What is Cloud Kitchen Restaurant Business Model?

Hyderabadi Biryani Cloud Kitchen in Navi Mumbai

These days, we often here about Cloud Kitchen, as a new form of restaurant franchise. So, What is this Cloud Kitchen? Is cloud kitchen a good business model? If you have an interest in food business and want to start your own food business or restaurant, would the cloud kitchen be a good option for you? Today, we will answer all these questions. We’ll also introduce you to Charminar Biryani Cloud Kitchen franchise model.

So, to begin with, we’ll discuss what exactly is a Cloud kitchen. Cloud kitchen literally means a cloud-based kitchen, but what exactly is a cloud-based kitchen? Cloud kitchen is a new business model in the food and beverage industry that has recently emerged in the United States and India.

Cloud Kitchen or Ghost Kitchen or Virtual Restaurant is a restaurant that does not have a physical location. You cannot visit and dine in this restaurant. Cloud kitchen is a virtual delivery-only restaurant where you need to order the food online and food will be delivered to your home or office location.

The cloud kitchen can be understood as an application of the central kitchen method for B2C. The idea is that instead of delivering the food cooked in one place to the restaurant, it will be delivered directly to the consumer.

There are no tables or chairs in the cloud kitchen, and no customer service staff too. Furthermore, cloud kitchens do not accept takeout. Orders are accepted online, the chef cooks the order, and the cooked food is delivered to the customer’s home or office by food aggregators such as Zomato and Swiggy or delivery service such as Wefast, Grab, Dunzo, and Shadowfax.

Since payment is also done online, there is no cash register or credit card payment terminal. It is a new type of “restaurant” that is purely specialized in kitchen functions.

Benefits of a Cloud Kitchen

To start a cloud kitchen business, you do not need to rent a dine-in space in some mall or high footfall location. You can open a cloud kitchen or delivery-only restaurant in any location and start delivering food from there. And, if you are low on budget, you can also start your cloud kitchen from your home and sell the food online; such an enterprise is also considered a cloud kitchen, though it is not so scalable.

As you do not need to rent a property in high footfall location, you can save a lot on your initial investment in your restaurant.  You also do not have to worry about flooring, interior decoration, signboards, or expensive cutlery sets.  All you need to invest is in a basic kitchen facility and salaries for the chef and helpers who would cook the food.

So, the merit of cloud kitchen is the savings in the initial setup cost. Unlike normal restaurants, cloud kitchens can be located anywhere. While traditional restaurants choose a location in a crowded place as possible, cloud kitchens, on the other hand, choose a location that has a low rent. In addition, since the cloud kitchen can be opened in an area of about 300 sq ft, the cost of opening a delivery-only restaurant and its monthly rent can be greatly reduced.

Also, as the cloud kitchen is purely cooking-focused, there is no need to hire customer service staff. In addition, there is no need to hire delivery staff, which can greatly reduce the burden of labor costs. In some cases, even a single chef can set up a restaurant, which can significantly reduce operating costs compared to a regular restaurant. If you are a chef who is familiar with your skills, the big advantage of cloud kitchen is that you can start a food and beverage business all by yourself.

The disadvantage of a cloud kitchen is that you may incur high delivery costs because the delivery is outsourced to a delivery company. Some delivery partners charge a delivery fee of 25% of the sales price, so it is necessary to raise the price of the products.

Why Cloud Kitchens are a boon during the Covid-19 pandemic?

While many regular restaurants are in trouble due to the new Covid-19 pandemic, the “cloud kitchen” is attracting more attention than ever. A restaurant business specializing in delivery services is considered to be one of the new business models that survives the “corona” era.

In addition, if the cloud kitchen operating company handles office work and sales promotion support, the staff can concentrate on cooking and work efficiently. In addition, since there is a high demand for “non-face-to-face services” in the current Corona disaster, we can expect to attract a new customer base.

It is often said that the wave of cloud kitchens that is beginning to spread will threaten the traditional food service industry.

For example, one of the major characteristics of the restaurant industry so far has been that it is a “box business”. This is because sales are greatly influenced by location, and once a store is opened, it cannot be easily moved to another location.

Therefore, it is necessary to choose the best location to open a store, but the more you try to choose a good location, the higher the cost such as rent will increase.

On the other hand, the cloud kitchen, which specializes in delivery, can be located anywhere. You can set up a cloud kitchen in low-rent areas or in less popular locations such as the upper floors of a building. In addition, it is overwhelmingly superior to existing restaurants in terms of cost because it only requires rent for kitchen space.

In that sense, it may be difficult for existing restaurants to compete with cloud kitchens in delivery services.

Until now, the food service industry has been an industry with high opening costs and needs a lot of time to become profitable. In addition to building a store, kitchens and other facilities are heavily equipped, so it is said that it will typically cost between Rs 10 lacs to Rs 50 lacs to open a restaurant in Mumbai.

Moreover, it is a high-risk industry with a high closure rate despite the initial cost. The reason behind this is that there is a wide range of skills and knowledge required other than cooking, such as product planning, purchasing, personnel management, marketing and public relations.

On the other hand, if you start a cloud kitchen, you can reduce the opening cost and develop your business with less risk. That is why cloud kitchens can survive during the covid-19 pandemic, whereas the traditional restaurants cannot.

It is clear that the benefits of cloud kitchens are the reduction of initial investment and working capital. The restaurant business has a large cost for rent and interior decoration, which raises the break-even point. In urban areas where delivery apps have become widespread, it is an advantage to be able to reduce the high cost of real estate. In addition, the reduced costs can increase the competitiveness and attract a large number of customers by lowering the price of products and improving the quality of food.

Cloud Kitchen Biryani Franchise in  Mumbai and Navi Mumbai

Charminar Biryani is now offering franchises in Navi Mumbai for its Hyderabadi biryani cloud kitchen. This offer for Hyderabadi Biryani cloud franchise will be initially available in the cities of Mumbai and Navi Mumbai.