The exponential growth of the world’s working class population has fueled the exponential growth of the food industry around the world. Every aspiring entrepreneur mostly wants to try his hands at the food delivery business owing to its enormous earning potential. If you do not have a large capital to found your own restaurant, you can found your own cloud kitchen, which is a lot cheaper or you can develop a food aggregator app for all the cloud kitchens in your service localities but what exactly is a cloud kitchen and what factors influence the cost to build an on-demand food delivery app for your cloud kitchen business? Kindly read on to find out.
A cloud kitchen is also known as a “ghost kitchen” or a “virtual kitchen”. It is a commercial kitchen space that can be used to cook and deliver food to customers or it can be rented by restaurants to fulfill their daily orders as they are cheaper than buying complete restaurant spaces (dining area + kitchen + cleaning area). Cloud kitchens do not have any seating areas for customers. They are only meant to cook and deliver food to customers or restaurants.
Cloud kitchens are mostly founded and setup by entrepreneurs who do not have a large capital to found a complete restaurant. Cloud kitchens cost much less to setup and run as business owners need not pay any property tax. Cloud kitchens can be run with the minimal amount of kitchen staff unlike restaurant kitchens. This drastically reduces expenditure in the form of staff salaries and incentives. They are also far easier to maintain than restaurant kitchens owing to their significantly smaller size.
Ever since the advent of the pandemic in 2019, far fewer people are going in person to dine at restaurants. Most people now prefer ordering takeaways. Hence, setting up cloud kitchens is a far safer and stable option for entrepreneurs willing to tap into the enormous earning potential of the food industry.
Setting up cloud kitchens will enable their businesses to perform well even when new “waves” of the pandemic strike and during normal times. Cloud kitchens are better equipped to handle large fluctuations in demand as their running cost overhead is far lesser than restaurants.
Though the concept of cloud kitchens is new (started around 2010 in New York first), the cloud kitchen business has grown and evolved exponentially since its inception. As of today, there are seven types of cloud kitchen business models, which we’ll have a look at in the following section.
Here, the business owner who had founded the cloud kitchen accepts orders from food aggregator apps and sometimes even restaurants. His business will be listed on various food aggregator apps in exchange for giving the agreed upon commissions on his profits. Independent cloud kitchens were the first type of cloud kitchen businesses to be founded. Independent cloud kitchens rank among the busiest commercial kitchens these days.
Here, the business owner owns and runs the cloud kitchen under his brand (single). He will usually have his own app for food delivery but his brand will also be listed on various food aggregator apps. Examples of brand owned cloud kitchens include Faasos, Fresh Menu, etcetera.
This is quite a rare and complex cloud kitchen model. Here, a few restaurants in a small locality co-own and co-run the cloud kitchen. This will reduce the operational costs for the restaurants and create a win-win situation for all the restaurants who co-run the cloud kitchen.
Generally small restaurant owners do not have the investment capital or revenue to scale up their kitchen size and cater to more of their customers’ orders. Buying large scale and hi-tech commercial kitchen equipments is also not possible for them.
However, if a few small restaurant business owners come together and invest a small portion of their profits into setting up a hi-tech multibrand cloud kitchen, they can tend to more of their customers’ orders and prepare more exotic dishes for their customers.
The facilities and equipments inside a multibrand cloud kitchen are shared between the chefs and other staff of the restaurant brands who co-own and co-run the multibrand cloud kitchen.
Here, the cloud kitchen business simply prepares its customers’ orders and keeps them at its dedicated pickup section. The food packages are labeled appropriately so that it becomes easy for the respective customers to pick them up.
Yes, you read it right; “pick them up”. Middle ground cloud kitchen brands do not deliver their customers’ orders to them. They require customers to come and pick them up at their physical outlets. This model of cloud kitchen business is very rare and none of the popular brands of cloud kitchens employ this business model.
Here a central cloud kitchen (a large one) has branch cloud kitchens (much smaller ones) at neighboring localities. The central cloud kitchen handles some of the orders from all of its branch cloud kitchens. It also supplies all of its branch cloud kitchens with raw food items from time to time to maintain their inventory levels at optimum levels. This model of cloud kitchen business is again quite rare.
Here, the cloud kitchen brand outsources its customers’ orders to another cloud kitchen business. After receiving the cooked food, the company’s staff heat the food if required, decorate it with appropriate herbs, nuts, fruits (like pomegranate), etcetera, and package the food nicely before delivering it to their customers.
In other words, the outsourcing cloud kitchen brand simply “polishes” the received food (cooked food) and delivers it to its customers. This model of cloud kitchen business requires the minimal amount of investment and incurs minimal running costs but is rare.
Just like co-working office spaces, aggregator cloud kitchens are co-working kitchen spaces. Here, there is one very large commercial kitchen (usually occupying a couple of floors in a commercial building) and in that large commercial kitchen, many food delivery brands cook their customers’ orders. All the brands working inside the aggregator cloud kitchen pay a fixed amount as rent to the kitchen complex owner.
Having known about the advantages that cloud kitchens offer over traditional brick and mortar restaurants, you might be thinking of starting your own cloud kitchen business but you might also want to know about the cloud kitchen development cost. If so, kindly read on and your question will be answered. The technical aspects that influence the cost to setup a cloud kitchen are listed below.
POS stands for Point Of Sale as far as cloud kitchens are concerned. Your cloud kitchen should have an efficient system in place to automatically enter the order details received from your customers, food aggregator apps, and possible even restaurants.
It is advisable to have smart systems in your cloud kitchen that can automatically track your inventory levels and give you notifications when the inventory levels of certain food items become low. Maintaining optimum inventory levels of all the food items in your cloud kitchen is necessary to maintain smooth business operations.
It is advisable to install and configure security surveillance cameras in your cloud kitchen to detect and correct any shady activities or “accidental ingredients adding” that might occur. After all, security is a fundamental requirement for any business.
A Kitchen Display System (KDS) is basically a large tv/computer monitor, connected to a computer that provides real time order information and status updates. It is required to correctly and smoothly execute your customers’ orders.
In case any hassles arise while delivering your customers’ orders, you should have a set of telephones in your cloud kitchen so that your customer care executives or order managers can talk to the concerned delivery boys and resolve their commutation issues. Having this system in place will enable you to preserve the operational integrity of your business and maintain your customer satisfaction and retention levels.
In case your customers want to chat with your customer care agents or officials directly regarding any issues that might have happened during the course of their order execution, you must have an appropriate CRM system (live chat system that also gives all the details of your customers) in place to address those issues effectively.
Generally speaking, setting up a cloud kitchen facility will cost you anywhere between USD 20,000 and USD 40,000.
In case you own and run a cloud kitchen business and want to develop an on-demand food delivery app for your cloud kitchen business and also want to know the cost to build a cloud kitchen app just get in touch with us and we’ll brief you about everything, including giving you a free quote.
Our professional services, including mobile app development are highly sought after by various businesses in various industries. Our impressive app development portfolio and jubilant client reviews are proof of our technical expertise and professionalism.
We will treat you business requirements as our own and design you the most appropriate and hi-tech on-demand food delivery app. Last but not least, we offer our renowned app development services at very reasonable costs. So, you have everything to gain and nothing to lose by consulting with us.