Why Should you Open a Cloud-Kitchen

Food tech will continue to ‘organise the unorganised’, driving increased focus on consumers, food innovation and efficiency. The entry of food tech start-ups has led to a massive transformation of the operations of the Indian food industry.

According to a report, In 2017, two predominant models—restaurant marketplaces and cloud kitchens—evolved following the upheaval. The recovery was led by a reduction in delivery costs and increased penetration in existing markets. Not only this, the space saw investment worth US $370 million in 2017–18, up from US $70 million in 2016–17, which is more than 400% growth.

With more than 900 food delivery start-ups in the country, the focus now is on expansion and introducing food and experience innovations. Brands such as Zomato, FreshMenu and Swiggy are trying to drive consumer engagement by creating new products and experiences such as membership clubs or loyalty programmes. Some of the food tech start-ups are also working with restaurants to improve and expand kitchens and restaurants are also opening their own cloud kitchen or dark kitchen formats. For instance, Zomato, in its push towards a cloud-based kitchen, has now committed to investing US$15 million in Bengaluru-based Loyal Hospitality. Similarly, one of the largest restaurant group, Lite Bite Foods has also opened its dark kitchen models to serve customers in a better way. And, as the customers are poised for convenience now and are delivering much more than in last few years’ restaurants also feel cloud-kitchen model profitable and can’t ignore the trend going forward.

Why Cloud- Kitchen?

The main reason to start or enter into any business is its cost effectiveness. And, going by the trend most restaurant owners now want to open a cloud kitchen business. According to a recent survey conducted by LimeTray, 67 Per cent of the restaurant owners would want to open a cloud kitchen as their next outlet. With all the ease that this model provide- the order is placed, meals are cooked, packed and then whisked immediately by the delivery partners at their assigned locations or address.

Low on Operational Cost: Being a takeaway outlet only, it is cutting your cost to a large extent. There is no operational cost involved in front-house operations as the fleeting is done through a third-party service.

Real Estate Cost is Removed: Since, this a takeaway model, you don’t have to get worried about setting up a dining space. It’s just a kitchen and a takeaway counter that would suffice the need. Also, you need not worry on setting up a kitchen at a location which has high visibility or is accessible to all. Kitchen can be setup at a low cost location where your customer exists.

High on Expansion: Cloud kitchen model comes with low investment cost. Thus, you can expand it to as much locations as possible by opening just small. Once the brand has got enough customers, expanding to new locations becomes easy. For eg: Biryani by Kilo has now 20 operational cloud kitchen in around four cities with heavy revenue. Similarly, Rebel Foods or Faasos which is the pioneer in the segment  is running more than 160+ kitchens and 4 brands including Faasos, Behrouz Biryani, Oven Story and Firangi Bake.

Saving on overhead costs: With a cloud kitchen, one can save hugely on overhead costs. You don’t need client-facing staff, decoration or space entrance, parking area etc. Even if you have lower-priced menu items, your profit margins are likely to be better.