A complete guide to Cloud kitchens in 2021

Cloud kitchens, often also known as Ghost kitchens, Dark kitchens, virtual restaurants or Digital kitchens is a word used for digital restaurants and this industry is one of the fastest growing in the world and in India itself this could grow up to 2 Billion dollars by 2023

What is a Cloud Kitchen ?

A cloud kitchen, ghost kitchen or a dark kitchen is a delivery-only restaurant that has no physical space for dine-in. It relies entirely on online orders placed through online food aggregators like Zomato, Swiggy, Jio delivery or Amazon delivery or an online ordering enabled website or mobile app owned by the food brand. The delivery in such cases could be managed by aggregators or the brand itself.

Lately, there has been a trend and movement called order direct initiated by NRAI which promotes restaurants to have their own delivery system independent of aggregators like Zomato & Swiggy which eat away huge margins out of a restaurant’s balance sheet.

There are multiple companies henceforth which enable restaurants or cloud kitchens to have their own back end integrated website for taking, processing and delivering orders by themselves. Some of the prominent players in this field are Thrive, Dot pe, Petpooja, Urban Piper etc.

Cloud Kitchen exchange is India’s springboard for Food Entrepreneurs | Here you can learn how to start a cloud kitchen in India and understand what is the meaning of a cloud kitchen along with getting access to resources to start your cloud kitchen

Where are Cloud Kitchens Located ?

Cloud kitchen locations are usually around delivery hotspots in cities , not necessarily in prime real estate locations but in surrounding areas with cheaper rents as the purpose of the a cloud kitchen is to be visible digitally rather than being accessible physically by customers

Who can start a Cloud Kitchen ?

The Cloud kitchen industry has a low barrier to entry with investment being low, so lately there has been a rush of solopreneurs who entered this industry from diverse backgrounds thinking this is where the money is

So currently we see a lot of Cloud kitchens being run by first time entrepreneurs, Food & beverage professionals who shifted from full time jobs to starting their own cloud kitchen, Enterprise brands which are scaling faster than ever and multinational chains which exist physically but see more coverage via this mode of expansion

Are Cloud kitchens a good business opportunity ?

Cloud kitchen business is tough, so tough that 80 percent of cloud kitchens shut down within 12 months of launch with the primary reasons being over crowded space with immense competition, lack of financial skills, mediocre or no marketing and a belief that I have a better product that the others

But for people who understand the nitty gritty of running a tight ship, Cloud kitchens are a fantastic opportunity at scale

You can also read about whether this is the right business for you by clicking here 

How to start a Cloud kitchen Business ?

Okay so first you need to choose which model do you want to build as Cloud kitchens are of 8 or more different types with each one having its own pros and cons – you don’t need to be an actual food operator and can choose to be in other services like C0- working kitchen spaces within this industry

Single brand Cloud kitchens mean one location (rented or owned), one food brand and the pros are limited manpower, reduced fixed expenses and focused marketing budget

Multi branded cloud kitchens mean one location (owned or rented) and multiple brands from operating within the same kitchen for example a north Indian brand, a biryani brand and a wraps and rolls brand all operating from within the same kitchen but being 3 different outlets in the eyes of the customer and on aggregators.

Pros of this are more leverage in revenue generation, capturing more digital real estate and the cons are higher costs because of different packaging required, higher manpower costs because of skill sets required and higher marketing budgets because each brand is treated as a separate entity

Hybrid Cloud kitchens are places which have a physical store front combined with a delivery model built in and the pros are dual avenues of revenue generation and the cons are higher rental and higher CAPEX since the storefront need to be presentable as well

Hub and spokeOwned Cloud kitchens are brands which have a central kitchen for manufacturing to bring in economies of scale to food production and multiple cloud kitchen locations around a geography selling the same things under a single brand entity.

Pros are Economies of scale and reduction of manpower at unit level and cons are higher fixed costs at central facility and of rental at multiple unit level.

Hub and spoke – Hosted kitchens are brands which have an owned central kitchen facility of their own or outsourced to a commissary kitchen and their outlets are usually hosted inside managed kitchens instead of their own rented kitchens.

Also usually called KIK (Kitchen in kitchen)  these usually carry a lower fixed cost burden at unit level as they are mostly revenue share arrangements with the hosts

Cloud kitchen exchange is one of the largest network to provide Kitchens as a service where we help Enterprise brands to scale across India with Zero CAPEX via our hosted kitchens model Kitchens as a service by cloud kitchen exchange

Co working or shared cloud kitchen spaces are large kitchen areas which are leased out and developed by an organized player like Kitchens centre, Kitchen Plus, [email protected] ,and many more further divided into 300 square feet blocks and leased out to different brands with common services and basic infrastructure

These are quite low cost and take care of most of the CAPEX requirement by food brands thus coming out as the most sensible choice while starting a cloud kitchen

Managed kitchens are kitchens which are fully equipped facilities designed to host enterprise or well established brands and the food is prepared by hosts for them with all costs being taken care of by the hosts

Cloud kitchen Exchange runs a network of managed kitchens across Delhi NCR currently offering managed kitchen services to brands looking to expand 

If you are an existing kitchen owner and wish to sign up to be on our network and earn more revenue out of your kitchen, click here 

sign up for kitchens as a service

Franchised cloud kitchens are cloud kitchens which franchise a brand and operate it from within their existing or newly setup cloud kitchens

Pros are lesser effort and money required to build a new brand and cons are the high setup fee and a recurring loyalty fee or revenue share paid to the the franchisor.

To take a franchise click here 

How to rent a cloud kitchen space if I wish to start a cloud kitchen business ?

locations for cloud kitchens as a service

Here are the choices you can make while starting up

  1. Rent a bare shell space in a hotspot location and build a kitchen yourself – usually high CAPEX required as everything needs to be built from scratch and lot of technical work is typically required in a kitchen like HVAC, MEP, waterproofing work, gas bank etc.
  2. Buy an existing cloud kitchen from sites like Cloud kitchen exchange from people who are coming out of this business which primarily happens because of overconfidence in the beginning
  3. Create a brand and a central kitchen and tie up with host locations – a network of kitchens which are usually underperforming and wouldn’t mind hosting your brand to make an extra buck – Cloud Kitchen Exchange can help you do that 
  4. Tie up with a managed kitchen who shall do all your production in their location based on your standardized recipes – this however is suitable for brands which are a higher level of automation and standardization as lot of technical knowledge is to be passed on for the managed kitchen to produce your food

Where do I buy kitchen equipment from ?

Here are the choices you can make

  1. Buy brand new equipment from vendors
  2. Buy used equipment from dealers or exiting cloud kitchen owners at a discounted price
  3. Rent kitchen equipment from organized companies like A2Z on rent instead of buying outright

How do I sell my food in a cloud kitchen model ?

Depending upon which geography you are in you the following options where you could sell your food online

  1. Zomato
  2. Swiggy
  3. Dunzo – as a merchant
  4. Jio delivery
  5. Amazon fresh
  6. Your own website with ecommerce

How do I deliver food orders from my cloud kitchen ?

  1. In case of Zomato, Swiggy, Amazon, Dunzo and JIo – the aggregators will take care of your food delivery and their riders will pick up food once the order is marked ready by you or within a certain period after receiving the order.
  2. In case of your own website enabled with restaurant ordering service, you would need to tie up with last mile delivery partners like Dunzo, Shadowfax, pidge etc which need to be integrated with your site to make the process faster

If your website is enabled by the likes of Thrive, Dotpe, Petpooja or Urban Piper, the delivery integration is already built in the back end and you do not need to tie up with the above last mile delivery partners.

food delivery of cloud kitchen

How do I build my Digital presence ?

crazy bananas digital growth agency by cloud kitchen exchange for startups and cloud kitchens

Social media marketing & SEO (Search engine optimization) shall remain the most important things to do when starting up a new cloud kitchen brand and once you establish yourself, a good CRM shall be the key along with the first two

You need to have your presence on GIFT (Google, Instagram, Facebook & Twitter) & Linkedin basically if you are building a company and brand with a long term vision and additional platforms like snapchat, tiktok etc will remain as lesser explored spaces for many years but some have been able to use them brilliantly

SEO on the other hand of your website will be the ultimate revenue generator in long term as it caters to users with intent rather than consumers of data on social media.

SEO again would be divided into multiple techniques like On page SEO, OFF page SEO, technical SEO & local SEO and it is advised that you hire expert people to do this for you

Crazy Bananas by Cloud Kitchen Exchange is a complete Hybrid Tech + Service agency for Hotels, Restaurants & startups offering Digital Growth, Revenue management, SEO services & Social media optimization and some of our clients include Masterchef Ajay Chopra, Two Wholesome Bakers, MXYR drinks , Buns in Oven , Kitchens Centre , Playwmedia & many more

Are Cloud kitchens profitable ?

To know more about whether this business is right for you, click here 

This article is meant for New Entrepreneurs and is written to help clear the basic understanding around Cloud kitchen business in India

It is recommended that you hire the right consultant to advise you in detail if you wish to start in this space. If you wish to speak to a consultant, click here 

If you wish to hire Cloud Kitchen Exchange as a consultant, see our services by clicking here 

I have a Cloud kitchen, How do I grow or increase my sales ?

Your food may be great but it’s not the only thing which matters when it comes to Cloud kitchen business

There are plenty of things which need to be right if you wish to grow your business including your Brand Image & Positioning, Menu pricing & portions, Optimized Fixed & variable costs, Great Food Packaging, Less dependence on aggregators for sales, a SEO friendly website with last mile delivery integration & most importantly your digital presence & SEO

If you can’t be found as the first preference, you aren’t even in the business – you are in “busyness” 

Cloud kitchen exchange offers a Growth module for existing cloud kitchen owners, contact us via Whatsapp today to know more 

Here is how it works

Step 1 Website & Digital audit
Step 2 PNL & Cost audit
Step 3 Growth Plan
Step 4 Handover & Execution

Things you can do next