuisine without extending its menu! An entirely new brand with nominal cost.
  • Flexible menus are a chef’s kiss to the list of advantages. Cloud restaurants can experiment with changing menus without the burden of updating physical menu cards! Also, it lowers the cost to create a menu every time it’s updated!
  • Data tracking helps the restaurant owner to save additional expenses by scrapping items with fewer orders, executing new strategies to gain customers, and so on. In simpler words, the business will be able to meet demands with efficiency and lower wastage.

Tips to Setup Successful Cloud Kitchen Business

Running a cloud kitchen isn’t tough, but it requires a whole lot of effort to make it successful. The journey begins right with building a strong and bulletproof workflow. So, while you are determined to start a food delivery business and make it successful, take a look at the steps involved in setup cloud kitchen business.

Online ordering in a cloud kitchen setup

The primary source of ordering in a delivery-only restaurant is online. The online restaurant can receive orders in multiple ways like online food apps, websites, and even via telephone calls.

A cloud kitchen POS is a must in this system because without it, accepting and managing orders becomes difficult.

Processing an order in an online food delivery system

Once the orders are received online or via telephone calls, the next step is to process them. The significant difference lies in maintaining a unique taste and customization according to customers’ needs. To solve this order processing issue, ghost kitchens designate different teams of chefs for various cuisines or brands they run in the space.

It is here that the POS is used the most. The POS kitchen display system displays the received orders and additional cooking instructions directly in the kitchen. The kitchen staff can easily view the details and prepare the order accordingly.

Once the order is complete, the chef can mark it as “done” and send it through packaging. In brief, every stage from receiving orders to preparation, packaging, and dispatch is recorded in the POS. The collected data can be viewed and analyzed later to improve the cloud kitchen business.

Additional Reading :   Why Cloud Kitchens Need an Online Ordering System

Kitchen staff for cloud kitchen

For running a successful cloud kitchen restaurant, you need the best chefs. The main goal of virtual kitchens is to keep the customers happy and satisfied by delivering flawless meals, the majority of investment should be put to hire the best chefs. Since there is no dine-in, restaurateurs can skip hiring wait staff, hosts, and other personnel.

Apart from skilled and talented chefs, restaurateurs need delivery personnel if they want an in-house delivery system in their cloud kitchen setup.

Supply management

Having a robust supply management system is necessary if you want to establish a successful ghost kitchen . There is no difference between the supply management of a cloud kitchen and a commercial kitchen. However, restaurant owners need efficient management of suppliers.

Depending on the restaurant’s requirements, there can be one supplier for one brand, and another for a different brand. If the base ingredients are the same, then one supplier can take care of everything.

Inventory management for delivery-only kitchen

Having multiple brands under a single cloud kitchen business can be difficult to manage. However, with the right checks and numbers, inventory management can become easy. A smart POS can help restaurateurs to handle inventory with care.

POS enables viewing and managing inventory at any point in time. Thus, helping with keeping daily stock consumption in check. Also, based on the requirements, purchase orders can be raised for each brand.

Location for Cloud Kitchen

Even though location does matter the most for cloud kitchen business, you can choose the location based on your target customers and market. As far as having space is concern, you don’t need to have a prime location with appealing storefront space. You can start it in a room or even in underground, basement, parking and other spaces.

Essential Kitchen Appliances for Cloud Kitchen

Yes, you need to have proper kitchen equipment but it will be different from restaurant kitchen equipment. For example, you need;

  • Exhaust hood
  • Fire suppression system
  • Refrigerators and freezer
  • Cooking range
  • Commercial fryers

They are the common equipment that you need to have to start a cloud kitchen business.

Start a Cloud Kitchen Business, Hassle-free

To start a cloud kitchen business you first need to set up the online  cloud kitchen ordering system that can be accessed via internet and smartphone. It is a high profit-margin business, but it’s slightly different from traditional restaurants.

See how to kick start a cloud aka virtual kitchen or ghost kitchen with no hassles.

  • Know your customers before starting the business. Understanding the demographics is the first step to running a cloud kitchen restaurant successfully.
  • Find the base concept of the kitchen. Start looking for what your customers want. Know the preferences of your target audience through online surveys, social media campaigns, etc.
  • Gain experience in accounting, management, marketing, and more apart from cooking.
  • Competitor analysis will help you establish a better delivery-only kitchen.
  • Bear the initial cost of setting up the virtual kitchen. Although the total cost will be 40 – 50% less than building a brick-and-mortar dine-in restaurant, proper financial arrangements are required.
  • Get an FSSAI license. This license regulates everything from food storage to preparation and delivery. The validity of the license lasts from one to five years, depending on how you plan the periodical renewal.
  • Spend a handful on properly equipping the kitchen. For example, you need to invest in electronics like ovens, microwaves, utensils, plumbing, burners, and much more.
  • Equip the cloud kitchen with upgraded technology like mobiles, laptops, tablets, POS, etc., to efficiently manage everything from receiving orders to delivery.

Other essentials of running a successful online ordering system are proper packaging, pandemic precautions, and an organized delivery system.

Read more about the Ghost Kitchen Mistakes You Should Avoid

Most Popular Cloud Kitchen Business Models

There are six types of cloud kitchen business models. Every model is different from the others based on budget, brand, scalability, efficiency, and more. Let’s look at the most popular cloud kitchen business models.

Brand-owned cloud kitchen

One brand owns a single cuisine kitchen with a delivery-only model. Simply, there is no takeaway and no dine-in. The upfront investment cost is low as there is no additional space to occupy diners or their vehicles.

Separate dine-in

There is an existing dine-in with a side hustle for delivery or takeaway. Here, the menu is the same, but the dine-in and delivery production lines are different. However, the upfront cost is low until restaurateurs need new processes, additional employee staff, etc.

Separate dine-in with shared kitchen space

The cloud kitchen business model has a separate dine-in operation. Well, the kitchen is physically removed from the dine-in space and it is operating in a shared kitchen. The upfront cost of this cloud kitchen restaurant model is medium because one needs to rent the shared space, equip it, and make it functional. Moreover, the dine-in has to be maintained and operated as well!

Hub and spoke

There are multiple variants of this cloud kitchen. It includes a single brand, shared kitchen, sometimes multiple brands, and so on. Each of the units has a centralized production space! Well, the upfront cost is high because of a centralized kitchen, labor cost, pop-up locations, etc.

Multiple virtual brands

Here, one cloud kitchen business runs multiple brands under its hood. It is a deliver-only model, with no dine-in or takeaway. The upfront cost can be low or medium depending on their equipment, large spaces, high rent, etc.

Shell kitchen

Final Words

To run a successful cloud kitchen business, one has to start working hard right from the scratch. The initial steps include finding the right cloud kitchen model for the business, a mobile app development company to facilitate professional platform creation, budgeting, and more.

So, if you are planning to start an online food ordering system for cloud kitchens, find experts like Foodiv , who have already designed, developed, and launched a hundred similar platforms.

Get started today!

FAQ About Cloud Kitchen Business

Are cloud kitchens profitable.

About 20% of cloud kitchen businesses make handsome money. So, if you want to be part of the top 20%, start by outlining your goals, finding a proper solution, deciding the business model, and so on.

What are the essential licenses required to run a cloud kitchen?

You need these licenses to start a cloud kitchen – FSSAI, GST, Fire & Safety, and Trade license.

How bright is the future of a cloud kitchen business?

The cloud kitchen industry is rising with the advancements in online food delivery systems. Since a majority of the people like ordering food online rather than dining in jam-packed diners, the industry will upscale quickly!

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How Cloud Kitchen Business Models Have Transformed the Food Delivery Industry

Cloud Kitchen Business Models Explained - ValueAppz

Quick Summary: Though cloud kitchens gained popularity a long time ago, their demand is on the rise at present. With a shortage of space, huge investments for an outlet, and changing trends in the food industry, businesses have started to invest in cloud kitchens. Whether you are an existing restaurant or a startup looking for opportunities in the online food industry, this blog will help you with everything to understand ghost kitchens’ cloud kitchen business models and benefits in detail.

In today’s rapidly evolving market, transitioning to online platforms is imperative for businesses looking to establish a strong brand presence and expand their services. This shift is especially pronounced in the food industry, where many food businesses now rely entirely on online platforms to drive their sales. This transformation has been made possible through the advent of Cloud Kitchens.

As per the reports, the value of the cloud kitchen market is expected to reach US$ 117.89 billion by 2031. All this is because customers want to get their food delivered rather than moving out of their homes.

Table of Contents

What is A Cloud Kitchen?

Also known as the virtual kitchen, ghost kitchen, and dark kitchen, these models are a great fit for food delivery startups and existing businesses that want to expand quickly. Unlike traditional restaurants, cloud kitchens do not offer a physical dining area for customers. Instead, the food is prepared in the kitchen and delivered to the customers. They take orders for delivery-only meals through their own website or delivery apps like Uber Eats, Grubhub, DoorDash, and Deliveroo.

Are you a cloud kitchen owner relying on third-party apps and losing significant money to commissions? It’s time to invest in on demand food delivery app development services and launch your own branded app.

Now, rolling back to the topic, let’s understand how cloud kitchens operate.

How Does A Cloud Kitchen Model Work?

Here is a brief explanation of how a cloud kitchen operates:

  • Location: The virtual kitchen is strategically chosen in a densely populated area or areas with high demand for food delivery services. Choosing the right location ensures that the cloud kitchen performs well by engaging the right audience for its services.
  • Online Presence: Ghost kitchens rely heavily on online platforms such as food delivery apps and websites to receive customer orders. Some dark kitchens also build partnerships with various food delivery platforms to reach a broader customer base.
  • Food Preparation: Once the order is received through online platforms like apps and websites, the kitchen staff starts to prepare the food. The emphasis is given to preparing efficient and standard food to ensure consistency and quality.
  • Delivery Logistics: Cloud kitchens must ensure safe delivery once the food is ready. They often have their in-house delivery fleet or third-party delivery services like Zomato. The food is packed appropriately to maintain its quality during delivery.

The whole process mentioned above allows ghost kitchens to ensure that they operate efficiently, enhance food delivery services, and build a solid customer base. 

This article will explore why investing in cloud kitchen models is a smart move and why it will be helpful in the long run. But, before that let’s discuss, what makes the cloud kitchen model different from traditional restaurants. 

Cloud Kitchens VS Traditional Restaurants

Restaurants have been around for decades and are here to stay. Food lovers get an excellent experience when they visit their favorite eatery places. However, with the evolving technologies and changing trends, restaurants must quickly adapt to these changes.

Develop a food delivery app for your cloud kitchen - ValueAppz

Stats About the Growing Market of Cloud Kitchens

Before we understand what ghost kitchens are, their models, and how to build a dark kitchen for your brand, let’s look at its growing market. The global cloud kitchen market size was valued at US$ 51.96 billion in 2020, and this is projected to grow at a CAGR of 12.4% from 2021 to 2028 .

One of the main reasons for this continuous growth is the changing preferences of the target audience. Customers now prefer online food services over dining experiences. 

Before investing in virtual kitchens, you must also understand what food has the highest demand. It will help you choose the perfect food delivery solution that gives you a market lead. The graph below provides a clear picture of it.

Cloud Kitchen Market by Product Type

Different Types of Cloud Kitchen Business Models

If you are a startup looking to invest in cloud kitchens, you should know various ghost kitchen business models. Your chosen model will depend upon the business needs, budget, and other factors. 

Cloud Kitchen Business Models

1. Single-Brand Cloud Kitchen

Single-brand or standalone cloud kitchens are independent kitchens owned or rented by a brand without offering a dining space. Instead of requiring a physical eating area like typical restaurants, it concentrates on cooking and serving a particular brand or concept of food. 

These kitchens are explicitly designed to manage large-scale food production while maximizing efficacy and efficiency. Single-brand cloud kitchens can serve a broad range of customers by operating only online and offering convenience and unique culinary experiences.

2. Multi-Brand Cloud Kitchen

Multi-brand ghost kitchen runs various culinary brands under one roof. These cloud kitchens offer a wide range of dishes from different cuisines or food categories rather than concentrating on a particular brand or theme. These kitchens can maximize productivity and accommodate broader consumer demands by using shared facilities and resources. 

It enables operators to reach a larger audience and optimize their revenue potential by allowing the simultaneous production and delivery of various food brands.

3. Kitchen Pods

Within a shared kitchen facility, separate cooking spaces are provided via modular, self-contained kitchen pods. These pods often include the infrastructure and tools required to function autonomously within a more extensive kitchen, including cooking appliances, storage, and hygienic facilities. Kitchen pods offer a versatile and affordable alternative for enterprises that need their own cooking area but may not want to invest in a full-scale standalone kitchen.

4. Commissary/Shared Kitchens

Commissary or shared kitchens are commercial kitchen facilities that several restaurants or other food entrepreneurs share. These facilities have storage spaces, high-end culinary equipment, and other essential infrastructure. Commissary kitchens’ main benefit is that they provide a cost-effective option for individuals, small-scale food businesses, and startups that need access to a fully operating kitchen but cannot afford to set up and operate their own premises. 

Additionally, shared kitchens offer a cooperative setting encouraging networking, knowledge exchange, and future collaborations between food businesses.

5. Franchise Model

The cloud kitchen franchising model allows individuals or organizations to run a cloud kitchen under an established brand name while leveraging a tried-and-true business model and support system. Franchisees profit from the franchisor’s established brand, standardized operating practices, supply chain networks, and marketing assistance. 

Cloud Kitchen Market by Model Type

They can benefit from a lucrative business model while using the flexibility and scalability provided by cloud kitchens by paying initial franchise fees, ongoing royalty fees, and adhering to the franchisor’s rules and requirements in exchange for these payments.

6. Aggregator-Owned Cloud Kitchen

A virtual restaurant idea owned and run by a third-party aggregating platform or food delivery service is called an aggregator-owned virtual kitchen. In this arrangement, the aggregator partners with other restaurant brands or food suppliers to provide a variety of menus while owning and managing the kitchen area, furnishings, and resources. 

The aggregator manages order management, logistics for delivery, and customer service, giving customers a central location to access a variety of food brands and cuisines. It enables greater productivity, cost-sharing, and market reach for the aggregator and the associated food companies.

How Do Cloud Kitchens Make Money?

Are cloud kitchens profitable? How do businesses in cloud kitchens make money? There are several ways that cloud kitchens can earn money. Some of the cloud kitchen revenue streams include:

1. Sales of Food and Beverages

The primary source of income for virtual kitchens is the sales of food and beverages. Once the customers pay the order online, it is prepared in the cloud kitchen and delivered. In this way, revenue is generated like the traditional restaurants.

2. Delivery Fees

Cloud kitchens earn money from delivery fees by charging a fee to customers for the delivery services provided. For every order placed through cloud kitchen, the customers may be required to pay a separate delivery fee that covers the cost of logistics, packaging, and the actual delivery of the food. The price is charged based on factors like distance, location, and order size.

3. Commission Model

Some cloud kitchens operate on a commission-based model. For each order or sale generated by the food businesses operating within the cloud kitchen, they have to pay a percentage/commission for it. This module helps the cloud kitchens earn money for every order placed through it.

4. Subscription Services

Another way that dark kitchens earn money is through subscription services. They offer food businesses or restaurants a subscription package to access and utilize their kitchen facilities. Depending upon the package, companies can get various benefits like discounted rental rates, exclusive kitchen access, storage space, and more.

5. Franchise Fees

By allowing aspiring business owners to use their established brand and business plan, Cloud Kitchens can generate revenue from franchising fees. Franchise fees are up-front sums of money paid to the cloud kitchen operator by people or companies in return for the right to duplicate and run a franchise location. These fees often cover the costs of brand licensing, initial coaching and support, access to recipes and SOPs, and ongoing assistance.

6. Marketing and Partnerships

Another cloud kitchen revenue stream is marketing and partnerships. Some dark kitchens further partner with food delivery apps, aggregators, and other businesses to promote their brands and services. These partnerships can include marketing collaborations and co-promotions to generate additional revenue.

💡 Must read: 10 Tips to Run a Successful Cloud Kitchen Business in 2024 .

Why Choose a Cloud Kitchen for Your Food Business Startup?

There  are so many competitive advantages of cloud kitchens models. Restaurants, cafes, hotels, and other eatery places face numerous challenges while preparing food, serving, and keeping the place up to date. Adapting to the latest techniques and strategies is essential to stay ahead of the rising competition. Below are the ways that cloud kitchens can help with this.

1. Reduced Overhead Costs

Cloud kitchens save restaurant owners and entrepreneurs money on overhead costs like rent, utilities, and equipment. In a traditional restaurant, these costs are significant and can sometimes make it challenging to earn a profit. By avoiding these expenses, virtual kitchens can offer meals at a more affordable price, which can attract customers and increase business.

2. Increased Efficiency

Cloud kitchens are designed for efficiency. They are optimized for online ordering and delivery and have a streamlined workflow that allows for faster preparation of meals. The streamlined workflow helps reduce time spent on prep work, leading to faster order fulfillment and improved customer satisfaction.

3. More Flexibility

The cloud kitchen model provides greater flexibility for entrepreneurs and restaurant owners. They can tailor their kitchen space to fit their specific needs and adjust their menu according to the ever-changing consumer demands. This flexibility allows for better experimentation with new concepts and menu offerings without the high cost of opening new locations.

4. Focus on Online Ordering

Cloud kitchens are built to maximize online ordering and delivery platforms. With more customers turning to online order and food delivery services, having a strong online presence has become critical for a restaurant business. Additionally, cloud kitchens can partner with third-party delivery platforms like Uber Eats and DoorDash, which have larger customer bases than traditional restaurants.

5. Wider Customer Reach

With a cloud kitchen, a restaurant owner can reach a broader market segment. In addition, customers can order from these kitchens from anywhere, at any time, and the orders can be delivered to remote areas where a physical restaurant’s reach may not have been possible otherwise.

6. Low Investments and Better Returns

Low investments and better returns are some of the most significant benefits of cloud kitchens. A traditional restaurant may need a hefty investment for a lease on a storefront, renovation expenses, furniture, equipment, and staffing costs, among others. In contrast, cloud kitchens are designed to be lean and cost-efficient, with shared equipment and utilities. Furthermore, better returns are also achievable from cloud kitchens due to their ability to reach a broader customer base more efficiently.

Steps to Start a Cloud Kitchen Business

Want to build your own cloud kitchen business and earn profits? Below are the simple steps that can help you get started with a solid cloud kitchen business, no matter what business model you choose.

1. Planning and Research

The first step towards building a cloud kitchen business is thorough research and planning. You must be able to identify your target market, analyze competition, and determine types of cuisines or food concepts. All these will further depend upon the location that you choose.

On the other hand, you must also invest in a food delivery app to enhance your business growth. It can be really easy when you follow the right steps to build a food delivery app .

2. Choose Business Model

You must pick a suitable business model once you identify and answer the important questions above. Do you want to build a single-brand cloud kitchen, collaborate with kitchen pods, or choose another model? The business model you choose will depend on your business goals and how you want to grow your brand in the future.

3. Build an App and List Your Business

Building a dedicated app for cloud kitchen is another important step towards establishing your business. The app will let you connect with the audience quickly, take their orders, and deliver them to the right address. Also, you must list your business on the top food delivery apps like Zomato, Uber Eats, etc., to gain a better customer base.

One of the best cloud kitchen case studies is the Eat Sure, which works purely on the cloud kitchen business model. With its strategies, Eat Sure generated revenue of ₹859 crores (US$110 million) in 2022 .

3. Find a Suitable Space

Choosing the right place for your cloud kitchen is highly crucial. Brands should look for a commercial kitchen space that meets their specific needs in terms of size, location, permits, and infrastructure. Further, you must also ensure that the space has all the necessary utilities like water, electricity, ventilation, and more.

4. Get the Necessary Permits and Licenses

Once you have chosen the location, you will also need to obtain the necessary permits. The permissions will depend upon the area you select. These are very important to ensure your business does not get involved in legal trouble.

5. Create A Menu

Creating a menu that aligns with your target market is another critical step. When creating the menu, ensure it meets your audience’s preferences. The menu should be diverse, offer high-quality ingredients, and be efficiently prepared and delivered even under the limitations of the cloud kitchen model.

6. Set Up Kitchen and Hire Staff

Now it’s time to set up your kitchen with the necessary tools and equipment. Also, to provide good quality and tasty food, you would also be required to hire an experienced staff who can operate your cloud kitchen.

7. Plan Cloud Kitchen Marketing Strategies

Once everything is set up, you must take your brand to the target market with engaging marketing strategies. It should include reaching out to the people through social media platforms, building a website or app, and other tips to increase food delivery business sales .

Important Factors to Consider When Starting A Cloud Kitchen Business

Before you start building your cloud kitchen business, there are a few factors that you must consider to avoid any mistakes and to launch your brand smoothly. Some of the factors include:

  • Market demand: Analyze the market demand in your area for restaurants that deliver food and operate online. To ensure enough consumer demand to support your cloud kitchen business, research your target audience, their tastes, and the competition.
  • Location: Pick a prime spot for your dark kitchen that is convenient for delivery partners and efficiently serves the intended audience. To ensure effective delivery operations, take into account a location’s closeness to densely inhabited areas, neighborhoods in high demand, and transit hubs.
  • Equipment and infrastructure: Determine your cloud kitchen’s equipment and infrastructure needs. Make sure the cooking area conforms with health and safety laws, has adequate ventilation, and has utilities. To satisfy your food business’s particular requirements, invest in high-quality cooking equipment, storage space, and packaging materials.
  • Operational efficiency: Planning and streamlining your operations will help you run them as efficiently as possible. Improve procedures such as order management, inventory management, food preparation, and delivery logistics. Use technology to automate and streamline business processes, such as order management software and delivery tracking tools.
  • Cost study: To determine whether your virtual kitchen business is financially viable, perform a detailed cost study. Consider the cost to develop a food delivery app , kitchen rental, machinery, personnel, utilities, license fees, marketing, and continuous operational expenses. To attain profitability and sustainability, ensure your revenue estimates match your costs.

Boost Your Restaurant Growth with Cloud Kitchens

Ghost kitchens provide an attractive investment opportunity for restaurants looking to minimize costs and maximize profits and for startups who want to enter the online food industry. With a focus on efficient operations and technology-driven management, virtual kitchens help restaurant owners deliver quality food to consumers while reducing overhead expenses. 

Empower Your Cloud Kitchen with a Customized App Solution

Whether you are a startup wanting to enter the online food market or an existing brand planning to invest in cloud kitchens, we are here to help you. With our excellent on demand food delivery app development services , we can provide the perfect platform for any cloud kitchen business looking to attract customers and expand its customer base.

With ValueAppz’s expertise and experience in building robust mobile apps, restaurants can enhance their delivery operations and lend a great experience to their customers.

Contact us now to build a solid food delivery app for your cloud kitchen and get started.

Food Delivery App For Your Cloud Kitchen

Key Takeaways

  • Cost Efficiency and Flexibility: Cloud kitchens cut costs and adapt quickly by ditching physical spaces.
  • Data-Driven Success: They thrive on data analytics, shaping menus and operations for better results.
  • Personalized Convenience: Focused on tailored experiences, they offer personalized menus and swift delivery.
  • Virtual Brands for Expansion: Multiple brands under one roof allow for easy experimentation and market expansion.
  • Tech Integration and Partnerships: Their success hinges on technology and collaborations for efficiency and reach.

Frequently Asked Questions

Q1. is cloud kitchen profitable.

Yes, cloud kitchens offer a lot of potential for profitability. Also, its operations can be scaled much faster than dine-in restaurants.

Q2. What is the Average Monthly Cost for a Cloud Kitchen?

The average monthly cost depends on several factors: location, size, equipment, and services rendered. 

Q3. Can a Single Person Run a Cloud Kitchen?

A cloud kitchen only requires a few people to run the operations. You can quickly run the business with 4-5 people who would focus on preparing and delivering food orders.

Q5. How do Cloud Kitchens Work?

Cloud kitchens, also known as ghost kitchens, are models of food businesses with no physical storefront. They operate solely by preparing and delivering food.

Q6. Are Cloud Kitchens Suitable for all Types of Restaurants?

Cloud kitchens work best for restaurants that have a strong delivery business or for those whose business model is delivery-only operations.

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Harjyot kaur

As a technical content writer my focus is on creating high-quality, engaging, and informative content that simplifies complex technical topics. Throughout my career, I have continuously pursued opportunities for growth and development, refining my skills and expanding my knowledge base.

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How to Start a Cloud Kitchen at Home: Simple Guide for Success

Last updated on November 14, 2023

Discover the essential steps to successfully launch your own cloud kitchen at home, as we guide you through this innovative culinary venture.

The food industry has undergone a significant transformation in recent years, and the pandemic has only accelerated this change. One of the most prominent trends that have emerged is the rise of cloud kitchens.

These kitchens operate entirely online and deliver food straight to consumers’ doors, without any physical storefronts. If you’re someone who loves cooking and wants to start a business from home, then starting a cloud kitchen might be just what you need! In this article, we’ll guide you through everything you need to know about starting a successful cloud kitchen at home.

So let’s dive right in!

What's Inside

Cloud Kitchen Concept

Cloud Kitchen Concept

Cloud kitchens, also known as ghost kitchens or virtual restaurants, are a new and innovative concept in the food industry. These types of kitchens operate entirely online and have no physical storefronts.

Instead, they rely on delivery apps like Uber Eats or Grubhub to bring their food straight to customers’ doors.

The cloud kitchen model has become increasingly popular due to its low overhead costs compared to traditional brick-and-mortar restaurants. By eliminating the need for expensive real estate and dining areas, cloud kitchen owners can focus solely on creating high-quality dishes that appeal directly to their target audience.

Another advantage of cloud kitchens is that they allow entrepreneurs with limited resources or experience in the restaurant industry an opportunity to start a business from home without having significant upfront investments .

However, it’s important not just jump into this venture blindly; there are several factors you should consider before starting your own cloud kitchen at home.

Types of Cloud Kitchens

Virtual Restaurants Food deliveries

The most common ones include:

1. Independent Cloud Kitchens : These are standalone cloud kitchens that operate independently and have their own branding.

2. Aggregator Cloud Kitchens: These are platforms that bring together multiple restaurants or food brands under one roof and offer a shared kitchen space for them to operate from.

3. Virtual Restaurants: Also known as ghost restaurants, these cloud kitchens don’t have any physical storefronts but instead exist entirely online through delivery apps like Uber Eats or Grubhub.

4. Commissary Kitchens: These commercial-grade facilities provide licensed kitchen spaces for rent to food businesses looking for a place to prepare their meals without investing in expensive equipment and infrastructure.

Market Research

Market research and analysis

This step will help you understand the current food trends and consumer preferences in your area. You can start by analyzing your competitors’ menus, pricing strategies, and delivery options.

You should identify gaps in the market that you can fill with unique offerings.

Another crucial aspect of market research is identifying your target audience. Who are they? What do they like to eat? How much are they willing to spend on food delivery services? Answering these questions will help you tailor your menu and marketing strategies accordingly.

By conducting comprehensive market research before launching a cloud kitchen at home, you’ll be able to make informed decisions about every aspect of your business – from branding and identity to menu planning and pricing strategy.

Target Audience Identification

Checking Online

Knowing who your customers are is crucial for creating a menu that appeals to them, setting prices that they’re willing to pay, and developing marketing strategies that resonate with them.

Start by researching the demographics of your local area. Consider factors such as age range, income level, lifestyle preferences (e.g., health-conscious or indulgent eaters), and cultural background.

You can also use online tools like Google Analytics or social media insights to gather data on consumer behavior patterns.

Another important aspect is identifying customer pain points – what problems do they face when ordering food? Is there something missing in their current options? Addressing these issues will help you create a unique selling proposition for your cloud kitchen.

Remember: Your target audience may evolve over time as you receive feedback from customers and adjust accordingly.

Business Model Selection

delivery-only business model

There are several options available, each with its own set of advantages and disadvantages.

One popular model is the aggregator or delivery-only model. In this approach, you partner with third-party food delivery platforms like Uber Eats or Grubhub to handle order processing and deliveries.

This can be a great option if you’re just starting out as it allows you to tap into an existing customer base without having to invest in marketing efforts.

Another option is the virtual restaurant or brand-owned model where you create a unique brand identity that operates exclusively online through various channels such as social media platforms, website orders etc., allowing for greater control over branding and menu offerings.

Lastly, there’s also the hybrid approach which combines elements of both models mentioned above – partnering with aggregators while simultaneously building up your own online presence under one umbrella brand name.

Ultimately, choosing the right business model will depend on factors such as budget constraints, target audience preferences & behavior patterns among others.

License and Regulation Compliance

Regulation Compliance

This step is crucial as non-compliance can lead to hefty fines or even closure of your business. The requirements may vary depending on where you live, so it’s important to research thoroughly.

Some common licenses required for a cloud kitchen include food service establishment permits, health department permits, fire safety certificates, zoning approvals and more. You should also check if there are any specific regulations related to online food delivery services in your area.

To avoid any legal issues down the line make sure that all paperwork is in order before launching your business. It might be helpful to consult with an attorney who specializes in small businesses or restaurant law.

Menu Planning and Pricing

Meal Planning and Pricing

Your menu should reflect the preferences of your target customers while also showcasing your culinary skills. Keep in mind that a cloud kitchen has limited space, so it’s best to keep the menu simple yet diverse enough to cater to different tastes.

When planning prices for each dish, consider factors such as ingredient costs, preparation time, delivery fees (if any), and profit margins. It’s important not only to cover all expenses but also offer competitive prices compared with other cloud kitchens in the market.

Another crucial aspect is offering meal combos or packages that can attract more customers by providing value for money deals. You can also experiment with seasonal menus or special offers during festivals or events.

Remember that pricing is not set in stone; you may need to adjust them based on customer feedback or changes in ingredient costs over time.

Branding and Identity

Branding

Your brand is what sets you apart from the competition and helps customers recognize your business. It should reflect the values of your cloud kitchen, such as quality, convenience, affordability or sustainability.

Start by choosing a name that is easy to remember and relevant to your cuisine or concept. Then design a logo that represents your brand visually – this could be anything from an abstract symbol to an illustration of one of your signature dishes.

Your branding should also extend beyond just visual elements; it should include messaging too. Develop taglines or slogans that capture the essence of what makes you unique in just a few words.

Location and Setup

Key Features of Incubator Kitchens

Since cloud kitchens operate entirely online without any physical storefronts or dining areas, you can set up shop in almost any location that meets certain criteria.

Firstly, consider the size of the space required for setting up a commercial-grade kitchen with all necessary equipment. Secondly, ensure that there is adequate ventilation and proper electrical connections available at the site.

Thirdly check if there are enough parking spaces nearby for delivery drivers to pick-up orders quickly.

You may choose to rent out an existing commercial kitchen space or convert an unused area in your home into a dedicated cooking zone. If you decide on using part of your home as a workspace make sure it complies with local zoning laws before starting operations.

When setting up the interior design of your cloud kitchen keep functionality as top priority while also considering aesthetics such as color schemes and lighting options which can help create brand identity. Remember that customers will not be visiting this space so focus on creating an efficient work environment rather than investing heavily in decor elements like furniture or artwork.

Kitchen Equipment and Essentials

Incubator Kitchen Equipments

The right tools can make all the difference in ensuring that you can prepare high-quality food efficiently. Here are some of the essential items that every cloud kitchen needs:

1. Cooking Range: A reliable cooking range is an absolute must-have for any cloud kitchen.

2. Refrigeration Units: You’ll need refrigerators to store raw ingredients as well as cooked food before delivery.

3. Food Processor: A good quality food processor will help you chop vegetables quickly and efficiently.

4. Oven or Microwave: Depending on what kind of dishes you plan to serve, an oven or microwave may be necessary for reheating purposes.

5. Utensils & Cookware Set – Pots & pans with lids (various sizes), spatulas (metallic/wooden), ladles/scoops/tongs/knives/cutting board etc.

6. Storage Containers- Plastic containers with tight-fitting lids are ideal for storing prepped ingredients like chopped veggies or marinated meats.

Safe Food Handling Practices

Safe Food Handling Practices

As a cloud kitchen owner, you must ensure that your food is prepared and delivered safely to avoid any health hazards or legal issues. The first step towards safe food handling practices is to maintain proper hygiene in the kitchen area.

This includes regular hand washing, wearing gloves while preparing the food, using clean utensils and equipment, sanitizing surfaces frequently.

Another important aspect of safe food handling practices is maintaining appropriate temperatures during storage and transportation. You should store raw ingredients separately from cooked foods to prevent cross-contamination.

It’s essential to keep hot foods hot (above 140°F) and cold foods cold (below 40°F) during delivery.

Efficient Order Management

With no physical storefront, your online presence and order management system become the face of your business. It’s essential to have an efficient and user-friendly ordering platform that can handle high volumes of orders without any glitches or delays.

To achieve this, you need to invest in reliable technology solutions that can streamline the entire process from order placement to delivery. You could use third-party food delivery apps like Uber Eats or Grubhub, but they come with hefty commissions that eat into your profits.

Alternatively, you could develop an in-house ordering system using software like Toast POS or Square POS for restaurants. These systems allow customers to place orders directly on your website or mobile app while providing real-time updates on their order status.

Another critical factor is ensuring timely deliveries by optimizing routes and dispatching drivers efficiently. You should also consider partnering with local logistics companies for last-mile deliveries if needed.

Marketing Strategies

Social Media Marketing Strategies

To attract customers to your online kitchen, you need to have a solid marketing strategy in place. One effective way to market your cloud kitchen is through social media platforms like Facebook, Instagram, and Twitter.

You can create engaging content that showcases your menu items or offers exclusive discounts for followers.

Another way to promote your brand is by partnering with food bloggers or influencers who have a significant following on social media platforms. They can help spread the word about your cloud kitchen and generate buzz around it.

You could also consider running paid ads on search engines like Google or Bing as well as social media sites such as Facebook Ads Manager or Instagram Ads Manager targeting specific demographics based on age range, location etc., which will increase visibility among potential customers.

Don’t forget about email marketing! It’s an excellent tool for keeping in touch with existing customers while also reaching out to new ones who may be interested in what you offer.

Partnerships and Collaborations

By partnering with other businesses, you can expand your reach, increase brand awareness, and offer more value to your customers. One way to do this is by collaborating with food bloggers or influencers who have a large following on social media platforms like Instagram or Facebook.

You can offer them free meals in exchange for promoting your brand on their channels.

Another option is to partner with local grocery stores or supermarkets that don’t have their own kitchens but want to offer fresh meals made from quality ingredients. This partnership will allow you to sell pre-packaged meals through these stores’ online platforms, increasing sales volume while also providing convenience for customers.

You could also consider partnering with delivery companies such as Uber Eats or Grubhub if they operate in your area. These partnerships will help streamline the delivery process and ensure timely deliveries while allowing you access to a broader customer base.

Financial Planning

Financial Planning

You’ll need to consider various costs, such as equipment and supplies, rent or mortgage payments for your home kitchen space, marketing expenses, delivery fees and salaries if you plan on hiring staff.

To start with financial planning for your cloud kitchen business at home:

  • Create a detailed budget outlining all the expected costs.
  • Determine how much money you can invest in the business from personal savings or loans.
  • Explore funding options like crowdfunding platforms or small business grants.
  • Consider partnering with other businesses that complement yours.

It’s important not only to plan but also keep track of your finances regularly. Keep an eye on cash flow statements and profit-and-loss statements so that you can make informed decisions about where best to allocate resources.

Legal Considerations

Permits

The first step is to register your business as a legal entity and obtain all necessary licenses and permits from local authorities. Depending on where you live, there may be specific zoning laws or health codes that apply to food businesses operating from home.

It’s also essential to have proper insurance coverage for your cloud kitchen in case of any accidents or incidents. Liability insurance can protect you against claims made by customers who suffer injuries or illnesses after consuming food prepared in your kitchen.

Another critical aspect of legal considerations is protecting intellectual property rights such as trademarks, copyrights, patents etc., which are vital for branding purposes. It would help if you consulted with an attorney specializing in small business law before launching a cloud kitchen at home.

Packaging and Delivery Solutions

Brown paper bag Eco Friendly Delivery Options

The packaging should be sturdy enough to keep the food fresh during transportation while also being visually appealing. You can use eco-friendly materials such as paper bags or biodegradable containers that align with your brand values.

Delivery is a crucial aspect of cloud kitchens, so make sure that you have a reliable delivery system in place. You can either hire delivery personnel or partner with third-party logistics providers like Uber Eats, Grubhub, DoorDash etc., depending on what works best for your business model.

It’s important to ensure timely deliveries as customers expect their orders within the promised timeframe. Use technology solutions like GPS tracking systems and order management software to streamline operations and improve efficiency.

Remember that packaging is not just about protecting the food; it’s also an opportunity for branding! Make sure all packages are labeled clearly with logos or stickers representing your brand identity so customers know where their delicious meal came from!

Hiring and Staff Training

Hiring and Staff Training

Your team is the backbone of your business, so it’s essential to choose the right people and provide them with adequate training.

When hiring staff for a cloud kitchen, look for individuals who are passionate about cooking and customer service. They should be able to work in a fast-paced environment while maintaining quality standards.

You can advertise job openings on social media platforms or online job portals.

Once you have hired your team members, provide them with comprehensive training on food preparation techniques, hygiene practices, order management systems as well as customer service skills. Ensure that they understand how important their role is in delivering high-quality food promptly while ensuring safety measures are followed at all times.

Customer Feedback and Continuous Improvement

Customer Feedback

Customer satisfaction is the key to success in any business, and a cloud kitchen is no exception. Encourage customers to leave reviews on social media platforms or through online surveys so that you can identify areas for improvement.

Analyze the feedback received from customers regularly and make necessary changes accordingly. For instance, if multiple customers complain about late deliveries or cold food upon arrival, then it might be time to re-evaluate your delivery process or packaging solutions.

Moreover, consider offering loyalty programs or discounts for repeat orders as an incentive for returning customers. This will not only help retain existing clients but also attract new ones through word-of-mouth marketing.

Customer feedback plays a crucial role in improving the quality of service offered by a cloud kitchen at home.

Navigating Challenges and Competitors

exceptional customer service

One of the biggest hurdles you’ll face is competition from other cloud kitchens in your area. To navigate this challenge, you need to differentiate yourself by offering unique menu items or exceptional customer service.

Another significant challenge is managing your finances effectively. You must keep track of all expenses and revenue streams to ensure that your business remains profitable in the long run.

There may be unforeseen obstacles such as equipment breakdowns or delivery delays that could impact your operations. It’s essential to have contingency plans in place for such situations so that you can quickly adapt and continue serving customers without any interruptions.

Staying up-to-date with industry trends and consumer preferences is crucial for remaining competitive in the market. Keep an eye on what other successful cloud kitchens are doing differently than yours; learn from their strategies while also maintaining a unique identity for yourself.

Navigating these challenges requires patience, perseverance, creativity – but most importantly – passion! With dedication towards providing quality food coupled with excellent customer service will help set apart from competitors while ensuring success over time!

Can you do a cloud kitchen at home?

Yes, you can operate a cloud kitchen at home as it primarily takes orders from online platforms or phone calls and does not require a dine-in area or takeaway services, focusing mainly on the kitchen operations.

Do Cloudkitchens make money?

Cloudkitchens make money by generating revenue through food sales on a per-order basis and potentially offering subscription services.

Are cloud kitchens a good investment?

Cloud kitchens can be a good investment with proper location, menu, pricing strategy, operations, and marketing efforts, but profitability is not guaranteed.

What is the difference between a cloud kitchen and a virtual kitchen?

The terms cloud kitchen and virtual kitchen refer to the same concept which is an online-only food business operating from a rented space without a brick-and-mortar presence, and sometimes known as ghost kitchens or dark kitchens.

What are the essential equipment and tools required to start a cloud kitchen at home?

Essential equipment and tools required to start a cloud kitchen at home include a commercial-grade cooking range, refrigerator, food storage containers, utensils, oven, microwave, food preparation surfaces, and proper ventilation.

How do you market and grow a cloud kitchen successfully?

To market and grow a cloud kitchen successfully, focus on creating a strong online presence, leveraging digital marketing strategies, and delivering exceptional food quality and customer service.

What are the key factors to consider for menu planning and pricing in a home-based cloud kitchen?

The key factors for menu planning and pricing in a home-based cloud kitchen include understanding customer preferences, cost of ingredients, portion sizes, cooking time, competition, and profitability.

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business plan for cloud kitchen

The A-Z of building a successful cloud kitchen business model in India in 2022

  • May 6, 2022

Gone are the days of restaurants and dining out being the only option to travel beyond the everyday home food and the kitchen. If you look around these days, seeing food aggregators such as Zomato and Swiggy running round the clock to deliver the freshest food right at the customer’s doorsteps, is a common sight. 

Not only has this driven a trend among consumers, but it has also left the food entrepreneurs, the small restaurant owners, and people in the food industry, gaping at the growing trend of the online ordering business. The number of users of the online food delivery system is expected to grow up to 2.9 million users by 2026. 

Now imagine a sector completely dedicated to these consumers and the online delivery system. 

That’s where cloud kitchens come in. If you’re a  foodie, a food entrepreneur, a food truck owner or someone interested in gaining revenue by tapping into the online food delivery market, this is the blog for you. 

Our team at Foaps have considered industry trends, experience and statistics to curate the ultimate guide consisting of cloud kitchen business models, plans, examples and cost of setting up a cloud kitchen in India. 

So, let’s get to the basics first. 

What is a cloud kitchen model?

A cloud kitchen or a ‘ghost kitchen’ is called so, due to the physical visibility it lacks, to the public.. Unlike restaurants that offer dine-in, cloud kitchens are devoid of all the setup. In fact, cloud kitchens require minimum equipment, such as space and kitchen equipment, compared to the lavish decor that restaurants use. 

So, how does the cloud kitchen business plan work in India? Actually, the entire concept of cloud kitchen is reliant on online delivery. The cloud kitchen is essentially the entire set-up, with no space for dine-in. Being delivery oriented, a cloud kitchen either sets up its own website for online delivery or ties up with Zomato , Swiggy or other food aggregators etc. With minimal investment, a cloud kitchen saves money, can be expanded to different outlets, utilizes technology for customized and personalized offers, and offers competitive pricing to customers.  

In short, orders come in, the chefs are informed, the food is ready, packed and placed at the hands of the delivery executive who lands it at the customer’s door. 

Starting a cloud kitchen business model in India: Types of cloud kitchen model 

The operation of a cloud kitchen is uniquely different, compared to traditional kitchens. Cloud kitchens maximize their use of technology for marketing, customer acquisition, delivery and so on. For instance, multiple restaurants can be run in the same space, as different cloud kitchens. Or, one cloud kitchen can run under multiple brand names, creating ‘virtual kitchens’. A cloud kitchen’s menu is optimized such that it is easy to prepare, and retains the best quality when it reaches the customer’s doorstep. 

As a commercial virtual kitchen that decides it’s working hours, menu and the type of customers to cater to, here are some cloud kitchen models to assess before getting started, 

1. Independent cloud kitchen

As the name suggests, behind the cloud kitchen is a single brand that is dependent on an online ordering system for their orders. With a small team of chefs, definitive operative hours and a brand name, independent cloud kitchens have a business model that is self reliant, and is hosted on different food aggregators as a means to acquire customers. 

2. Hybrid cloud kitchen 

Being a hybrid of takeaway and cloud kitchen, a hybrid cloud kitchen can be visualised as an extension of the regular cloud kitchen. Instead of being tucked away in a space with kitchen equipment, hybrid cloud kitchens also have a storefront that allows customers to receive their takeaway parcels. In short, a single brand with a single kitchen, can have multiple outlets in a hybrid cloud kitchen. The delivery is either through the in house staff or through food aggregators. 

3. Food aggregator owned cloud kitchen

If you thought the competition was tough among food entrepreneurs, in recent times, we have food aggregators entering the cloud kitchen game. Aiming at the revenue and growing popularity of cloud kitchens, there are several food aggregators that lease out or purchase a convenient kitchen space to a growing food brand or one that’s new in the market. This is a win-win situation for both, as the food brand acquires customers and has a sponsored delivery by the food aggregator. In turn, the company received business by only having invested the rent space for the cloud kitchen and avoiding all other costs. 

4. Multi brand cloud kitchen 

This cloud business model is a combination of different brands under the same kitchen. Imagine a menu with assortments from pasta to desserts, but outsourced from a single kitchen, under different brand names. This form of cloud kitchen utilizes resources effectively and keeps operational costs low. Flexibility is an important part of such multi brand cloud kitchens as they cater to the local food demand in any area and uses marketing data insights to include different type of cuisines and to maximize profits. 

5. Outsourced cloud kitchen

As the newest entry to the cloud kitchen game, this cloud kitchen business model is solely dependent on outsourcing of the food and the delivery services. A restaurant or any other business can outsource almost part or all of the menu such that the prepared product is recieved at the restaurant. The restaurant then packs the item and hands it over to the delivery personnel. The operational cost for the in-house team is greatly reduced as everything from preparation, to delivery is handled by the outsourced group. 

How to set up a cloud kitchen business model in India: 7 steps to follow 

With the right budget, the required resources, and the right marketing a cloud kitchen model can soon be bringing in profit for anyone if it is a startup. Some cloud kitchens examples in India include Faasos by Rebel Foods , Freshmenu , Behrouz Biryani and so on. 

One can gain considerable insights by assessing the journey of these cloud kitchen startups and how they managed to rise to popularity. That apart, here are the main investments, licenses, location and other aspects of a cloud kitchen model to keep in mind, while considering a cloud kitchen startup in India. 

1. Choosing the right rental space

Cloud kitchens pride themselves on the reduced budget required to set one up. The main reason for the low investment is the rental space. However, choosing the right rental space, that is, ensuring that there is proper sanitation, water supply and maintenance is very crucial. The location of the cloud kitchen matters, and is mostly based on the demographics of food ordering and the type of food the cloud kitchen caters to. Cloud kitchen startups in India are usually deployed on the basis of the demand, customer demography and the type of food produced by the cloud kitchen. In short, it is advised to choose a place with the best demand for the services your kitchen offers. 

2. Licenses and trademark registration

Licensing is a crucial part of any set up due to the legal regulations and to keep a worry free business running. Having the proper license can save the cloud kitchen model from any legal difficulties and also let customers know of the high quality of the food and sanitation offered by the cloud kitchen. Showcasing the licenses or badges on websites boosts customer trust. Some of the licenses to procure before starting out with a cloud kitchen business model include, 

  • GST registration
  • Trade license
  • Fire and safety license 
  • FSSAI (Food Safety and Standards Authority of India) license 
  • Trademark registration

Having these licenses can assure any owner that their cloud kitchen startup can sustain any legal difficulty, hence allowing them to focus more on business operations. Compared to cloud kitchens, the owners require more licenses to open a traditional restaurant . Having a trademark registration is crucial in a competitive environment, as the brand name, and logo are extremely crucial for developing customer and brand loyalty. 

3. Deciding the cuisine 

The competition among cloud kitchen startups has a huge difference with respect to traditional dine in kitchens. Often, cloud kitchen models are known for a particular type of cuisine they offer and the quality of the food. Deciding the main type of cuisine to be prepared is a crucial factor. This decision should be backed by proper analytics, resource analysis, ease of procuring raw materials, staff management and so on. 

4. Kitchen space, equipment and raw ingredients

The type of equipment required depends on the cuisine offered by the cloud kitchen. One can save costs by setting up a kitchen with the right electronic equipment for preparation, and acquiring second hand or old tables. In the case of multiple brands under the same kitchen, there could be cost saving due to shared kitchen equipment such as chimneys, burners and so on. One can even outsource a cloud kitchen with basic equipment and upgrade on the basis of needs. 

In terms of quality of food and packaging, these form the hallmark qualities that customers look for, in cloud kitchen startups. Due to the lack of in-house dining and dish presentation, packaging plays a crucial role. Invest in sturdy packaging that preserves the quality of the food and uniquely sets your brand apart. If possible, it is advised to go for eco-friendly packaging. It is also best to source local ingredients or have a separate budget for procurement of raw materials that have a good quality. Better the ingredients, better the quality and your chance of retaining customers in the cloud kitchen business model. 

5. Online Order Management System 

The majority of the business model of a cloud kitchen startup is based on food delivery aggregators like Swiggy or Zomato. It is heavily dependent on the number of orders, proper tracking and preparing and apt delivery. Imagine having to manually write down each order from a different food aggregator, and convey it to the staff. This can disrupt the smooth functioning of your cloud kitchen due to the possible errors, lack of proper information and so on. 

Before this drawback hurts your rush hours, we recommend having a restaurant online order management system that best fits your restaurant. 

Here’s how Foaps, online order management system , helps manage your business: 

  • Centralized dashboard for management of online orders- Manage, track and analyse orders from Zomato, Swiggy and other food aggregators, all in one dashboard
  • Track orders- Update the progress and delivery updates of individual orders in one click
  • Menu availability on all platforms- Update and have your menu distributed on all platforms
  • Revise pricing and update menus with one click- Inform customers of any dishes that are sold out, bestsellers of the day, and revise pricing, across different platforms with one click on the dashboard
  • Manage multiple food delivery partners- with any new food delivery service in the game, forget all the hassle of a tie up, as Foaps helps you tie-up with any food aggregator easily 

6. Staff requirements

While starting out, it is recommended to have a basic staff setup of 1-2 chefs, one person to manage the billing, any queries on telephonic calls and one for marketing. Having 1-2 people for housekeeping and maintenance of the cloud kitchen is necessary. As the profits rise, the staff can be scaled up on the basis of need. 

7. Marketing  

With a cloud kitchen business model, the only limitation lies in physical marketing, but these industries are free to tap into the potential of online marketing. There’s no fixed platform that works best for marketing and it is advised to deploy a mixture of marketing methods to find what works best for your cloud kitchen’s discovery. Some marketing methods to deploy include, 

  • Online listings- apart from the listing on food aggregator platforms, it is beneficial to have your listing on Google, Yelp and other websites that can help increase visibility
  • Social media- the target audience of this generation is mostly on social media, and is drawn towards creative, smart marketing. Ensuring your brand’s presence vocally and visually on social media guarantees a chance for brand recognition
  • SMS and email marketing- the era of personalized offers drives the competition market today, and despite having no physical location, ensure that your SMS and email marketing campaigns include online discounts, rush hour discounts and so on to boost frequency

What are the costs associated with a cloud kitchen business model in India?  

The costs of starting cloud kitchen in India can vary depending on the city chosen, the demographics, the type of cuisine offered and so on. Here’s a rough outline of the costs that might come up and a rough estimate of how much they amount to.

The resources one would have to be spending in a cloud kitchen business model include, 

  • Rent: This mainly depends on the location and the land prices. A space of 600-800 sq feet is considered sufficient for a cloud kitchen model and may range from ₹25,000-50,000 
  • Licences: The basic and necessary licenses cost around ₹15,000-20,000
  • Staff: Having a basic set of staff can cost around ₹50,000-85,000
  • Kitchen and equipment: This is solely dependent on requirement and can range from ₹5 lakh from scratch to around 8 lakh. Basic kitchens can also be outsourced. 
  • Online ordering system: Many ordering systems allow customisation on the basis of features required, and these can range from ₹4,000/year to around ₹6000
  • Customer acquisition and social media presence: Based on paid and organic marketing, this may cost around ₹40,000-80,000 per month
  • Branding and packaging: As packaging is the crucial thing with cloud kitchen startups, branding across social media, food aggregators and effective packaging can cost around ₹50,000-70,000

To go virtual or not to: Tapping into the potential of the cloud kitchen market in India 

The changes in customer food ordering trends saw a rapid rise due to the pandemic, but the trend is only projected to continue in the years to come. Cloud kitchens have their own set of advantages and disadvantages, and it is wiser to compare the pros and cons before jumping on setting up a cloud kitchen business model. 

In India, the average annual cost of setting up a restaurant is almost 3x more than the set up of a cloud kitchen, steering good entrepreneurs and food aggregators alike to jumpstart on this side of the competition. 

Regardless, it is always recommended to not follow the herd and go with the requirements your business needs to succeed. Assessing market trends, costs required, estimating the funding required, security, profitability in the long run are topics to consider before getting started on a cloud kitchen model. 

Here at Foaps, we pay attention to the most minute parts of your business to assure you an easy order management system.  With Foaps, you can manage more orders at a time from different food delivery aggregators which will make your job a lot easier, and will eventually help in increasing the revenue.

Would you like to learn more about Foaps? Start your 30-day free trial now.

business plan for cloud kitchen

  • Bilal Nasir
  • Cloud Kitchens

Here’s Your Foolproof Plan on How to Invest in Cloud Kitchens

  • June 1, 2023

Investing in Cloud Kitchens

Whether we wanted it or not, the recent pandemic situation spanning over the last few years or so has given rise to a lot of business opportunities.

While many thriving businesses in the food industry took a nose dive into dirt, a lot of startups and name-brand restaurants managed to take the hit.

To this effect, we would also like to mention that the majority of food businesses that failed to sustain their operations during the COVID-19 frenzy are alluded to the operators’ inefficiency to adopt new changes.

A recent example of such businesses headed towards an early and unexpected closure would be the lack of an online food ordering app integration, refusal to take food orders coming in from remote customers, substandard delivery policies, and vice versa.

This leaves us with only a specific percentage of food industry businesses that not only thrived during COVID-19, but despite taking a hit, or laying off their employees, the company operations expanded by tenfold.

Food Industry Business Research Figures by R Reports

The interesting news is that eMarketer experts reported steady growth in the food business industry starting from 2019 and going all the way to the year 2020. Likewise, in the year 2019, according to eMarketer experts, the number of online food order app users was 36.4 million.

As we move on to 2020, the same number of users grew to be at a whopping 45.6 million.

Meanwhile, revenue for such food businesses, regardless of whether they were startup or old-school restaurant operators, continued to grow by 26%.

What’s the point that we’re trying to make here?

Cloud Kitchens are Safe Bets

If you’re looking to make a safe bet and invest in a sound business, go for something along the lines of cloud kitchens.

Cloud kitchens are not only today’s growing fad; they’re safe, economical, and promise a huge ROI factor to investors from different aspects.

In this post, we’ll talk about the rise of cloud kitchens, some interesting stats, and how to invest in cloud kitchens from a safe point of view.

So, let’s get to it.

What Are Cloud Kitchens?

People also call them ghost kitchens and virtual kitchens, but we’ll stick with the ‘cloud kitchen analogy’ for the sake of helping you to understand the concept.

Cloud kitchens are shared commercial spaces where either one restaurant prepares food or works in coherence with other restaurants. The main thing is that these restaurants follow an online food delivery format through some kind of food aggregator merchant app.

Each restaurant may, or may not have an online partnership with the food services merchant. If it does have a contract, then the said restaurant is maintaining a name-brand identity on popular online food ordering platforms.

These cloud kitchens are utilitarian, which means that there is no dine-in facility in these cloud kitchens. Staff-wise, we are looking at only a handful of manpower consisting of a manager, a supervisor, chefs, and people with key roles adjacent to fulfilling the operations easily.

So, the next time you hear the term “What are cloud kitchens”, you can think of warehouse space with kitchen equipment, pre areas, lots of yelling chefs, and the whole shebang!

Also Read: Cloud Kitchens | Will This Concept Catch Up In 2021?

What Is Cloud Kitchen Concept?

The concept of cloud kitchens, also known as virtual kitchens or ghost kitchens, is a relatively new and rapidly growing trend in the food industry. Essentially, cloud kitchens are professional kitchen facilities that rent out space to food businesses without the need for a physical restaurant space. Instead, these businesses operate solely through online ordering and delivery services.

The rise of cloud kitchens can be attributed to a number of factors. For one, the demand for food delivery services has skyrocketed in recent years, driven in large part by the convenience and ease of online ordering. Additionally, the high costs associated with opening and maintaining a traditional brick-and-mortar restaurant have made it increasingly difficult for smaller food businesses to compete.

With cloud kitchens, however, entrepreneurs can focus solely on food preparation and delivery, without the overhead costs of a physical location. This allows for greater flexibility, scalability, and profitability.

Cloud kitchens also offer a number of benefits for consumers. For one, they provide a wider variety of food options, as businesses are able to experiment with new menus and concepts without the risk of investing in a physical location. Additionally, cloud kitchens often operate in areas with high demand but limited dining options, making it easier for consumers to access quality food.

Overall, the concept of cloud kitchens is revolutionizing the food industry, offering a new and innovative way for businesses to operate and for consumers to enjoy delicious and convenient meals.

Are There Any Different Types of Cloud Kitchens?

Are There Any Different Types of Cloud Kitchens?

As a matter of fact, yes, there are different types of cloud kitchens working in different shapes and forms. Let’s take a look at some of them right now:

1. Standalone Cloud Kitchen:

This type of cloud kitchen resonates with a small-scale food business operation where a single or multiple brands work under the same facility.

For most of the food industry startups that do not wish to spend too much on infrastructure costs, standalone cloud kitchens are the best choice. They start with a single location but may expand as businesses grow with the passage of time.

Initially, before 2013, standalone cloud kitchens were operated by single name-brand businesses. By 2013, experts suggest that the standalone cloud kitchens model evolved to encourage multiple brands under the same roof.

2. Chain Based Cloud Kitchen Model:

Otherwise known as cloud kitchen chains, they are best suited to meet multiple food businesses’ requirements. From an investment point of view, several parties may shake hands on opening cloud kitchens in chains, while each brand catering to different food brands at the same time.

Think big; think multi-location, multi-city operations.

business plan for cloud kitchen

Cost Of Starting A Cloud Kitchen

The cost of starting a cloud kitchen can vary depending on various factors. Here are some key points to consider:

The cost of rent and utilities can vary depending on the location of the cloud kitchen. A prime location in a high-traffic area may cost more than a less desirable location.

The cost of equipment such as ovens, refrigerators, and other appliances can add up quickly. It’s important to invest in high-quality equipment to ensure efficiency and longevity.

Licenses and permits

Depending on the location and type of food being prepared, there may be various licenses and permits required. These can include health permits, business licenses, and food safety certifications.

The cost of hiring and training staff can be a significant expense. It’s important to ensure that there are enough employees to efficiently prepare and deliver orders.

Marketing and advertising

In order to attract customers, marketing and advertising efforts may be necessary. This can include social media advertising, email marketing, and other promotional tactics. Overall, the cost of starting a cloud kitchen can range from thousands to hundreds of thousands of dollars. It’s important to carefully consider all expenses and create a comprehensive budget to ensure the success of the business.

If you’re interested in starting a cloud kitchen, there are a few important steps to follow. First, you’ll need to research the market and determine what type of food you want to offer. You’ll also need to develop a business plan and secure funding for your venture. Once you have a solid plan in place, you’ll need to find a location for your cloud kitchen. This could be a commercial kitchen space, a shared kitchen, or even a food truck. You’ll also need to purchase equipment and supplies, such as cooking utensils, food storage containers, and delivery vehicles. Next, you’ll need to create a menu and build your online presence. This could involve creating a website, social media accounts, and online ordering systems. You may also want to consider partnering with food delivery services to expand your reach. When it comes to staffing your cloud kitchen, you’ll need to hire chefs, cooks, and delivery drivers. You may also want to consider outsourcing tasks like marketing and accounting to free up your time to focus on the day-to-day operations of your business. Finally, it’s important to stay up-to-date on industry trends and regulations. This could involve attending trade shows, networking with other industry professionals, and keeping up with local food safety and licensing requirements. Starting a cloud kitchen can be a challenging but rewarding venture. By following these steps and staying focused on your goals, you can build a successful business that meets the needs of today’s consumers.

Online Food Business Prospects in MENA/ MENAP Regional Belt

  • Shared Cloud Kitchen(s):

If you are a startup food business owner, you may have heard of shared cloud kitchens.

These kitchens are ideally meant for food businesses that are just about getting started. Under such circumstances, multiple food brands may work together, while being able to keep the cost focus on food production, maintenance, and rentals.

Most of the time, startup food brands that work in a shared cloud kitchen, only spend most of their money on creating their own brand and marketing.

Cloud Kitchen with a Restaurant Kitchen:

Cloud Kitchen with a Restaurant Kitchen

This one’s a combination of a shared space rented out by a restaurant with a physical location.

You may see customers going in for a dine-in experience, but what they don’t know is that other name-brand food businesses may be working in the kitchen to fulfill remote food orders for their respective clients.

The most relevant example of restaurant kitchen + cloud kitchen would be “Hardeep Punjab” . It is a very old Indian restaurant that caters to its fair share of customers via a traditional business model.

However, ‘Hardeep Punjab’ also has ‘Red Bell Pepper’ and ‘Flavors of Punjab’ name restaurants working in the same kitchen. However, the latter two brands cater to their customers through the food aggregator’s online ordering portal.

Home-based Cloud Kitchen:

These cloud kitchens are operating from a home.

This type of business model is an ideal choice for family businesses, solopreneurs, and housewives who work in a kitchen in the same house. As usual, the only difference is that each of these operators has its brand name, and they are working through an online food services provider under unique brand names.

The best thing about home-based cloud kitchens is a small menu that promises home-cooked food. These businesses share their expenses and have a very low ‘Opex/Capex’ cost factor to account for.

How Does a Typical Cloud Kitchen Function?

how does a typical cloud kitchen function

If we were to talk about a traditional hub & spoke business model, cloud kitchens in this configuration, work under the same roof to accept online orders and have them delivered to their respective customers.

A ‘Hub’ is where food is cooked, and a ‘Spoke’ is the main forward base where restaurants send their orders for pickup and further delivery.

How To Invest In Cloud Kitchens?

Cloud kitchens are an appetizing opportunity for investors due to several reasons.

If we were to talk about the investment opportunities that came up during the Pandemic situation, the swelling trend of the food industry attracted a lot of potential investors from all over the world.

These people are smart, and they know how to stack their cards when it comes to making substantial investments in cloud kitchens.

business plan for cloud kitchen

Former Uber CEO: Travis Kalanick

For instance, ‘Travis Kalanick’ , the former CEO of Uber invested millions in raising a startup, simply called: ‘CloudKitchens’ .

Back in January 2019, Travis was angling for investing in a cloud kitchen business model that would only fulfill ‘For Delivery Online Food Orders’. Did the system work for Travis and his partners? It did! Insiders report that Travis Kalanick invested approx. $130 million into purchasing additional properties in different cities based around the same business model.

Thanks to an “uber” alpha male mentality, ‘CloudKitchens’ fell from grace, despite having a lot of business potential. However, from an investment point of view, it was a good example of calling the shots at the right time, given how healthcare organizations motioned a swift lockdown that ultimately affected many businesses.

Start With Low-Cap Initial Investment:

Given your industry’s niche and the nature of business, if you’re looking for a side hustle, or simply trying to figure out how to invest in cloud kitchens, start small.

A low cap investment, especially, if you’re going in solo, aggravates low risk and lesser accountability. Because there might be unforeseen circumstances that could affect the cloud kitchen’s potential to generate ROI, you won’t have to answer your investor partners.

Plus, small investments, even if they are coming in through micro-loans lead to saving time and hassle on your part. Think of parting ways with a substantial amount of money that you can easily function without.

Partnering Up with Other Investors in Cloud Kitchens:

On the flip side, if you are looking for big game prospects, feel free to shake hands with like-minded business associates who are willing to pitch in.

The plus side of investing in cloud kitchens through mutual investors is that you will have low-cost risk, in case the business goes south. Since everyone’s involved with their fair share of the money, if your contribution is small, you’d have to lose less. This is a better investment opportunity if you think that you do not have a lot of money, to begin with.

Draw Up a Fail-Safe Contract on How to Invest In Cloud Kitchens:

This part is important for people who are looking to invest in cloud kitchens via a mutual investment pool with other parties.

By all means, if it is possible, do not claim responsibility if the cloud kitchen business model doesn’t work out long term. Just to be on the safe side, all investing parties need to be accountable for sharing loss percentages, as much as they are excited to take a fair chunk of profits when the ROI starts rolling in.

Oftentimes, when happens is that naïve investors are made to believe that their investment in cloud kitchens is a safe bet – and that too, without any risks. Since businesses are volatile, and anything can happen out of the blue, such investors end up losing money when things go south.

To make matters worse, if you have taken a loan from someone to invest in cloud kitchens, your contract can save you plenty of headaches because the primary investor will be liable to sustain financial injury. This way, you won’t be legally bothered to pay back the principal amount out of your own small pocket!

Cloud Kitchen Pricing

Cloud kitchen pricing is an important factor to consider when starting a food business. This type of kitchen is a shared commercial space where multiple food businesses can operate. Pricing for these kitchens varies based on location, amenities, and services provided. It’s essential to do research and compare prices before choosing a cloud kitchen.

One way to save money on cloud kitchen pricing is to choose a location that’s outside of a high-demand area. Kitchens located in popular areas may have higher fees due to their prime location. However, it’s important to balance cost with accessibility and convenience for customers.

Another factor to consider is the amenities offered by the cloud kitchen. Some kitchens offer fully-equipped spaces, while others may require you to bring your own equipment. The cost of renting equipment and utilities can add up, so it’s important to factor these expenses into your budget.

Services provided by the cloud kitchen can also impact pricing. Some kitchens offer additional services such as marketing and delivery, which can be beneficial for new businesses. However, these services may come at an additional cost.

In conclusion, when researching cloud kitchen pricing, it’s important to consider location, amenities, and services provided. By comparing prices and weighing the costs and benefits, you can make an informed decision and set your food business up for success.

How To Invest In Ghost Kitchen

Investing in ghost kitchens can be a great opportunity for those looking to enter the food industry without the high costs of traditional brick-and-mortar restaurants. Here are some steps to consider when investing in ghost kitchens:

1. Research the market

Look into the demand for ghost kitchens in your area and identify any gaps in the market that you can fill.

2. Choose the right location

Ghost kitchens should be located in areas with high population density and easy access to delivery services.

3. Invest in quality equipment

Ghost kitchens require high-quality equipment to ensure efficient and safe food preparation.

4. Focus on branding

Develop a strong brand identity for your ghost kitchen, including a unique name, logo, and menu.

5. Partner with delivery services

Form partnerships with popular delivery services like Uber Eats or Grubhub to ensure your food reaches customers easily.

6. Create a streamlined ordering system

Invest in a user-friendly online ordering system that makes it easy for customers to place orders and track their delivery.

7. Develop a marketing strategy

Use social media and other digital marketing tactics to promote your ghost kitchen and attract new customers.

8. Consider franchising

If your ghost kitchen is successful, consider franchising your concept to open additional locations and expand your brand. By following these steps and investing in a well-planned and executed ghost kitchen, you can potentially reap the rewards of a profitable and growing industry.

Real Estate Agencies are Hustling through Cloud Kitchen Investments:

The people at the top of the food chain in the real estate industry are well-connected.

They prefer investing in cloud kitchens, over dine-in restaurants because of the overall efficiency, low-cost factor, and other variables associated with the platform itself. Therefore, if you are part of the real-estate niche, it’s the right time for you to ring a few former associates, or go in solo.

If you have your own piece of land, you can rent it out to other businesses that are looking to start as cloud kitchens. This is a fantastic opportunity because McDonald’s actually did that when the business was just about getting started.

Also Read: McDonald’s Is a Real Estate Empire [It’s Not a Fast Food Chain]

Since the COVID-19 outbreak, a lot of chaos has subsided, with people getting vaccinated and businesses returning to the “old” normal.

Therefore, many barriers have come crashing down. Already, millions of people are ordering food by dozes through online food apps . It’s the perfect opportunity for you to get started on how to invest in cloud kitchens right away.

If you have any questions, feel free to post them in the comments section below. We would love to hear about your thoughts on the cloud kitchen investment model, and whether it’s a good move for investors or not.

Frequently Asked Questions:

Is cloud kitchen profitable.

When considering starting a cloud kitchen, many entrepreneurs often ask the question, “Is cloud kitchen profitable?” The answer is not a simple yes or no, as there are several factors that can impact the profitability of a cloud kitchen.

First and foremost, the location of the cloud kitchen plays a significant role in its profitability. A cloud kitchen situated in a high-traffic area with a significant demand for food delivery services is more likely to be profitable than one in a low-traffic location.

The menu and pricing strategy of the cloud kitchen also have a significant impact on its profitability. Offering a unique and diverse menu at competitive prices can help attract more customers and generate higher profits. Additionally, offering special deals and promotions can help increase sales and revenue.

Another critical factor that can impact the profitability of a cloud kitchen is the efficiency of its operations. Ensuring that the kitchen is well-equipped and staffed with trained professionals can help reduce operating costs and increase productivity.

Marketing and advertising efforts can also play a role in the profitability of a cloud kitchen. Utilizing social media platforms and other digital marketing strategies can help attract more customers and increase brand visibility.

Overall, while there is no guarantee of profitability in the cloud kitchen business, with the right location, menu, pricing strategy, operations, and marketing efforts, it is possible to run a successful and profitable cloud kitchen.

Related Articles:

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Business Plan Template For a Ghost Kitchen: Complete Guide

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  • February 24, 2023
  • Food & Beverage

business plan for cloud kitchen

Whether you’re looking to raise funding from private investors or to get a loan from a bank (like a SBA loan) for your ghost kitchen, you will need to prepare a solid business plan.

In this article we go through, step-by-step, all the different sections you need in your ghost kitchen business plan. Use this template to create a complete, clear and solid business plan that get you funded.

1. Ghost Kitchen Executive Summary

The executive summary of a business plan gives a sneak peek of the information about your business plan to lenders and/or investors.

If the information you provide here is not concise, informative, and scannable, potential lenders and investors will lose interest.

Though the executive summary is the first and the most important section, it should normally be the last section you write because it will have the summary of different sections included in the entire plan.

Why do you need a business plan for your ghost kitchen?

The purpose of any business plan is to secure funding through one of the following channels:

  • Obtain bank financing or secure a loan from other lenders (such as a SBA loan )
  • Obtain private investments from investment funds, angel investors, etc.
  • Obtain a public or private grant

How to write your ghost kitchen’s executive summary?

Your ghost kitchen is not like a regular restaurant and hence, the information that goes into the business plan will differ slightly. You can always use a general layout that includes:

  • Business overview : introduce your company and tell why you want to open a ghost kitchen. Speak about your menu and what problems they solve. Also, mention the location, target delivery partners, and the legal structure of your ghost kitchen.
  • Market analysis : provide a deep market analysis that backs your decision to open a ghost kitchen. The market analysis will include information like who your competitors are, your strengths and weaknesses, target audience, food ordering trends, etc.
  • People : mention who are the managers and why you have selected them along with their relevant industry experience in the food and restaurant industry. Also, speak about your staff requirements and the management hierarchy.
  • Financial plan : how much profit and revenue do you expect in the next 5 years? When will you reach the break-even point and start making profits? It is ideal to include a chart depicting your key financials such as revenue, gross profits, and net profit
  • Funding ask : what loan/investment/grant are you seeking? How much do you need? How long will this last?

business plan for cloud kitchen

Ghost Kitchen Financial Model

Download an expert-built 5-year Excel financial model for your business plan

2. Ghost Kitchen Business Overview

In this segment of your business plan, you will describe your ghost kitchen. Include the following information:

  • What inspired you to go for a ghost kitchen business?
  • What products you are offering and what problems do they solve?
  • Who is your target audience?
  • Where are you located and why did you select that location?
  • What is your company structure and who are your key partners?

Let’s look at different subsections that you must include:

Start by explaining why you selected the business and what is your experience in the industry. It is okay to not have any experience. As long as you can show passion and as long as you can prove that your business is going to solve some problems, you are good to go. The two things that you must demonstrate are:

  • Your passion for food & restaurant businesses
  • Feasibility of the business

You may be passionate about cooking and/or you may have a professional culinary degree. Either way, as long as you can channel your knowledge, expertise, and passion in one direction, it will be a good start.

Feasibility will look into various aspects that include:

  • The degree of competition you will face
  • The popularity of online food ordering in your area
  • Availability of the food delivery partners
  • The type of food you are going to sell

For example, if you are living in the suburbs with closed-knit communities involved in more social exchanges and family and/or community feasts, they are most likely not going to order food online. Even the availability of food delivery partners may be a problem.

On the contrary, if you want to operate your ghost kitchen in an area where most of the residents are office goers, it is highly likely that they will frequently order online to save time.

Similarly, people involved in high-stress jobs may crave comfort foods and there may not be enough options for them. Opening a ghost restaurant in such a locality will be a success.

business plan for cloud kitchen

b) Business Model

This is where you will present the following:

  • The type of kitchen you want (free-standing and completely customizable, sub-leased restaurants, or shared commercial kitchens)
  • Choice of the location (must be in a safe place with easy access for delivery partners, easy waste management and disposal, safety permits, etc.)
  • If you want to use your own delivery fleet, speak about the number of delivery staff you will need, the vehicles needed, the technology you intend to use for navigation, etc.
  • A brief of your order management and payment processing system

If you have a unique business model in mind, spell that. For instance, you may decide to have multiple menus with different names and food types such as Emir’s Shawarma, John’s BBQ, The Kentucky Grills, etc.

For more information on the different types of business models there are for ghost kitchens, read our complete guide here .

business plan for cloud kitchen

This is the sub-section where you define your kitchen concept and provide some information about the menu items you have selected and why.

Here are a few things you need to explain:

  • Is the food you are offering in tune with the locality and your target customers?
  • Will your food items withstand travel? For example, if you want to sell French fries, it might not be a good idea because they may become soggy quickly before reaching the customer
  • Are your products targeting any particular age group? For example, Gen X and Millennials may gravitate more towards comfort food.
  • How do you intend to package your food?
  • Who will be your vendors for supplies?
  • What will be your branding, menu layout, etc.?

d) Pricing Strategy

This is the segment where you define your pricing strategy. You may offer discounts on bundled products. You may have a higher price range than your competitors for using organic items. Similarly, you may be charging slightly higher for providing bio-degradable containers and packaging material.

You must also speak about the most profitable items along with expected profit margins for all products you want to sell.

A pricing chart for all major products you are offering can help the investors or lenders to tie your pricing strategy with your financial projections.

e) Target Audience

Give an overview of your target audience or customers and explain the rationale behind the selection. For example, if you are creating a menu around Gen X and Millennials, then there must be a sizable proportion of people in those age groups in the locality.

If your menu includes more breakfast and lunch items then there must be a large chunk of working-class people who don’t have enough time to cook and will usually order food from outside.

A clear understanding of your target audience is crucial for success. If you don’t understand your target customers and their needs, potential lenders and investors will not be confident about investing in your business.

business plan for cloud kitchen

f) Legal Structure

Finally, your business overview section should specify what type of business structure you want. Is this a corporation or a partnership (LLC)? Who are the investors? How much equity percentage do they own? Is there a Board of Directors? If so, whom? Do they have experience in the industry?

If you have selected partners, explain why you have selected them and what positive impact they will have on your business. For instance, you may actually decide to make your raw materials vendor a partner in your business. This will ensure that you will get your supplies at a much lower rate than your competitors. This can help you to bring down your prices.

3. Ghost Kitchen Market Analysis

A clear understanding of the market is absolutely necessary. You must demonstrate your market knowledge to potential lenders and investors, or else they will lose confidence. That’s the purpose of the market analysis section of your ghost kitchen business plan.

For example, if you intend to sell Connecticut’s popular White Clam Pizza in Colorado where Lamb Chops are famous, it might not work. Thus, understanding your market and the food preferences of people living there is absolutely necessary.

a) Market Trends

Understanding the market trends is necessary. This will allow you to identify growth opportunities. For example, if plant-based sausage wrap and cajun fries are popular choices among people ordering online, trying to sell Nashville hot chicken sandwiches that fell out of popularity is definitely not a good idea.

If you don’t know which dishes to offer, you can check Grubhub’s ‘State of the Plate’ or Doordash’s ‘State of Flavor’ reports to get an idea of what people are ordering the most. Such reports will give you a fair idea.

The goal is to stay abreast with current demands and trends and offer those items. You will need to research your potential customers. The best way to do that is to interact with them and ask them directly.

You may ask questions like:

  • Which dishes do they usually order online?
  • What side dishes and desserts do they usually prefer?
  • What are the top alcoholic beverages they order?
  • What do they prefer for breakfast, lunch, dinner, and late at night?
  • What food items do they prefer during winter, summer, spring, and fall?

The more data you gather, the easier it becomes to come up with a menu that people will like.

business plan for cloud kitchen

b) Competition

Researching your competition is important. You must try to find out:

  • Which food items they are selling the most?
  • Who is their target audience?
  • What promos, offers, and bundles do they offer to maximize sales and profits?
  • Do they have seasonal menus?
  • How many food delivery platforms they have partnered with?
  • What is their average price range?
  • What type of packaging materials are they using?

Add as many questions or points as required for your analysis. The more detail-oriented the analysis is, the better it is.

You must draw a strong conclusion based on the data you gather. Here are some examples of the conclusions you can come up with:

  • There are no ghost kitchens in the area that have seasonal menus.
  • None of the competitors offer bundled food items
  • No competitor offers multiple menus with different names and different food types

The conclusion you draw must validate your business model and the rationale behind it.

business plan for cloud kitchen

c) Customers

This is where you will give the details of your target audience. Remember that the Business Overview section only gave a preview. Additional details will be here in this section.

Customer data can include information such as:

  • What percentage of the total population in the locality make up your target audience?
  • How frequently do they order food online?
  • What type of food do they usually order?
  • What is the average order size?
  • At what time of the day do they usually order food online?
  • Are they loyal customers of certain ghost kitchens or do they try out food from different kitchens frequently?
  • Do they buy recommended items (recommended items on your menu may carry the highest profit margins)?
  • Do they share their culinary experience on social media? Which social media platforms do they use?

Feel free to add such much data as you feel is necessary to validate your business plan. While you will get most of the data from your direct target audience outreach and research, you can get some data from competitor research and various other sources as well.

business plan for cloud kitchen

4. Ghost Kitchen Marketing Strategy

In this segment, you must explain your strategy for acquiring customers.

This is the segment where you outline your customer acquisition strategy. Try to answer the following questions:

  • What is your USP?
  • What marketing channels will you use (online or offline)?
  • Do the marketing channels aptly grab the attention of your target audience? For instance, young adults will most likely not pay attention to TV ads. They are more hooked on social media.
  • How do you intend to track the success of your marketing strategy?
  • What is your CAC or customer acquisition cost?
  • What is your marketing budget?
  • What introductory promos and offers do you intend to provide for attracting new customers?

Let’s expand a bit on a few questions below:

What marketing channels do ghost kitchens use?

In addition to the food delivery apps, a few marketing channels ghost kitchens typically use are:

  • Social media
  • Influencers
  • Email marketing
  • SMS marketing

You don’t need to use all marketing channels. You can focus on just 2 or 3 and gain expertise in those channels. For instance, if your target audience is mostly on Instagram and Facebook, you must come up with strategies to engage with them on those platforms.

business plan for cloud kitchen

What is your unique selling proposition?

In other words, how do you differentiate yourself vs. competitors? This is very important as you might need to win customers from competitors.

A few examples of USPs are:

  • Price : you may have cheaper prices than competitors
  • Specialization : you may be specializing in some specific type of food (e.g. Dim Sum, Korean BBQ, etc.)
  • Additional products : you may sell alcoholic and non-alcoholic beverages, special seasonal shakes, etc.
  • Combos : you may offer chef-recommended food combos and bundles
  • Packaging : you may use environment-friendly bio-degradable food packaging

Your USP will vary based on the products you want to sell and the target audience.

5. Ghost Kitchen Management

You must address two things here:

  • The management team and their experience/track record
  • The organizational structure: what are the different teams and who reports to whom?

a) Management

Your kitchen management will vary depending on its size, scale, and business model. For instance, if you are going for shared commercial kitchens, you don’t need to worry about building or equipment management. For a free-standing ghost kitchen, your will be responsible for everything. Again, for a multi-menu model, you may want separate people managing the supply chains.

You may have co-founders and/or senior managers. You must explain their roles, too. Apart from that, you must also explain their industry experience and why they are suitable for those positions.

b) Organizational structure

Note that even if you have not already hired anyone, you must include the roles at least.

Typical roles for a ghost kitchen are: senior managers, chefs (head chef and junior chefs), housekeepers, helpers, delivery staff (if you want your own delivery fleet) and other support team members (HR, finance if you run a large operation).

You must define their roles and the hierarchy of reporting. This will demonstrate to the potential lenders and investors the solid management plan you have in place to operate your business efficiently and successfully.

Create and attach an organizational chart for a visual understanding of your kitchen’s staff and their reporting lines.

business plan for cloud kitchen

6. Financial Plan

The financial plan is perhaps, with the executive summary, the most important section of any ghost kitchen business plan.

Indeed, a solid financial plan tells lenders that your business is viable and can repay the loan you need from them. If you’re looking to raise equity from private investors, a solid financial plan will prove them your cloud kitchen is an attractive investment.

There should be 3 sections to your financial plan section:

  • Your historical financials (only if you already operate the business and have financial accounts to show)
  • The startup costs of your project (if you plan to open a new kitchen, renovate or expand your kitchen, etc.)
  • The 5-year financial projections

a) Historical Financials (optional)

In the scenario where you already have some historical financials (a few quarters or a few years), include them. A summary of your financial statements in the form of charts e.g. revenue, gross profit and net profit is enough, save the rest for the appendix.

If you don’t have any, don’t worry, most new businesses don’t have any historical financials and that’s ok. If so, jump to Startup Costs instead.

b) Startup Costs

Before we expand on 5-year financial projections in the following section, it’s always best practice to start with listing the startup costs of your project.

For a ghost kitchen, startup costs are all the expenses you incur before you can actually start cooking and making sales. These expenses typically are: buying equipment, renovating the building, purchasing inventory, paying for the lease deposit , etc.

To give you a clear overview of the costs you can expect when you open your own dark kitchen, we have laid out below 2 examples: a white label dark kitchen in a kitchen you own (1) and another operating in a shared kitchen you rent (2) . For more information on how much it costs to open a ghost kitchen, read our complete guide here .

c) Financial Projections

In addition to startup costs, you will now need to build a solid financial model over 5 years in your ghost kitchen business plan.

Your financial projections should be built using a spreadsheet (e.g. Excel or Google Sheets) and presented in the form of tables and charts in your business plan.

As usual, keep it concise here and save details (for example detailed financial statements, financial metrics, key assumptions used for the projections) for the appendix instead.

Your financial projections should answer at least the following questions:

  • How much revenue do you expect to generate over the next 5 years?
  • When do you expect to break even?
  • How much cash will you burn until you get there?
  • What’s the impact of a change in pricing (say 5%) on your margins?
  • What is your average customer acquisition cost?

You should include here your 3 financial statements (income statement, balance sheet and cash flow statement). This means you must forecast:

  • The number of customers and orders over time ;
  • Your expected revenue ;
  • Operating costs to run the business ;
  • Any other cash flow items (e.g. capex, debt repayment, etc.).

When projecting your revenue, make sure to sensitize pricing and the number of customers, sales as a small change in these assumptions will have a big impact on your revenues.

business plan for cloud kitchen

7. Use of Funds

This is the last section of your ghost kitchen business plan. Now that we have explained what your ghost kitchen is about, the industry, management and your marketing strategy, this section must answer the following questions:

  • How much funding do you need?
  • What financial instrument(s) do you need: is this equity or debt, or even a free-money public grant?
  • How long will this funding last?
  • Where else does the money come from? If you apply for a SBA loan for example, where does the other part of the investment come from (your own capital, private investors?)

If you raise debt:

  • What percentage of the total funding the loan represents?
  • What is the corresponding Debt Service Coverage Ratio ?

If you raise equity

  • What percentage ownership are you selling as part of this funding round?
  • What is the corresponding valuation of your business?

Use of Funds

Any business plan should include a clear use of funds section: this is where you explain how the money will be spent.

Will you spend most of the loan / investment in paying your employees’ salaries and the inventory? Or will it cover mostly the cost for the lease deposit, the renovation and the cooking equipment.

Those are very important questions you should be able to answer in the blink of an eye. Don’t worry, this should come straight from your financial projections. If you’ve built solid projections like in our ghost kitchen financial model template , you won’t have any issues answering these questions.

For the use of funds, we recommend using a pie chart like the one we have in our financial model template where we outline the main expenses categories as shown below.

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Cloud Kitchen Financial Model Template

Cloud Kitchen Financial Projections Summary

Cloud kitchens, also known as ghost kitchens, are a very popular business model these days. The rise of online ordering, lower investment requirements, and increased flexibility make it a smart way to test out new culinary ideas or take advantage of current trends without breaking the bank.

Most people interested in opening a ghost kitchen are less interested in the prospect of putting together a financial plan for the business, and who can blame them? This is where Poindexter comes in. Our software makes the process of creating a financial plan as simple as possible. Creating a plan only takes minutes, whether you're creating a business plan for investors, applying for a loan, or just want to test the viability of your ideas.

How the Ghost Kitchen Financial Model Works

Poindexter is built to remove the complexity that comes with financial modeling in spreadsheets. There won't be any complicated equations or reports to configure here. All you need to do is insert some of our pre-built business model components, adjust a few assumptions and you're all done! This template is intended to be used as a starting point for your cloud kitchen, so you can quickly remove, add or modify any aspect in seconds.

To get you started, we've included some basic financial assumptions most cloud kitchens can expect to encounter.

Revenue is calculated based on forecasts for the number of orders coming in from three different channels: Uber Eats, Door Dash, and the company website. The revenue from each channel is broken out separately, but you can just as easily combine them all into one revenue calculation, separate them further by each product, or forecast revenue using some other metric entirely.

Costs are generally split into two categories: fixed costs and variable costs. We've included some examples of each type so you can see how they work and quickly add the costs you'll need. Fixed costs tend to be more straightforward and include things like rent, utilities, and salaries. Variable costs are those that grow (and decline) along with revenue, such as the transaction fees from Uber Eats and Door Dash, both of which we've included.

Investments in equipment are often one of the biggest startup costs for restaurants, and we've included an example purchase of generic kitchen equipment to show you how easy it is to add these transactions to your plan.

Full Pro Forma Financial Statements for Your Cloud Kitchen

Based on the simple business model components and assumptions you've chosen, Poindexter automatically produces a complete financial analysis including full pro forma financial statements. Some of the reports you can expect include:

  • Income Statement (P&L)
  • Balance Sheet
  • Cash Flow Statement
  • Summary Dashboard
  • Charts & Graphs

There are also multiple options for sharing your plan with others once it's time. You can invite collaborators to edit alongside you, share a private link with read-only access or download everything to Excel for further analysis, presentations, and more! Try it out today! It's free to try so there's nothing to lose.

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Cloud Kitchen Business Model ( Faasos) | Start your own Cloud Kitchen

lapaasindia

August 17, 2019

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business plan for cloud kitchen

2 Minute Summary

With the rapidly growing online business, the market that is gaining momentum now is Food. A cloud kitchen is a virtual restaurant. You cannot physically go there and order food. You have to order online and the food will be delivered to your home. There is no need for dining and no need to take an exclusive place. It saves a lot of investment. According to a recent survey, 67% of the restaurant owners would want to open a cloud kitchen as their next outlet. Faasos was launched in 2011 by Jaydeep Burman and Kallol Banerjee in Pune. Due to Online players, The rent-to-sales ratio dropped from 15% to 4% over the next 2 years. Today, Faasos has 160+ kitchens that produce delivery meals for four distinct brands. This include, Faasos, Behrouz, Oven Story – a pizza brand, and Firangi Bake. Their main focus is on UAE, Indonesia, Thailand, and Vietnam. Rebel Foods has raised a total of $124.6 M in funding over 10 rounds. There most recent investors are Sequoia Capital and Go Ventures.

Cloud Kitchen Business Model

In this digital age, everything is becoming digitized and technologically advanced.

The internet has become a faster source of earning revenue.

From clothes and shoes to gadgets and cosmetics, everything is available for sale online.

With the rapidly growing online business, the market that is gaining momentum now is  Food .

The online food business has now gradually transformed itself from traditional outlets to cloud kitchens.

But what exactly is a cloud kitchen?

What is cloud kitchen, business model?

If you are a foodie or a food entrepreneur, this blog is a must-read for you!

What’s in it for you?

WHAT IS A CLOUD KITCHEN?

A cloud kitchen is a virtual restaurant.

You cannot physically go there and order food.

You have to order online and the food will be delivered to your home.

There is no need for dining and no need to take an exclusive place.

Cloud Kitchen owners can take place anywhere and deliver food at your doorstep.

This means you can also deliver food even by cooking at your home.

It saves a lot of investment.

There is no need for proper setup or an exclusive furnishing and interiors.

This reduces your operational costs.

All you need is chefs to cook food.

According to a recent survey, 67% of the restaurant owners would want to open a cloud kitchen as their next outlet.

One of the best examples of Cloud Kitchen in India is  Rebel Foods.

Rebel Foods owns numerous companies including Faasos, Oven Story, etc.

what is cloud kitchen-business-model

ABOUT REBEL FOODS (Faasos)

Rebel Foods cloud kitchen was launched in 2011 by Jaydeep Burman and Kallol Banerjee in Pune.

At that time the concept of cloud kitchen was new and only a few people knew about it.

Jaydeep Barman didn’t set out to create a new food tech category.

He was just tired of burgers and pizza.

 He was craving a more Indian take on fast food.

Jaydeep and his friend Kallol Banerjee set up Faasos, an Indian wraps chain.

They had built Faasos as a tech-friendly brand and was an early adopter of online ordering platforms.

This gave them a front-row view on how technology was reshaping the food services industry.

The shift from a traditional fast food format to a cloud kitchen business model changed the economics of the entire venture.

The rent-to-sales ratio dropped from 15% to 4% over the next 2 years

 It took away the need to solve the #1 problem of retail – finding great locations!

Today, Faasos has 160+ kitchens that produce delivery meals for four distinct brands.

This include, Faasos, Behrouz, Oven Story – a pizza brand, and Firangi Bake.            

This cloud kitchen business model is clever because it showcases their separate brands as individually established.

The same customer can order a wrap for lunch and a biryani dinner, or something different for every member of the family.

The team is always experimenting, fielding a few new concepts at any given time.

Rebel Foods has 4 current team members, including Co-Founder & CEO Jaydeep Barman.

Jaydeep Barman – Co-Founder & CEO

Kallol Banerjee – Co-Founder

Sagar Kochhar – Chief Marketing Officer

Soumyadeep Barman – Chief Technology Officer

Rebel Foods is expanding its presence within the country and in overseas markets.

Their main focus is on UAE, Indonesia, Thailand, and Vietnam.

They also have taken a bigger kitchen and have opened multiple kitchens within it to suit multiple brands.

In one restaurant, various speciality restaurants are functioning.

They are working under one management which reduces its cost.

MARKETING STRATEGY OF FAASOS

Faasos has an amazing marketing strategy.

Faasos launched its mobile app in 2014.

It is one of the first companies that took orders on Twitter.

People had to just tag Faasos and they could order anything.

Barman shares that the strategy fetched good social media presence and new customers to the brand.  Faasos is spending around Rs 400 – 500 for acquiring new customers.

Another special feature of Rebel Foods is their amazing packaging.

The type of packaging of all the verticals of Rebel Foods is special and there is a special vision behind it.

marketing strategy of cloud kitchen-business-model

FINANCIAL STATISTICS

Rebel Foods has raised a total of $124.6 M in funding over 10 rounds. 

There most recent investors are Sequoia Capital and Go Ventures.

COMPETITION

Their main competition is  Fresh Menu  which works in similar services.

Fresh Menu provides offline and online services.

You can go to a restaurant or order food online.

Currently,  OYO Rooms  is looking to acquire Fresh Menu.

The reason is that they are thinking of launching their cloud kitchen.

With Fresh Menu they are getting a readymade platform to deliver food.

freshmenu-competitor-of-faasos-business-model

Disadvantages Of Cloud Kitchen

Nothing is perfect in this world, everything has its pros and cons is a very popular quote. This also happens to be true in the case of cloud kitchen. There are a lot of drawbacks that you may face if you are planning to start a cloud kitchen. Various disadvantages of a cloud kitchen that one may come across are discussed below in detail.

  • Very High Competition

Restaurant or the food industry has always been very competitive. Talking specially about the cloud kitchen, there are no entry barriers in the business. Anyone who has a little amount of investment and some knowledge and skills can enter into this business. The new entrepreneurs who wish to start a cloud kitchen must be ready to face the competition.

There are two modes of launching a cloud kitchen business. One is through your platform, it may be either a website or an app or through the other mode that is depending on the food aggregators. The first option may not be a good one because it will require a lot of initial investment and marketing which may not be a good idea in such a competitive industry.

With the other option that is depending on different food aggregator platforms, there comes a lot of restrictions. Unless and until you don’t have any issue with the terms and conditions provided by the food aggregator, you can stick with the second option.

  • No Direct Customer Relation

In a cloud kitchen business, except for the delivery of food, there is no direct relation with the customer. This may act as a disadvantage because you cannot directly know the taste and preference of your customer. And if you are working with a food aggregator, then you might not even know the basic details of your customer.

  • Only Online Presence

Whatever sales a cloud kitchen generates is all through the online medium. Since the concept of cloud kitchen does not involve any physical presence, it becomes a little difficult for the customers to develop trust in the brand, and any business whether online or offline needs to gain the trust of its customers.

  • Dependence On Technology

A cloud kitchen or ghost kitchen business is one hundred percent dependent on technology. Any small hurdle can disturb the business. This is a very big disadvantage as all the sales of a cloud kitchen depends on the technological environment.

  • Marketing Cost

Many newcomers into the cloud kitchen business start with a very low investment. This is one of the reasons they do not spend a lot or barely any minimum amount on marketing. But the ultimate growth hack in this business to beat the high competition is a good marketing strategy. Marketing comes with a cost.

These are a few disadvantages that you may face in the business. However the list is not finite, you may face various challenges that may come as a disadvantage. Like any other business, if you overcome these challenges there are a lot of scopes associated with the business.

HOW TO START A CLOUD KITCHEN?

I am sure that you have started thinking about how you can start a cloud kitchen. 

Following are some things that you will have to keep in mind before starting a business.

#1 Location

First, you need a place, a location where you will set up your internet restaurant.

Suppose you rent a place at a monthly expense of Rs. 10,000.

It is also assumed that the company would not achieve breakeven until five months.

So you need at least Rs. 50,000 to pay the rent.

#2 Kitchen and Equipment’s

Rs. 2,50,000 is required for all the kitchen equipment like utensils, gas stove, etc.

The cost also includes Power costs, Water bills and machinery costs.

#3 Licenses

You would need four licenses to start your business.

This include-:

This is a food security license that is compulsory for every business.

GST is Goods and Services Tax which is levied on online companies as well.

Online businesses need to register themselves under GST as part of the law.

The people will be paying you online.

FIRE SAFETY

A fire safety license is compulsory to acquire for every business.

TRADE LICENSE

This license permits you to trade goods or services in the city.

The cost of taking all the licenses can range from 15,000- 20,000.

Suppose you are employing 2 staff members as chefs at a salary of Rest. 20,000 each.

After multiplying with 5 you will know how much you need to pay for the next 5 months.

A cloud kitchen needs to have good chefs who cook delicious food.

This is because food is the only thing that will build your reputation and bring the customers back.

#5 Inventory Management Software

The point of sale software will cost you around Rs. 15000.  

Convenient software is required for easy calculations and printing bills.

#6 Working Capital

Initially, I assume that you would require Rs. 50,000.

Working capital will keep your business running when the company hasn’t received payments.

#7 Marketing

In my opinion Rs. 1, 00,000 should be invested for marketing as it is the only thing that will help in growing the business.

It includes costs like:

Online Customer Acquisition

Cost  – Rs.40,000-Rs.1,55,000

In the beginning, it is important to acquire online customers through advertisements and offers.

Social Media

Cost – Rs.20,000-Rs.40,000

Social Media has become a force where you can promote your brand widely at a lower cost.

Today in the age of Facebook and Instagram it has become important for a brand to have a great social media presence.

Check out our Blog on  Social Media Marketing

Branding & Packaging

Cost – Rs.50,000-Rs.60,000

When your business depends entirely on delivery, packaging can make it or break it.

The packaging is one of the important things that is being delivered to customers.

#8 Delivery

The Business Model of a Cloud Kitchen is Hyper-Local Business.

Hyper-Local Business means that you deliver within the radius of up to 5-6 kilometres.

You rent different outlets around the city and deliver the food to the nearby areas.

It means to create a cluster network of virtual restaurants and spread.

The Delivery Cost is estimated to Rs. 20-40 per order.

start-your-own-business-faasos-business-model

MARKETING STRATEGY OF CLOUD KITCHEN

#1 Run advertisements on social media platforms like Facebook and Instagram.

#2 Offer coupons and discounts

#3 If you are thinking of opening an app then use social media for advertising.

SERVICES THAT SHOULD BE PROVIDED

#1 elite pass.

Elite Pass gives you some special services and benefits which is different from normal.

The customers can acquire an elite pass by paying some amount.

#2 Bolt feature

A Bolt feature means that if the company does not deliver food in a stipulated time then the order will become free.

PRECAUTIONS TO BE TAKEN WHILE PLANNING

#1 disadvantages of third party discounts.

Often the orders increase due to third-party discounts.

This leads to buying more equipment and hiring more people.

When that discount gets over, the orders stop and you are left with higher costs.

#2 Food cost management

The company should take care of the food costs that is the actual cost of the ingredients that go into a dish.

As a standard, your food costs should range between 30-33%.

#3 Food Safety

The Food Safety and Standards Association of India (FSSAI) has been quite visible in the news ordering aggregators to de-list restaurants.

They are taking measures to ensure a high standard of food safety.

 The cloud kitchens should train the staff according to these rules.

MY IDEA OF A CO-KITCHEN

Most of you would have heard about co-working space.

In a co-working space, there is a big space in which multiple offices are established.

In a Co- kitchen, similarly like offices kitchen can be set up in this big space.

The equipment’s like utensils and gas stove and basic services like electricity, gas will be provided by us.

Anyone who wants to open a kitchen will give you a certain amount to work there.

It is a low risk and high-profit business.

Build your company  Branding   

Now it is over to you.

Do share your ideas and queries regarding cloud kitchen business model in the comment section.

Also you can go for some cloud kitchen franchise Model available in Market.

FAQ’s

Faasos was launched in 2011 by Jaydeep Burman and Kallol Banerjee in Pune. Faasos has 160+ kitchens that produce delivery meals for four distinct brands. This include, Faasos, Behrouz, Oven Story – a pizza brand, and Firangi Bake.            

Barman shares that the strategy fetched good social media presence and new customers to the brand. Faasos is spending around Rs 400 – 500 for acquiring new customers.

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COMMENTS

  1. Cloud Kitchen Business Plan [Free Template

    Here are a few tips for writing the market analysis section of your cloud kitchen business plan: Conduct market research, industry reports, and surveys to gather data. Provide specific and detailed information whenever possible. Illustrate your points with charts and graphs. Write your business plan keeping your target audience in mind.

  2. How To Run A Successful Cloud Kitchen Business In 2023

    Learn the benefits, steps, and tips to run a successful cloud kitchen business in 2023. A cloud kitchen is a delivery-only restaurant that has no physical space for dine-in and offers multiple brands using the same kitchen infrastructure. Find out how to order taking, processing, staffing, inventory, marketing, and POS system for cloud kitchens.

  3. Cloud Kitchen 101: How To Start And Scale Your Cloud Kitchen Business

    Operations Plan: The operations plan must include precisely how you want your cloud kitchen business to function. Right from the order acceptance mechanism and staff required in the kitchen, to detailing the recipes, everything must be explained in detail. Financial Analysis: Analyze the capital that you will require to open a cloud kitchen.

  4. 3. Starting A Cloud Kitchen Business In 202 3

    The cloud kitchen business provides restaurateurs with the opportunity to experiment with different concepts and formats, which has in turn, given birth to varied food delivery business models. 2. Types Of Cloud Kitchen Business Models . The cloud kitchen business model has undergone many variations and has diversified into the following types

  5. What Is A Cloud Kitchen & How To Run One Successfully

    The growth of cloud kitchens isn't unexplained. Covid19 changed the way consumers purchase food. With people required to stay at home, the online food delivery business boomed, so much so that, in the US alone, the online food delivery market was valued at $221 billion in 2022 and is expected to continue to grow at an annual rate of 10% over the next few years.

  6. What is Cloud Kitchen & How to Start a Cloud Kitchen

    A cloud kitchen business does not have a physical dining area for customers. Instead, customers order food from the restaurant online or over the phone and then pick up their food when ready. Cloud kitchens typically have multiple cooking stations and large kitchen space to prepare multiple orders simultaneously.

  7. 8 must-know steps on How to Start a Cloud Kitchen Business

    Understand the cloud kitchen business model: The cloud kitchen business model revolves around operating delivery-only kitchens that cater to the growing demand for online food delivery. Here are the key aspects of the cloud kitchen business model: Virtual Presence: Cloud kitchens don't have a physical dine-in area. Instead, they focus solely on ...

  8. 6 Most Popular Cloud Kitchen Business Models (& the Only 2 We're

    Cloud Kitchen Model #6 - Shell Kitchen /w Outsourced Food Prep/Delivery/Support. This one is… slightly complicated. Imagine a cloud kitchen that only does final touches. It can offer one cuisine (most common), or several of them — but the offer is often really slim and uninspired.

  9. Cloud Kitchen Business Model

    The cloud kitchens operate on the following business models: Independent cloud kitchen: This is the classic cloud kitchen model. It is a restaurant with no physical presence. As the demand for online food grew, so did this concept. It consists of a single brand that prepares food in a kitchen based on online orders.

  10. 5 Strategies to Build Cloud Kitchen Business Model

    In this Cloud Kitchen Business Plan, a 3rd party aggregator will own a shell kitchen with bare minimum facilities such as gas pipes, ventilation, and drainage. Now, this 3rd party aggregator will rent out this space to multiple kitchens, having brands of cuisines. The kitchen owner needs to bring staff, raw materials, and cook the food.

  11. Cloud Kitchen Business Model: Understanding and Implementing the Concept

    Step 4: Create your menu. Your menu is the backbone of your cloud kitchen business, so it's important to get it right. Offer a variety of dishes that cater to your target market, and make sure that each dish is well-priced, flavorful, and easy to deliver.

  12. Cloud Kitchen: Meaning, Concept, Business Models, Benefits ...

    5. One Business, Multiple Brands, Single Kitchen Model. This cloud kitchen model is for businesses that offer different types of cuisines. With this model, they can sell each cuisine type with a separate brand name without being worried about the extra costs of a different physical setup for each brand. 6.

  13. How to Start a Cloud Kitchen Business in 2024

    A cloud kitchen is cost-effective because the business solely engages with the financial investments of kitchen staff and delivery agents. There is no need to spend a handful on hosts, servers, valets, etc. Thus, the operational cost reduces to a minimum. More brand exposure at a minimum cost.

  14. Cloud Kitchens Business Models Explained [2024 Edition]

    The global cloud kitchen market size was valued at US$ 51.96 billion in 2020, and this is projected to grow at a CAGR of 12.4% from 2021 to 2028. One of the main reasons for this continuous growth is the changing preferences of the target audience. Customers now prefer online food services over dining experiences.

  15. How to Start a Cloud Kitchen at Home: Simple Guide for Success

    Kitchen Equipment and Essentials. The right tools can make all the difference in ensuring that you can prepare high-quality food efficiently. Here are some of the essential items that every cloud kitchen needs: 1. Cooking Range: A reliable cooking range is an absolute must-have for any cloud kitchen. 2.

  16. How To Build A Cloud Kitchen Business Model In India [2022 Guide]

    The resources one would have to be spending in a cloud kitchen business model include, Rent: This mainly depends on the location and the land prices. A space of 600-800 sq feet is considered sufficient for a cloud kitchen model and may range from ₹25,000-50,000.

  17. 6 Proven Tips On How To Run a Successful Cloud Kitchen Business

    Third-party food aggregators ensure maximum outreach and visibility for cloud kitchen operators. Make sure to list your restaurant on all the major aggregator platforms such as Zomato, Swiggy, Foodpanda, etc. Build your restaurant's own online ordering system via a website or mobile app for maximizing the volume of orders.

  18. Here's Your Foolproof Plan on How to Invest in Cloud Kitchens

    1. Standalone Cloud Kitchen: This type of cloud kitchen resonates with a small-scale food business operation where a single or multiple brands work under the same facility. For most of the food industry startups that do not wish to spend too much on infrastructure costs, standalone cloud kitchens are the best choice.

  19. How To EASILY Write A Cloud Kitchen Business Plan

    Want to start a cloud kitchen business or ghost kitchen business? Well before you do that you need to write a cloud kitchen business plan. Here's how...⚠️ S...

  20. Business Plan Template For a Ghost Kitchen: Complete Guide

    In this article we go through, step-by-step, all the different sections you need in your ghost kitchen business plan. Use this template to create a complete, clear and solid business plan that get you funded. 1. Ghost Kitchen Executive Summary. The executive summary of a business plan gives a sneak peek of the information about your business ...

  21. Cloud Kitchen Financial Model Template

    Creating a plan only takes minutes, whether you're creating a business plan for investors, applying for a loan, or just want to test the viability of your ideas. ... Full Pro Forma Financial Statements for Your Cloud Kitchen. Based on the simple business model components and assumptions you've chosen, Poindexter automatically produces a ...

  22. Cloud Kitchen Business Model ( Faasos)

    A cloud kitchen or ghost kitchen business is one hundred percent dependent on technology. Any small hurdle can disturb the business. This is a very big disadvantage as all the sales of a cloud kitchen depends on the technological environment. Marketing Cost; Many newcomers into the cloud kitchen business start with a very low investment.

  23. How to Start a Cloud Kitchen in India

    To start a franchise unit of a cloud kitchen, you need approximately Rs 30 lakhs. The rent for an area of 150 to 300 sq ft is Rs 45,000 to 1 lakh, which can be reduced to Rs 7 lakh if you lease it annually. The cost of equipment is somewhere between Rs 3.5-4 lakh. The interiors cost between Rs 2.5-3 lakh.