How to Start a Cloud Kitchen Business?

The credit for the rise of a cloud kitchen in recent times goes to high startup costs, stringent business rules, and red tape. The food delivery industry, especially after the lockdown quagmire, has grown manifold. While the footfalls in restaurants declined markedly, the cloud kitchen business have been a preferred choice of many young food entrepreneurs. As a result, the demand for food delivery app solutions has seen a sharp surge.

What is a cloud kitchen startup?

Also known as a ghost kitchen, dark kitchen, or virtual restaurant, a cloud kitchen is a restaurant kitchen that works only on online orders through websites and mobile apps and sends food dishes accordingly to the doorsteps of people who ordered them. The cloud kitchen business involves no dining setup or facility.

The global ghost kitchen market size had crossed 55 billion US dollars in 2021 and is likely to cross 100 billion USD by 2027. MrBeast Burger, a global ghost kitchen restaurant chain, had marked itself as a leading creator-owned brand fetching annual revenue of USD 100 million as reported in 2022. The fastest-growing cloud kitchen startup has been reported in India where the gross merchandise value is estimated to cross 2 billion USD by 2025.

What are the benefits of the cloud kitchen business?

Today mobile apps are transforming the food industry at a much faster rate. Amidst the changing times, it is important to know how mobile apps benefit food business like a cloud kitchen. The best part of a dark kitchen business is that it is a standalone business or it can be managed as an extension of a present brick-and-mortar restaurant. That said, many established restaurants also plan or have already set up their cloud kitchen business. Here are a few benefits of cloud kitchen startups –

• • Low investment – Since there is no cost involved in infrastructure or restaurant setup because there is no dining option, the ghost kitchen business requires quite a low investment. The biggest portion of any restaurant business goes into setting up the infrastructure to dine in (elegant tables, chairs, table clothes, air conditioning, large kitchen equipment, crockery, flooring, and many more items), so the cloud kitchen saves a large chunk of bucks.
  • High-profit margin – It is not an unknown fact that food dishes’ prices are much higher than what they actually cost restaurant owners. Patrons order their favorite food dishes from the restaurants to eat at their own places and therefore they pay the same price that restaurants charge when they dine in. That said, cloud kitchen businesses reports full profit as there is no cost involved in paying servers’ salaries and other staff expenses.
  • No overheads – No infrastructure, and no staff, hence, there are no overheads. The electricity bills and infrastructure maintenance costs and the salary to staff take a major portion of your profit when you run a brick-and-mortar restaurant or café. The biggest business benefit of running a restaurant kitchen online is that there are no overheads; hence, the profit is more because there is less to pay to staff and infrastructure.
  • People’s choice – After the covid pandemic and unprecedented lockdown, there is a sharp increase in using online services. People love shopping for everything online and food is no exception. Cloud kitchen and/or food delivery services have proved to be one of the best on-demand business models for startups with promising results.
  • Flexible timings – A cloud kitchen business runs online and, therefore, the restaurant’s timings depend on the owner. In other words, a cloud kitchen app can be switched on for availability and switched off when the kitchen is not serving food. The restaurant kitchen’s timings can be flexible and can be modified as and when needed. Due to this feature, many young lady entrepreneurs initiate a startup cloud kitchen as they can easily earn out of their cooking skills.

A step-by-step guide to starting a cloud kitchen business

There is not much investment required to start a virtual kitchen business; hence, most people, without any finance or business knowledge, can venture into it. All you need is just to follow simple steps that lead to a strategic way to a successful cloud kitchen business plan.

Research for Virtual kitchen business

Dark kitchen business requires demographic and psychographic research about the current market trends and consumers’ food habits and preferences. On the other hand, the location of the cloud kitchen should be at a place where constant water and power supplies are guaranteed so that there is no flaw in the services. Since the entire business runs on online orders and deliveries, the delivery partners should be able to locate your cloud kitchen and, therefore, the location should be easily accessible.

Another research that may help you set up your ghost kitchen business is the price of dishes. You may study peers and other cloud kitchen business models in the operating areas to fix the prices of dishes so that they don’t look either costly or cheaper. With minimal requirements such as small kitchen equipment and necessary grocery, you can estimate kitchen setup costs before going for a full-fledged commercial cloud kitchen.

Licenses required for Cloud kitchen startup

Depending on the region, you require licenses and permissions to run cloud kitchen businesses. In fact, before you go for cloud kitchen app development, it is important to gather all the required documents and licenses because you may need to upload or present them to authoritative bodies such as the local government.

It is important to hire a local legal advisor or attorney to acquire licenses as they are aware of the required processes. For instance, in India, it is important to get some licenses to avoid any unwanted legal consequences. The licenses and permissions to start a cloud kitchen business in India are mentioned below –

• FSSAI license
• Fire NOC for the cloud kitchen (by the fire department)
• Health license
• Local authority license (state/city)

Additionally, some other certifications would help you set up and run your cloud kitchen startup smoothly.

• GST certificate
• Company’s PAN
• Owner’s PAN
• Photos of the cloud kitchen
• Company’s current account

Kitchen and network setup

Unless you have a readymade cloud kitchen application solution, you may need your own network to send food parcels to several destinations. After setting up minimum kitchen equipment, food packaging boxes, stationery, and grocery items, you need proper infrastructure to support your cooking services. In addition, you may hire a person or two to assist you (cook or simple helper) to meet the orders received online.

The delivery partner network is quite important if you are running your cloud kitchen startup on a standalone basis i.e., with no further technical assistance. On the other hand, if you go for an already-established food delivery platform, you do not get into the hassle of finding a delivery partner.

Creating or designing a menu

As a result of research on local residents’ food-consuming habits and choices, you may design or create a menu for a virtual kitchen business. The menu should include texts and graphics (in most cases high-quality photos of food or dishes) along with prices. Additionally, or maybe as per local rules, you may need to add the quantity of the food served along with its ingredients for allergy safety. In some places, mentioning the energy calculation (calories) is made mandatory even for cloud kitchen businesses.

Decide your food delivery options

Having food delivery options are a crucial aspect of any successful cloud kitchen business. There are various options to choose from, and it’s important to select the best ones. The selection that makes should not only compliments your cloud kitchen startup but also aligns well and caters to your target audience perfectly. Some popular food delivery options that can be resorted to by the cloud kitchen startup include:

Food delivery service providers

Popular food delivery service providers such as Swiggy and Zomato in India, and the likes of Uber Eats, Grubhub, and DoorDash in the USA offer an easy way for cloud kitchen startups to expand their customer base and reach a wider audience. This is the best option when you are starting but weighing on the pros and cons of food delivery services and how it is working for your food business, you can take a call to include more options.

In-house food delivery management

For greater control over the delivery process, some cloud kitchen businesses prefer to handle their own in-house delivery service. This option can be cost-effective and allows for a more personalized customer experience. Though it would require some investment to develop the required web app and mobile application it is the one with the best ROI in the long term.

Curbside pickup

With curbside pickup, customers can conveniently order and pay for their food online or through an app, and then pick it up at the designated location outside the cloud kitchen. Based on the location and the type of food and cuisines you serve, you can get an application developed to make it easy for your foodie customers.

Self-service kiosks

Self-service kiosks is another popular option for getting the food delivered to your customers. In this delivery model, the customers can place their orders and pay through an interactive touch screen. Though this option would require only a basic app web app or mobile app to start with, down the line, as you get more foodie customers looking for you, then it is required to get a more advanced app built that serves your customers better.

Catering

Another option is to offer catering services for events, parties, and corporate meetings. This can be a lucrative option for cloud kitchens looking to expand their ghost kitchen business beyond regular meal delivery. This would be a completely different mode of business operation and it is suggested that you also have a website built along with an application so that you can market your services and have more clients reach you for more orders.

By exploring different food delivery options, cloud kitchens can create a strong delivery strategy that meets the needs of your customers and contributes to the overall success of the business. The key here is to opt for a food delivery app solution and customize it as per your cloud kitchen startup needs.

Find the best cloud kitchen app development company

The food delivery mobile app can make things easier for you to set up and run a virtual cloud kitchen business. Hence, it is important to find the best tech partner that can work on the customization of a food delivery solution at affordable costs. A couple of meetings with your tech solution providers will help you execute your cloud kitchen startup business plan. Once the project is allotted to the best startup app development company providing mobile app development services, you may receive deliverables as per pre-defined milestones. Finally, when the product is tested, it is available to get into the market.

While an all-new dark kitchen business app can be built from scratch it requires a lot of effort to be put in. But, an alternate way to start the ghost kitchen business instantly is to opt for a food delivery clone app that is readily available and only some basic customizations are to be made based on your cloud kitchen startup needs.

Importance of a cloud kitchen business app or web portal

The concept of a cloud kitchen comes from cloud technology where all functions and processes are carried out on the cloud (virtually) and not on local setups. Without a mobile app for cloud kitchen, the business cannot run. It is because a ghost kitchen restaurant does not have any dining place for patrons to sit and enjoy their food. The business model of a cloud kitchen runs online and orders are only accepted through a web portal or a mobile app. Other ample benefits come with an app –

• Quick response to orders – Online ordering triggers a notification or an alert to cloud kitchen owners. That said, the orders are responded to within a few seconds improving user experience. The patrons shall get immediate notification when the orders are accepted.
• Real-time tracking – From placing an order in a ghost kitchen to accepting and preparing food by chefs, and notification of food parcels being picked up to the live tracking of a delivery partner – everything is available on the mobile device. Real-time tracking also suggests an estimated time of delivery to the doorsteps of patrons.
• Secure payment gateway – Patrons have several ways to pay online. Cloud kitchen companies offer eWallet, net banking, credit/debit card, and other digital payment options depending on the local market so that customers can easily pick the one they want. Such payments are safely carried out with multi-tier security.
• Built-in analytics – For restauranteurs or cloud-kitchen business owners, built-in analytics in the mobile application or web portal shall help them build foolproof business strategies to expand their services or food items.

Starting a Cloud Kitchen Business: The Key to Success and Flexibility in the Food Industry

Among all the app ideas, starting a cloud kitchen startup is a great opportunity for food entrepreneurs who are looking to enter the food industry. Setting up a cloud kitchen requires careful planning, investment in equipment, and finding the right location to operate from. However, the benefits of operating a cloud kitchen, such as lower overhead costs and the ability to reach a wider audience, make it a worthwhile investment.

One of the key benefits of a cloud kitchen is the flexibility it provides. Especially, considering the different delivery options and choosing those that best fit the target audience and business model.

Overall, a cloud kitchen business can be a profitable venture with the right approach. By understanding the importance of cloud kitchens, carefully planning the setup, and exploring the various delivery options available, food entrepreneurs can start a successful and sustainable food business.

Pragnesh Modh

With a deep interest in new technologies, analyzing mobile application trends and impressive technical concoctions keep him inquisitive. In addition to managing the Operations and Delivery of projects at Prismetric, he likes to read and write a lot about the latest in technology. New app technologies, gadget fascinations, and big technology announcements kindle the writer in him spontaneously. His articles are his passion for innovative technologies.