With the rising competition and ever growing technology, the food space has been volatile for quite some time now. Newer innovations are kicking in every day and creating for themselves an identity and a cult. Latest on the scene is cloud kitchens. There have been many restaurateurs raving over the concept and even more trying to figure out the intricacies of it. So much so, that cloud kitchens are actually being considered as the smarter way to run the restaurant business. To understand how a cloud kitchen works, its model, operations & other factors to take into consideration, read ahead.
What is a Cloud Kitchen Restaurant
First, we look at what is a cloud kitchen. Popular belief is that a cloud kitchen is any restaurant that operates just from its kitchen, has no dine-in or takeaway place physically and thrives on home deliveries. While this is true, this image is incomplete. The business model of a cloud kitchen is very different from what we hold in popular belief. To understand this in detail, we will introduce two lesser-known terms of the restaurant industry, Delivery Kitchen and Ghost Kitchen.
A delivery kitchen is a restaurant that has no physical space and no dine-in or takeaway facility as it does not exist as a restaurant of any sort. It relies entirely on third-party integrations or home delivery orders placed on call or through a website. The main difference between a cloud kitchen and a delivery kitchen is that in a Delivery Kitchen the outlet operates independently for a single brand name. The orders are received and prepared under the same brand. If the owner runs the restaurant under one single name, then the format is that of a Delivery Kitchen.
A Cloud Kitchen, like a Delivery Kitchen, is a restaurant where there is no physical outlet and the food is prepared for all sorts of deliveries. What differentiates a Cloud Kitchen from a Delivery Kitchen, is the number of brands or restaurants operating in the same outlet. In a cloud kitchen, the number of restaurants operating is more than one. The owner could be the same person or different people. For example, if a restaurateur who owns a delivery kitchen and delivers South Indian food, decides that he should start delivering Mexican food as well, but instead of adding Mexican to the menu of his current brand, starts operating a different brand that sells Mexican from the same delivery kitchen, then he turns his delivery kitchen into a Cloud Kitchen.
The reason why restaurateurs are preferring to start a new brand instead of introducing new items in the same menu is that customers prefer to order from a different restaurant if they think it specialises in that particular cuisine.
For instance, customers are most likely order pasta from a restaurant named La Italiana instead of Punjabi Delight even if the same chef is preparing the pasta. But the customers don’t need to know that!
Ghost Kitchen or Dark Kitchens
Ghost kitchens are delivery/cloud kitchens which are virtually located in different destinations but operate on a hub and spokes model. This means that there is one central kitchen where the food is prepared and delivered to the subsidiary kitchen. These subsidiary kitchens are located in different areas. When a customer orders, he is rerouted to the nearest virtual kitchen from where the food prepared in the central kitchen is delivered.
Now that you understand the difference between a delivery, cloud, and ghost kitchen, it is simple enough to understand the business model of a cloud kitchen. In the simple structure of the model, a cloud kitchen is a delivery kitchen with two or more brands belonging to different people or the same person operating from the same kitchen. ZIS, Kitopi and Asian house are some of the popular examples of Cloud Kitchens.
How To Run A Cloud Kitchen Restaurant
Let us take a look into what it takes to run a cloud kitchen restaurant.
1. Order Taking in a Cloud Kitchen
Since the primary source of order-taking is online, a cloud POS is a must for Cloud Kitchens and Delivery Kitchens. This is so because there are multiple restaurants and multiple channels being dealt with when it comes to collecting orders in a cloud kitchen and it is virtually impossible to keep up with different orders pouring in from different sites without a POS that will not only handle this task but also give you an analytic report regarding it.
Another means of taking orders is the through telephonic calls. For this, you need a Call-Center Panel that will route the orders to the right brand and outlet. When you have multiple brands operating at the same outlet, you need a robust POS system that can give you detailed insights about the number of orders received for each brand.
Since all of the brands are integrated with online ordering platforms such as Zomato and Swiggy and have their own websites and calling numbers, it can get borderline possible to keep up with the number of orders. Not only do you need to do the billing to ensure proper delivery, but you also need to keep them separate. Having an end to end POS is virtually the only way to keep up.
Here are some quick tips that will help you master your online ordering campaigns.
2. Order Processing in a Cloud Kitchen
Orders collected in a cloud kitchen are processed like normal orders. The only difference lies in the fact that each order can belong to a different brand and so the unique taste of each one needs to be maintained. To solve this, you can have different chefs catering to different brands or different kitchen areas designated to the team of different brands under the same chef. Investing in a POS with a Kitchen Display System will be helpful as it will display orders directly in the kitchen on a screen and enable your staff to keep track of all the orders that have been prepared and need to be prepared.
3. Staffing a Cloud Kitchen
A cloud kitchen because of the lack of a dine-in or take away facility does not require any wait staff but it does require a highly skilled kitchen staff. Your food is the only thing that the customer is in contact with so it has to be flawless. In a cloud kitchen, the same chef may prepare the food of different brands or there may be different chefs designated for each brand. Either way, a full kitchen staff is the apex staff requirement in a Cloud Kitchen. Apart from that, you will only need delivery boys, if you plan on having an in-house delivery system and kitchen helpers.
4. Managing Suppliers
Suppliers in a cloud kitchen can vary from a single establishment supplying for all the brands in the cloud kitchen to different suppliers for each brand. In some cases, you can even have a combination of both. While finalizing suppliers for a cloud kitchen is not too different from a regular commercial restaurant kitchen, you must still look for a combination that is the best for you. If your brands have the same base ingredient but some different ingredients, you can order the base ingredient from the same supplier and the different ingredients from different suppliers. If your supplier has a different variety of ingredients, you can order for all your brands from the same supplier. Just like in the case of a restaurant supplier, you need to ensure that the supplier for your cloud kitchen is just as punctual and particular with the orders.
While finalizing the supplier, also ensure that you can dictate your terms well. As a cloud kitchen you might be tempted to order from different suppliers even when it is not needed to keep accounting simple, but remember that if you end up ordering small units from different brands, it will cost you more. Not just that, but you will end up being a very small customer for the supplier which means that you will never be able to leverage your own terms.
We would say that before finalizing your supplier, you should make a list of all the ingredients you would need across brands and try to order as many as possible from the same supplier. It will make it easier to keep track of inventory, you will be able to hold a single person accountable, in case of changes it would be far easier to coordinate, and you will definitely save money.
5. Managing Inventory
Managing the inventory in a Cloud Kitchen is thought to be the most complicated task of running a cloud kitchen. That is not entirely true. Yes, having multiple brands under the same roof can make managing inventory a little tedious but by developing a system of checks and numbers, you can handle it without much problem. Your POS can handle ordering and computing inventory once a minimum is fed to it.
6. How to Market a Cloud Kitchen Restaurant
Since Cloud Kitchens have no such physical outlet, the marketing needs of a cloud kitchen are very different from those of a regular restaurant. Since there is no outlet where the customers can just walk-in, a cloud kitchen essentially lose out on visibility. To compensate for this, a powerful marketing and branding strategy are required. Here are some things that you can do to market your cloud kitchen.
(i) Have an Online Presence
Given that the Cloud Kitchen model negates any physical presence, you must build an online presence for yourself. This will give your restaurants a virtual address and enable customers to find you with ease. Having a website and different social media pages will not be enough. You will have to update them regularly and make them as interactive as possible as that is the only medium through which your customers can reach out to you. Listen to them there, talk, participate in comments and address any negative feedback there and then. Your followers are your most loyal customers, remember that.
(ii) Third Party Integrations
Most people today order using online apps like Zomato, Swiggy, and Foodpanda. Your integration with them is a must. Being on these platforms will get you more orders for home delivery, and because they have their own delivery mechanism, the cost of delivery will not be out of your pocket. Apart from that, being on these platforms will also make you discoverable to your potential customers. Most people who order through these apps do not know whether they are ordering food from a restaurant, a delivery kitchen, a ghost kitchen or a cloud kitchen. What they do know is that if the food looks good, they can try a new place, so get yourself integrated with all the delivery platforms out there to enjoy large-scale discoverability.
Here is a detailed guide on how to partner with online ordering platforms.
(iii) Tie-ups with Complimentary Restaurants
In order to build your brand presence and to make people try your food, you could get into tie-ups with other restaurants who are not your direct competitors. For example, if you run a Cloud Kitchen with a dessert brand, you could tie up with restaurants not having their own dessert menu with schemes like, buy a meal for two and get a choco-lava cake free. When someone does so in the restaurant, the cake will come in your brand’s packing with a pamphlet of your restaurant. This can be extended to online orders as well. Not just other restaurants, you can run such promotions within the brands in your own cloud kitchen. If you run a Mexican restaurant in a Cloud Kitchen format and are introducing a dessert bar under a different brand name, you could have the same scheme tied up to your own Mexican brand.
(iv) SMS and Email Marketing
SMS and Email Marketing though not that new are still as effective when it comes to marketing a Cloud Kitchen. In fact, sending your regular customers messages with exclusive offers and emails with your new menu items or contests that you are planning to run will keep you fresh in their minds. As a Cloud Kitchen, your newer menu innovations may just get missed because people order from cloud kitchens with a specific dish in mind. SMS updates regarding new dishes that you have added to the menu, schemes that you are running for these dishes or codes to get complimentary dishes with the next order will keep your customers updated, and orders will keep pouring in. To get more out of SMS marketing use these Restaurant SMS Marketing tips to double your business.
(v) Distributing Flyers and Pamphlets
Just because Cloud Kitchens are online, it does not mean that offline marketing is not an option for Cloud Kitchens. Remember a huge amount of orders come to a cloud kitchen through regular calls. To promote this channel of ordering and creating an identity among people who do not belong to the internet generation, flyer and pamphlet marketing is the way to go. You can distribute flyers which double up as your menu and leave your website link and phone number on it. Families mostly preserve these flyers and use them when they are ordering next. To know how you can use flyers and pamphlet marketing to your advantage, read how flyers and pamphlets marketing can boost your restaurant’s sales.
With the pace at which the restaurant industry is growing, cloud kitchens are the next new thing. Not only do they bring the dream of serving good food close but also make it accessible by eliminating the challenges of high rentals and investments. We hope this comprehensive guide to cloud kitchen operations has been useful and will help you open your own cloud or delivery kitchen restaurant.