The Finest Cloud Kitchen Business Models You Can Adopt In 2022

Last Updated on May 13, 2022

There have been some major changes in the food industry in the past couple of years.

The restaurant industry and traditional food business patterns have all been threatened with high startup expenses as well as heavy regulatory constraints.

Enters Cloud Kitchens.

A cloud kitchen — also known as ‘ghost kitchen’ or ‘virtual kitchen’ — is a commercial space for cooking enterprises that provide the necessary equipment and services for preparing menus for delivery and transportation. Cloud kitchens allow food firms to create and deliver food products with minimum overhead, unlike traditional brick and mortar places.

According to a report published by UBS about the online food ordering market, they estimated the worth of the online food ordering market was $35 billion in 2018 and is forecasted to grow at the rate of 20% annually and reach $365 Billion by 2030. Cloud kitchens are becoming more and more viable business solutions for capturing this increase in food demand by restaurant owners and food entrepreneurs.

Cloud kitchen apps like Kitopi are today regarded as the smartest way to operate a restaurant business due to a number of benefit systems, including lower operating costs, low startup cost, reduced maintenance and lower cost.

Let’s dive a little deeper.

How Do The Cloud Kitchens Work?

The cloud kitchens are centralized commercially registered food production facilities that rent space for one to two to dozens of restaurants for optimized food delivery. There are several brands or virtual restaurants in a cloud kitchen, all operated under one roof, or the kitchen can be run by different suppliers like an incubator. Picture a large warehouse containing many steel stations, hood vents, stoves, ovens, and sinks, with their own orders coming directly from clients. Picture the large station with its own mini-restaurants.

Cloud menu items are optimized to make food quality easy to manufacture and reliable upon delivery. Cloud cuisines can often be situated physically outside of town in industrial complexes, offering driver parking, driver’s waiting areas (often with order times monitoring screens) and seamless pick-up check-in stations. All designed to deliver food as soon as possible to the door and in the customer’s hands.

Cloud cuisines are tech-friendly. You are using your smartphone for food applications, such as UberEats, Grubhub, and Doordash, that are now omnipresent. They use large quantities of data to determine what kinds of foods to produce and when demand is most likely to be high. Hot wings, for example, are very popular between 11pm-2am in the vicinity of schools. These data drive rapid, almost in real-time, adjustment and optimization.

As technology matured, additional services have emerged for combining the various supply applications into one portal, facilitating the production of multiple orders and the coordination of delivery, along with intelligent food buying and production software for reduced food waste and increasing economy per meal unit. We only saw the tip of the innovation iceberg in this area.

Why Did The Cloud Kitchens Trend Get So Hyped Up Suddenly?

At the beginning of the 2010s cloud kitchens began to emerge to meet increased demand for quality food supplies and increased rent in the center of the city. The Green Summit Group in 2013 opened one of New York City’s first cloud kitchens and grew up to four sites in two cities. There have been many more start-ups and cloud kitchens that have become big businesses as we enter the new decade, with venture capital flowing to start-ups specifically aimed at seizing advantages from this new market.

The trend is driven by an era of thousands with ready-to-use digital, mobile-friendly solutions. And it’s only going to get stronger as the next generation that grew up with the Internet and smartphones enters the market (sorry boomers). Further forward, progress in kitchen automation, drone supply, and the continuing growth of the concert economy are looking to provide cloud kitchens more advantage by further reducing their costs.

Let’s have a closer look at all the related factors:

• Real Estate Prices In The Popular Neighbourhoods

Since urban immobilization prices continue to rise, only supply kitchens can use their ‘virtual’ nature. They have to be within a realistic delivery distance of enough hungry clients, the only restriction on their location.

Companies such as Kitchen United focus on light-industrial areas outside dense urban centers that are near enough to meet residential demand. Large, low-rent warehouses are the perfect spaces to accommodate large shared kitchens if you have the capital. Using data from supply applications, they can determine the best locations to serve particular districts.

• Real Estate Prices In The Popular Neighbourhoods

As a result of changing behavior, food supplies will rise to $200 billion by 2025, whereas nearly half of consumers will prefer to eat in their homes. Uber’s optimism at $795 billion is even more than most. Uber Eats is currently the most popular food supply app with 91 million monthly users. Consumers are now more willing to pay a substantial amount to make their food available.

• Increase In On-Demand Contract Workers

We have seen an increase in on-demand contract workers with the full-swing gig economy sharing and are expected to reach $335 billion by 2025. The number of people who work as drivers, carriers, and remote employees is on the rise, providing cheap jobs with no employer-related restrictions. But gigantic economic stability remains unknown. Recently, California has passed a law requiring some firms to treat contract workers as workers.

• Reduced Delivery Costs Due To Improved Technologies

Further forward, the standard restaurant model will be further disrupted by drone delivery and kitchen automation. Robot kitchens are rising and the drone supply is about to collapse with only regional regulations in place.

Shared technology kitchens are perfectly positioned to benefit from these developments. They can and will adapt much faster to new technology, which will give them an additional boost over shops.

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Benefits Of Cloud Kitchens For Businesses

Now that we know what a cloud kitchen is like, let’s look at its advantages compared with the conventional business model of the restaurant.

• Lower Overhead Costs In Comparison To Normal Restaurants

The cost of staffing and the observance of ever more restricted labor laws is one of the greatest challenges for restaurant operators. Cloud kitchens can use on-demand work more easily and do not need to worry about service personnel at all.

In comparison with traditional restorations, the access barrier for cloud kitchens is much lower. Theoretically, fantastic kitchens are lowered by eliminating the need for head-to-head operations, floor space for seating, or high-rent rentals for factories in prime locations with high foot traffic.

• Improved Efficiency

The Ghost kitchens can function very efficiently with their customized spaces and the optimization of their delivery processes. You can batch prepare ingredients for several different menus and design the cuisine with a view to giving priority to preparing speed and delivery to drivers when operating several brands from a single cuisine.

• Access To User Data & Improved Real-Time Adaptability

Since they’re tech-based, cloud kitchens can optimize consumer behavior-based processes, ordering, and employee planning. It is also possible to adapt the menu to the request and increase margins, optimizing the model over time.

Not tied to a physical location means, without having an effect on customer satisfaction, that you can change the menu or operating times to meet business needs. This may also help to reduce food waste, as ordering and preparing decisions can make you smarter.

Actually, virtual restaurants are so adaptable that for a season you could even launch a brand. For example, for the summer, you can launch a healthy salad brand and a warm winter poutine concept, so you can benefit from the seasonal demand for every type of food without any deterioration.

• Digital Brand Awareness Without Expenditure

Virtual brands can quickly become exposed to restaurant supply instead of marketing themselves through delivery apps. Although a new concept of virtual restaurant needs to pay for visibility that is part of the Business App delivery model, in general, this can still be cheaper, particularly if you build your brand creatively.

• Meeting Your Customers Demand

You can cater to your customers’ requests with cloud kitchens. Online food supplies have grown more popular as consumers are requesting fast food options at affordable prices. Cloud kitchens facilitate this increasing demand for online food supply through efficient logistics, cost reduction, and technological innovation.

• Improved Reach

Cloud kitchens enable your brand to increase its focus on food supply and reach a broader public. Supply-optimized restaurants promote their business through supply applications and social media rather than on smaller marketing channels. By strengthening new marketing channels and increasing exposure, your brand can be strengthened by Cloud cuisines.

Most Popular Cloud Kitchen Business Models

• Single brand, single kitchen, No storefront Model

This is the cloud kitchen model in its original form. No seating area and no physical store in the restaurant. Avoid high rentals and real estate costs by shedding the front of the house, restaurant owners or food business entrants sidestep. With the increase in online ordering and increasing consumer demand for deliveries, this concept has gained popularity.

• Multi-brand, Single Kitchen, Multiple Outlets, No Storefront Model

The more advanced cloud kitchens build on the information intelligence of local residents, popular cuisine, and hyper-commercial demand. The intention here is to respond to demands for the finest cuisine in an area (5-6 km away from the city), with relatively fewer options to serve these dishes (Biriyani, North Indian, the Chinese, Burgers, Pizza & Pasta – that’s really it in India).

It is a clever model because the individual brands are placed in its own right. And having a single common kitchen maintains low operating costs. This model is closely similar to the original cloud-free kitchen model. You might consider it to be specialized cloud restaurants based on cuisine, owned by the same brand, that share the same kitchen.

• Single Brand, Single Kitchen, Multiple Outlets, With A Storefront. Model

This is a kind of blend of a dining room with a cloud kitchen. It is mostly similar but also has a shop front, to a cloud kitchen business model. The storefront lies in the possibility of guests entering and seeing how their food is prepared if they wish. This model essentially takes account of the operational efficiencies of the business model of the cloud kitchen, but it also has a “real” client window.

• Aggregator Owned, Multi (Restaurant) Brand, Rented Co-working Kitchens, No Storefront Model.

In the food business sector, this cloud-based kitchen model is basically a well situated, vacant kitchen area with the bare minimum infrastructure of gas pipelines, drainage systems and ventilation systems. 

Established (or new) restaurant companies rent this kitchen area, use online ordering by Food aggregators, the fleet of delivery and menu information to set up a restaurant. Equipment, staff, raw materials and recettes are brought to the restaurant. Simply put, the restaurant cooks and Food aggregator does what is left.

• Aggregator Owned, Multi-restaurant Brand, Rented Kitchens, With A Storefront Model

Based on the idea of a rented kitchen but with integrated kitchen equipment and comprehensive processes. It’s used by Zomato, where it shares its expertise in managing demand for orders in this model too. These cloud kitchens, like the Freshmenu model, also have a shop where the customers are able to enter. A snack, similar to Freshmenu, between a cloud kitchen and a restaurant. 

• Entirely Outsourced Model

In the cloud kitchen business model mix, this is a relatively new concept. You can outsource everything from operations in your call center, kitchen, and supply in this model. Imagine a restaurant that outsources and delivers a large proportion of the preparation for your kitchen. Your chefs can then finish and the restaurant will again pick it up.

You can also check out our article explaining the business model of dark stores. These stores follow a similar concept to Cloud Kitchens but cater mainly to the grocery delivery industry whereas cloud kitchens are focused on food delivery.

Wrapping Up

Are you ready for the time when more than half the consumption of the restaurant will take place outside?
It’s around the corner, certainly.

If you have more questions about building your kitchen in the cloud, get in touch with us today.

Frequently Asked Questions About How Cloud Kitchens Work (FAQs)

Q- Is cloud kitchen a good business option?

A.-Cloud kitchens are a good business option due to many reasons such as:
Reduced Delivery Costs Due To Improved Technologies
Lower Overhead Costs In Comparison To Normal Restaurants
Digital Brand Awareness Without Expenditure
Improved Reach
Meeting Your Customers Demand

Q-. What are the few challenges of a cloud kitchen business?

A. Technological expenses
Competitive pricing
Low o.erational costs
Food quality

Q. What are some of the best cloud kitchens in India?

A. Meat Stock Exchange, Biryani By Kilo, Box8 are some of the famous cloud kitchens, among others.