The revenue in the online food delivery market is expected to reach $137,596 million worldwide, by 2023. Now think of a restaurant model that exists purely to capture this market. As consumers shift their dining behaviour increasingly to delivery, it’s impossible for restaurants to ignore the large appetite for this new model. Even industry trends have started showing up in favour.
According to a recent survey conducted by us, 67% of the restaurant owners would want to open a cloud kitchen as their next outlet. Why opening a cloud kitchen is a good idea?
Here’s what happens exactly in a cloud kitchen model:
Orders come in, meals are cooked, packed and then whisked immediately to their delivery locations by the assigned fleet.
Why does this work?
Because you’re cutting costs on front-of-house activities and concentrating on your food. With the availability of third-party services and the growing comfort of mobile ordering, this model seems just right to experiment with. There are more benefits involved like:
Lower real estate costs
Since you’re removing table servicing out of the equation and offering a delivery-only service, you’ll save a huge amount on real estate costs.
Cloud kitchens release you from the obligation of having space in a high-visibility area. Rather than paying for accessibility, better-developed complexes, or even a large parking space, you can concentrate on having enough kitchen space in a decent area near to your target market.
Better expansion opportunities
The best thing about cloud kitchens is that you don’t need heavy investments to begin. You can start small but expand fast. Once you build a brand and get loyal customers, expanding to new localities and even new menu variety gets easier. Let’s take the example of Faasos, today it runs 160+ kitchens and 4 brands including Faasos, Behrouz Biryani, Oven Story and Firangi Bake.
Saving on overhead costs
With a cloud kitchen, you save so much 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.
The 6 Cloud Kitchen Business Models
The independent cloud kitchen model – Single brand, single kitchen, no storefront. This is the original cloud kitchen model. A restaurant with no seating space and no physical store. Restaurant owners or food business entrants sidestepping high rents and real estate costs by shedding the front-of-house. This concept gained popularity with the growth of online ordering and growing consumer demand for deliveries.
Typical kitchen size – 500 – 600 sq ft.
How it works Orders come from online sources Kitchen only Specialized in a cuisine Delivery only A mix of aggregator dependency and self-reliance for orders and deliveries
The Rebel foods (Faasos) business model – Multi-brand (cuisine), single kitchen, multiple outlets, no storefront.
The more elaborate cloud kitchens are based on data intelligence such as area wise demographics of residents, popular cuisines and hyperlocal demand-supply. The idea here is to address the demand for the most ordered cuisine (Biriyani, North-Indian, Chinese, Burgers, Pizza & Pasta – that’s really it in India) in a neighbourhood (a 5-6 km radius) with relatively lesser restaurant options that serve these dishes. This model is clever because it positions the separate brands as their own individual establishments. And having a single shared kitchen keeps operational costs low. This model closely resembles the original cloud kitchen model with no physical storefront. You could think of it as specialized cuisine based cloud restaurants, owned by the same mother brand, sharing the same kitchen.
How it works Orders come from online sources Single kitchen, multiple brands Each brand specialized in a cuisine Delivery only A mix of aggregator dependency and self-reliance for orders and deliveries
The Freshmenu business model – Single brand, single kitchen, multiple outlets, with a storefront.
This is kind of a mashup between a takeaway restaurant and a cloud kitchen. It resembles a cloud kitchen business model for the most part, but also has a storefront. The storefront exists to allow customers to walk in and see how their food is prepared, should they ever want to. In essence, this model utilizes all the operational efficiencies of the cloud kitchen business model but also has a “real” window with customers.
Typical kitchen size – 1200 – 2000 ft
How it works Orders come from online sources Single kitchen, single brand Changing menu that has a mix of seasonal dishes and bestsellers Delivery and take away A mix of aggregator dependency and self-reliance for orders and deliveries
The Swiggy Access business model – Aggregator owned, multi (restaurant) brand, rented co- working kitchens, no storefront.
This cloud kitchen model often called the “shell” in the food business circles, is basically an optimally located empty kitchen space with the bare minimum infrastructure – gas pipelines, drainage and ventilation systems. Established (or new) restaurant businesses rent that kitchen space, make use of Swiggy’s online ordering, delivery fleet and menu intelligence to set-up a restaurant. The restaurant brings the equipment, staff, raw materials and recipes. In simple, the restaurant does the cooking and Swiggy does the rest.
Typical kitchen size – Each kitchen is 100-500 sq ft within a larger kitchen.
How it works Orders come from Swiggy Single kitchen, multiple restaurant “partner” brand The Restaurant takes care of the menu, kitchen equipment, and staff Delivery and fulfillment, by Swiggy
The Zomato Infrastructure Services business model – Aggregator owned, multi-restaurant brand, rented kitchens, with a storefront. One-up from the bare bones Swiggy access model, the Zomato model is based on the idea of rented kitchens but with built-in kitchen equipment and comprehensive processes. In this model, Zomato also shares its know-how on order demand management. Like the Freshmenu model, these cloud kitchens also have a storefront where customers can walk in. A mash-up between a cloud kitchen and takeaway restaurant, similar to the Freshmenu example. Powered by Zomato’s insights.
Typical kitchen size – 250-500 sq ft
How it works Orders come from Zomato Single kitchen, multiple restaurant “partner” brand The Restaurant takes care of the menu Zomato does everything else Customers have the option of walking into physical storefronts
The Kitopi business model – Cooking and delivery fully outsourced. This is a relatively newer concept in the cloud kitchen business model mix. In this model, you can outsource everything from your call centre operations, your kitchen and delivery. Imagine a restaurant where a large majority of the kitchen prep is outsourced and gets delivered to your kitchen. Your chefs can then do the final touches and Kitopi picks it up for delivery again.
How it works Orders come in via Kitopi owned call centre, through your own online platforms and third parties Kitopi buys and stores your raw materials Then “pre-prepares” the food in its centralized kitchen Kitopi then sends over the food to your kitchen for final touches Picks it up and delivers it to your customer
Image Courtesy – Limetray
Article originally published on Limetray
Original Link – https://limetray.com/blog/cloud-kitchen-business-model/