What is a Cloud Kitchen? [Concept & Business Model]
Updated: Jul 14
A cloud kitchen, also known as a virtual or ghost kitchen, is a concept to streamline and accelerate online cuisine orders. People were well-accustomed to online orders before the arrival of the pandemic. But, the COVID-19 pandemic has undoubtedly accelerated the online food ordering industry. People sitting idle at home often have cravings for various food items. They can download an online food delivery partner application and order food online from their favorite food joints.
Many food joints have to deal with competition, rising maintenance costs, and high rental rates. Adapting to the cloud kitchen concept can help restaurants overcome these challenges. According to a report, the size of the global cloud kitchen industry will expand by 12% from 2021 to 2027. By the end of 2027, the industry will be worth $71.4 billion.
What is Cloud Kitchen concept? Cloud Kitchen Business Model?
The concept of a cloud kitchen is simple, it is a restaurant kitchen that only accepts orders that have been placed via online ordering software or application. In most cases, cloud kitchens have personalized online ordering systems. However, most Indian cloud kitchens are registered with popular online food delivery apps.
Cutting-edge POS software is a must-have requirement for developing a cloud kitchen. The POS software will receive and process orders. Notably, the tool can perform these tasks without human intervention. An automated process makes the order processing faster, and thus the restaurant can provide a quicker delivery service to the buyers. Nevertheless, the POS system also keeps the restaurant's inventory updated so that buyers can check the availability of the items before ordering them.
Cloud Kitchen Setup
Opening a cloud kitchen is a step-by-step systematic process, and you can find the basic cloud kitchen requirements in the following section of this article.
1. Cloud Kitchen location
Since cloud kitchen does not offer a dine-in facility to people, it does not need a posh location. A successful restaurant needs good accessibility, a car parking facility, large sitting space, and many more. However, a cloud kitchen does not need all these things. You need to find a location that employees can easily and safely access. Additionally, the place should have seamless electric, internet, and water supply.
2. Online food ordering system integration
Every cloud kitchen needs advanced POS software for receiving, processing, and fulfilling orders. The POS tool should be integrated with an online ordering platform. Cloud kitchens have two options in this regard. Firstly, they can develop their own online ordering platforms. Secondly, they can register with popular online food delivery platforms.
Creating an online food delivery platform is a matter of high expenses. Moreover, businesses need to make expenses for the maintenance of these apps. Another problem is that such cloud kitchens should employ dedicated delivery staff. A business can reduce all these hassles and expenses by registering with online food delivery partner apps.
3. Cloud Kitchen licenses
In India, a cloud kitchen business needs to procure a license from FSSAI for a legitimate operation. Additionally, the business needs to obtain clearance certificates from the health and hygiene department of the local municipal authority. Another crucial thing is obtaining a fire license from the state's fire safety department. Keep in mind that most certifications and approvals come with a certain validity period. When their validity is over, the cloud kitchen must reapply for those certifications and clearances. You can also read a complete guide on - What are the licenses needed to start a restaurant in India
4. Cloud Kitchen equipment and accessories
The most crucial part of a cloud kitchen is the kitchen, and having modern cloud kitchen equipment is essential for faster food delivery and better hygiene.
Cloud kitchen setup cost in India: Typically, developing a small to the mid-sized kitchen for the cloud kitchen business may take around INR 2-4 lakhs in India. A larger kitchen may have a dedicated freezer room and other sections for different activities. Developing such a kitchen can cost around INR 5-10 lakhs.
Packaging plays an important role in running a cloud kitchen business. Packing ensures the health, safety, taste, and hygiene of the foods. On the other hand, packaging plays a significant role in branding. Therefore, good packaging is crucial to improve brand exposure and enhance customer retention.
Opening a cloud kitchen is a cheaper business model than opening a restaurant and café. India's online food delivery industry is booming, and thus investing in cloud kitchens can be profitable. Top-quality POS software is one of the most crucial elements of a cloud kitchen.