Complete Guide to open a Cloud Kitchen Business in India:
Presently the restaurant and hotel industry is continuously changing. Online food delivery has become a trend. Customers like to order food at their doorstep and prefer home delivery service rather than dine-in. As per a report on the restaurant industry and evolutionary market, 52% of food service providers put their business on setting up a Cloud Kitchen or a delivery-only outlet. Restaurant food delivery service has grown for many years.
The cloud kitchen concept has allowed the business to get the opportunity to serve food on the doorstep and give economic benefit. Minimum startup costs, high profit margin, and limitless development potential are few key points of a cloud kitchen and the food providers and business owners are getting attracted by this model.
Like other restaurant business the cloud kitchen business also requires a full proof plan, strong business strategy, deep research about the market and clients needs. In this blog we will provide cloud kitchen business overview, investment costs, profit margin, risk factors, FAQ regarding cloud kitchen etc. Here we are explaining how to start a cloud kitchen business in India and other required information of cloud kitchen.
A cloud kitchen is a food delivery-only based restaurant that has no physical area for eating. It depends upon the online orders set through mobile app, third party food providers or websites. Cloud Kitchens also called ghost kitchens, dark kitchens, virtual restaurants, and delivery-only restaurants. It has become an evolution of food industry. The cloud kitchen provides facility to launch more than one brand in the same kitchen area.
If a person who runs a delivery-only kitchen and delivers Indian food can offer Mughlai food as well. The business owner need not add Mughlai food to the menu of his current brand but can operate another brand with different food in the same kitchen. It is the specialty of a cloud kitchen.
How to Start Cloud Kitchen Business ?
Starting a Cloud Kitchen Business are profitable idea but if we proceed without a proper planning and process then you can face lots of problems. In this segment we are explaining how to start a cloud kitchen business in a proper way.
Decide your menu: At first you need to decide food items. You can start with some special cuisine or can decide those food items which made you different from others.
Research and analysis of your business: This step is very important for a business. You need to research for market trend, client’s requirements, their food habits, advantages and disadvantages of cloud kitchen business, profit and loss etc. After a market survey you can understand how much you can invest for this business, how to proceed and everything.
Get required licenses: You can’t start your business without getting required permission and licenses. If you want to start a Cloud Kitchen Business then you would require different licenses, they are- FSSAI License, GST Registration, Municipal Health Trade License, Fire License, etc. It takes some time to get these licenses, so apply prior for these licenses.
Set your kitchen area and equipment: Decide a place for cooking and you can deliver food from that place. For a cloud kitchen you need not require large area. You can manage multiple brands and deliver multiple food items through the same place. You need equipment and utensils for cooking. It requires all equipment like any other restaurant.
Make your team: Start hiring staffs for your cloud kitchen business. For a medium scale cloud kitchen business you need 5-7 staffs along with the chefs. They must be well-trained, efficient, and they are able to manage the kitchen.
Marketing of your business: A cloud kitchen is dependent on the orders through website or mobile app. You should make an internet based presence of your business. Start promoting your business by Digital Marketing and get orders.
Business launch: All the above processes are belongs to the pre-launch activity. If you have set everything then decide a day to launch your business. You have to do a strong marketing to get regular orders.
Types of Cloud Kitchen Business in India
- Standalone cloud kitchen: This is a small-scale cloud kitchen, which offers limited menu items. It is operated by a small team of staffs of 4 to 5 people. The minimum area required for a standalone cloud kitchen is about 300 square feet.
- Virtual restaurant: The virtual restaurant operates by the online portals. These are the restaurants listed on the online food apps or website. They use the kitchen as virtual kitchen to facilitate the delivery of food to the customers.
- Multi-brand cloud kitchens: There is more than one brand can manage in the same kitchen space. This kitchen provides food to the people in a specific locality.
- Hybrid cloud kitchen: Hybrid cloud kitchen provides two types of services. This model has takeout restaurant as well as a cloud kitchen.
Conduct Market Research for Cloud Kitchen Business
During the pandemic, cloud kitchens model quickly grown and captured the market while dine-in culture is almost come to an end. After the pandemic people also ordered food from online and adapted this cloud kitchen model. The concept of the cloud kitchen was quickly become a market-leading technology and gradually evolving consumer’s eating patterns. The increase of online ordering, and the number of delivery options also increased.
The target consumers of the cloud kitchens are that people prefer a single cuisine type, fast food lovers, working people and people who largely depend on third-party channels for food delivery. The increasing customer demand for continental food and fast foods are expect to drive the growth of the cloud kitchen. There were about 3,500 cloud kitchens recorded in of 2020. The market for cloud kitchens in India is expanding as a result of the significant change in the food and beverage sector and this segment is earning a good profit every year.
Read Also: Complete details of Papad Making Business.
Location and Space Required for the Cloud Kitchen Business:
Location is one of very important factor which maintain the cost of opening a Cloud Kitchen business as compared to a normal dine-in restaurant. In the Cloud Kitchen the location does not require parking space, large area, main area etc. However, it requires a kitchen area with proper water and electricity supply & sanitation with low rentals.
Raw Materials to start a Cloud Kitchen business:
The raw materials of a Cloud Kitchen are depends upon the cuisine you decide. As per the cuisine the raw food items will be purchased. Like any other restaurant you should have sufficient cereals, staples, vegetables, non-vegetarian items. You need to talk to raw materials suppliers and get the best rate.
Machines, Equipment and its price:
|Equipment||Approx. Price in Rupees|
|Mixer Grinder||Rs. 10,000-12,000|
|Working Table||Rs.8000- 10,000|
|Gas Stove With 2 Burners||Rs. 3000- 5000|
|Knife Sets||Rs. 2000-3000|
|Various Utensils||Rs. 15000- 20,000|
Documents & License Required for Cloud Kitchen Business:
The documents and license require for any restaurant or hotel business the same license require for a cloud kitchen. The list of licenses is-
Staffs Required for Cloud Kitchen Business:
A cloud kitchen has no dine-in or take-away facility. For a home delivery facility it does not require any on-store staff, but it requires highly skilled kitchen staffs. It is important to hire skilled and experienced chefs who can plan the menu items and prepare them efficiently.
In a cloud kitchen, the same chef can prepare the food of different brands, or there may be different chefs prepare food for each brand. You can operate a cloud kitchen with 2 to 3 cooks and 3-4 helpers. You will need delivery boys and helpers if you plan to start an in-house cloud kitchen.
Investment Required to Start Cloud Kitchen Business:
The investment of starting a cloud kitchen in India depending on the city, demographics, type of cuisine offered etc. Here an approx costs are given for a cloud kitchen, please go through this-
- Rent: This mainly depends on the location and the space. A space of 600-800 sq feet is sufficient for a cloud kitchen and it may range from 25,000 -35,000 rupees.
- Licenses: All required licenses cost around 15,000-20,000 rupees.
- Staff: The salary of staffs will be around 50,000-85,000 rupees.
- Raw materials and equipment: This is solely dependent on requirement and can range from 3 lakh -8 lakh rupees.
- Online order generating system: You have to develop a Website and Mobile App for getting orders and it takes 1 lakh-2 lakh rupees.
- Promotion and marketing: You need to do paid and organic promotion, this may cost around 40,000 -80,000 per month.
- Miscellaneous: There are many things like package materials, kitchen accessories like duster, gloves, aprons, LPG gas cylinders and so on 10,000 -15,000 rupees.
Profit Margin of the Cloud Kitchen Business:
The cloud kitchen business cuts down your high rental cost of large space, shop set up and its maintenance. The only expense that your business need is the material usage, staffs salary and advertisement activities every month. Besides this, you do not require any extra cost so your returns are quite high from each customer and you can gain a good profit. The cloud kitchen profit margin is approx. 20%-25%. However, the profit is depending on the number of orders you process in a day.
Marketing Activities for Your Cloud Kitchen Business:
A strong advertising & marketing is the key to the success of a business. For a Cloud Kitchen marketing and promotion is an essential part because it is the single source of getting online orders through mobile app and website. You should go through Digital Marketing. Google Ads, Mobile App Marketing, Social Media Marketing are some main Digital Marketing services through you can get orders regularly.
Risk Factors of Cloud Kitchen Business:
When you are planning to start a cloud kitchen then you should its challenges and risk factors. Here few major risk factors are mentioned below-
- Lack of customer interaction
In a traditional restaurant a bond can develop between a customer and restaurant staffs and it makes a client satisfaction. Such customers can be their loyal and fixed customers. In a cloud kitchen people order via mobile app or a website so there are minimum conversation between them. So, there no bond developed between them. You do not get direct feedback for your food, service etc.
- Marketing challenge
The promotion and marketing services like banner, hoarding or digital marketing maintain a physical address of a restaurant and people also trust on these restaurants because they have the proper physical presence near their area. But in case of cloud kitchen place of cooking does not matter, so there is a matter of trust, hygiene and it is not acceptable by everyone. Here it is a big challenge for a cloud kitchen.
- Dependent on food delivery
In a cloud kitchen it is costly to maintain a group of delivery boy so most of the cloud kitchen owner dependent on third party delivery service like Swiggy, Zomato and others. Here a service charge given to such third party delivery services and the profit margin will be reduced. If any reason there is a fault in order generating platform then it directly hit your business.
- No proper food costing
In any cloud kitchen if the owner does not have good idea about the pricing of food then it can become a risk. Most of the cloud kitchen’s menu pricing is improper, and some food items are high-priced or low-priced. There is not a standard pricing of the food and it can ruin the business because in this market there is full of competition, and a mistake can down the business.
Cloud Kitchen Business is one of the most trending businesses that get orders via mobile app and website. The Cloud Kitchen is a great business model where you can start with a small infrastructure & a small group of people and effectively run the business.
In this blog we have mentioned the steps how to start a Cloud Kitchen Business in India. We also provided information about the business investment, location, profit, raw materials and equipment, FAQ etc.
However, Cloud Kitchens have their own challenges, advantages & disadvantages, and it is best to get the knowledge as much as possible before starting a Cloud Kitchen Business in India.
FAQ(Frequently Asked Question):
Q. How many staffs are required to run a cloud kitchen and what quality they should have ?
Ans-In every business, staffs are the asset of the business. For a medium scale business 5-7 staffs along with the chefs are required. If the numbers of employees are few, then they must be well-trained, efficient, and they are able to manage many things. If the chefs and helpers are experienced and expert then you can run the business smoothly.
Q. Is the cloud kitchen business profitable in India ?
Ans- A cloud kitchen business is consistently growing and earning a good profit. The profit of the cloud kitchen is depending on the number of orders per day. It earns a profit margin of 20-25% so it is a good option to start your business.
Q. What is the future growth of the cloud kitchen in India ?
Ans- As per the global cloud kitchen market survey it is expecting that the compound annual growth rate CAGR of 14% to reach the US dollar 90 billion approx. by 2026. It was US dollar 54 billion approx. in 2022.
Q. What licenses are required to run cloud kitchen business ?
Ans- The following licenses are required-
- FSSAI license
- Municipal health trade license
- Fire licenses
- GST Registration Certificate
Q. Can I start a cloud kitchen from home ?
Ans- Yes you can definitely start a cloud kitchen from home. In this business model place and location do not create botheration. You only get required licenses and fire NOC from the respective department. Even you can save kitchen rental charge every month.
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