Cloud kitchens are a tidal wave of a trend for food businesses. And restaurants are quick to surf this wave. You don’t have to look too far to see the tsunami of restaurants or ex-CEOs that are adopting the cloud kitchen concept. Fat bottom lines? Fat bottom lines! Faasos & Freshmenu, are big examples of cloud kitchens in India. Deliveroo & Uber Eats make this possible in the US and Europe. But no matter what social media would have you believe, it’s not all sunny in food biz heaven. The rising competition in the restaurant world is real and it comes with high-rent, expensive designs and rising costs. And hence the stratospheric popularity of the Cloud Kitchen concept. Think lower real estate costs, a reduction in order processing time and quicker deliveries. This means you are serving more customers per hour. What’s not to like?

1. February 4,
2019
Cloud Kitchen Concept – The Complete Breakdown
limetray.com/blog/cloud-kitchen-concept
Cloud kitchens are a tidal wave of a trend for food businesses. And restaurants are quick
to surf this wave. You don’t have to look too far to see the tsunami of restaurants or ex-
CEOs that are adopting the cloud kitchen concept. Fat bottom lines? Fat bottom lines!
Faasos & Freshmenu, are big examples of cloud kitchens in India. Deliveroo & Uber Eats
make this possible in the US and Europe.
But no matter what social media would have you believe, it’s not all sunny in food biz
heaven.
The rising competition in the restaurant world is real and it comes with high-rent,
expensive designs and rising costs. And hence the stratospheric popularity of the Cloud
Kitchen concept. Think lower real estate costs, a reduction in order processing time and
quicker deliveries.
This means you are serving more customers per hour. What’s not to like?
In fact,
In our online delivery report we found that, 67% of restaurants would prefer opening a
cloud-kitchen over a dine-in as their next outlet. Get the full research here.
Here’s a quick idea on what a cloud, (dark, ghost or virtual) Kitchen is. The concept of a
cloud kitchen is simple. It is an internet-enabled delivery restaurant. It’s hassle-free, cost-
efficient, no unnecessary expenses, and no parking problems as well. And it’s being
called the future of takeaway.
So altogether a lot of upsides.
How cloud kitchens are a cost-effective alternative
to traditional restaurant business models
Let’s break down the (approximate) costs of setting up a cloud kitchen concept in New
Delhi, India:
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2. Costs associated with a cloud kitchen concept
And comparatively, in the US:
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3. Basically, you save a lot on rent and marketing. The 2 biggest cost centers for a
restaurant.
Running a Cloud Kitchen
In this article, we will focus on your cloud kitchen concept, across 3 major restaurant
functions:
Technology (that simplifies your operations and automates processes)
Marketing (how to set-up marketing for your Cloud Kitchen)
Food & menu (ideas for a compelling menu)
Managing Inventory (reducing wastage and lost orders)
And include some ideas to get started with:
Equipment
Licenses
Packaging
What technology would you need to run a cloud kitchen concept?
You need to:
Acquire customers
Manage orders and billing
Collect data to drive repeat buying
Build engagement
Get feedback
Acquiring customers online
You need to be present on all third-party online ordering platforms and online
aggregators like Zomato, Food Panda, Uber Eats and Swiggy (or Yelp, Deliveroo, Uber
Eats in the US). But you also need to have your own online ordering portal and invest in
your brand, to avoid paying high third party commissions and get direct online orders.
The cloud kitchen concept is built around the “direct orders” on your platform, thus
lowering you dependency on a 3rd party.
Here is a complete guide on How to link with Online Food Ordering Aggregators
Managing orders and billing
Once you start getting online orders, they need to be managed. Manually punching in
orders from different sources on multiple screens is not optimal (in other words, we have
successfully crossed the stone age). You need a tool that helps you streamline all your
orders and integrate with your POS system. So that you can focus on serving those
orders and your customer experience.
Collecting data to gain visibility of your business and drive repeat buying
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4. Without clear visibility of your outlet performance, hottest selling menu items, and sales,
it’s business-as-usual till it’s not. A good restaurant management system is designed with
this in mind. It helps collect and make sense of customer data from different touchpoints
in their buying cycle. It then puts that data to use for driving repeat purchases with
Loyalty programs and CRM campaigns.
Build engagement
With seasonal CRM campaigns, special promotions, events or just a timely message. The
steps to effective CRM campaigns are to define campaign objectives, target the right
audiences, figuring out the timing of the communication, communicating sharply, using
email right, analyzing results and then being regular in your messaging.
Executing your cloud restaurant’s marketing
In times of great competition, being memorable and loved are crucial advantages to
have. Making sure your marketing is bang-on is a great start. But ideas don’t run
themselves. You need to set up your marketing software, resources, and people. You
could run your marketing yourself if you have the time. Or find the right agency to work
with. Either way put aside enough time, resources and an appetite to experiment when it
comes to your cloud kitchen’s marketing.
Social Media Marketing
One of the most popular and efficient way to market your brand. Your restaurant’s
Instagram, Facebook, Twitter are all great channels to create a bit of buzz about your
brand.
Having your own “voice” and personality is a must. Like these restaurants.
Given the popularity of Social media with customers (especially in the food biz), you
should double down on this channel and extract the maximum value out of it.
Our top recommendations for your Social media content:
1. Be Authentic. Showcase real people and real stories.
2. Give your audience a sneak peek behind these scenes.
3. Use events.
Check out Digital & Social Media marketing tailored for restaurants.
SMS marketing
This is also an important marketing channel that connects you directly to customers.
Regular emails and SMS informing about the brand and keeping them updated with the
latest addition to the brand is a very smart strategy to keep the customers engaged and
well- informed which may turn into more orders. While you will need a CRM tool to send
out emails and SMSs, you would also need specialist campaign managers to run and
optimize these campaigns for you.
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5. Are you struggling to make the most of your restaurant CRM?
Loyalty programs
Regular customers get some special benefits which encourage them to order more.
There are different kinds of loyalty programs suitable for different occasions, restaurant
types or objectives. As before, it’s a good idea to take the help of specialists to run and
optimize your loyalty campaigns for you.
The ideal cloud kitchen menu
Focussing on a niche is a great idea for your cloud kitchen.
Regional & traditional cuisine
Becoming the go-to place for a specific cuisine increases your chances of being
memorable. Also, it urges the customer to try something new most of the times. Do you
serve a killer crepe? Or an authentic Poke bowl?
The temple of health
Vegan, Gluten-free, Non-GMO, Juice cleanses – are some hot trends in food right now.
You could watch out for the next food trend and capture an emerging micro-market.
Bakeries, Sweets and desserts
This is a very suitable category for the cloud kitchen concept. Online delivery for desserts
is on the rise and companies like Crep-fe are on trend with their delivery first business
model.
Meal boxes and catering
A very fast growing category, packaged meals are making their way to health-conscious
office goers the world over. Customers that are looking for healthy options beyond what
the get in the office cafeterias.
Managing suppliers and inventory
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6. Supply-wise, the cloud kitchen concept begins to resemble a traditional restaurant. The
only difference is in the turnaround time. In the online delivery setup, you don’t get a
chance to cajole waiting customers or turn down their order without strongly affecting
sentiments regarding your brand. This happens because there is less human interaction
(also the inability to serve them complimentary bread to make up for a service delay).
This means that you simply cannot afford to run out of produce and supplies.
Overstocking on the hand creates wastage which is not flattering to your costs or the
environment. But if you do end up wasting, consider these upcycling techniques.
As you can imagine, managing inventory can be a nervous process. Inventory
management keeps a record of the departure and arrival of your raw material. The best
way to manage inventory is to keep a detailed record of how your raw goods are getting
used. By what quantity and in what duration.
Over time your inventory data allows you to make better stocking decisions and helps
anticipate demand spikes. It is also crucial to figuring out your food cost. Some inventory
management techniques can help such as JUST-IN-TIME methodology, ABC analysis and
more.
3 must-haves to get started with your
cloud kitchen concept right away
Kitchen Equipment
Having a good kitchen design that is built for speed, is an important investment for cloud
kitchen. Well planned racks, good quality utensils are all very real considerations, to
make your cloud kitchen operationally efficient. We recommend some good research
here. Be mindful of how big you want your kitchen to be since rent and the cost of
equipment can be significant.
Licenses
Before you start, try acquiring the licenses that make your operation legal and compliant
with food and safety norms. Here’s what you need.
FSSAI License
GST Registration
Municipal health and trade licenses
Fire safety compliance
Get started with the FSSAI license.
Packaging
The First impression always counts. So make sure the packaging is attractive. Throwing in
some complimentary condiments can win you the impression game.
The most important aspect of packaging is temperature. Nobody likes being served cold
(or even lukewarm) food. Make sure the food is hot and fresh when it reaches the
customer. Being a cloud kitchen means you should take the opportunity to delight your
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7. customers with the packaging. Functional containers suitable for different kinds of food
that helps preserve it’s presentation and travels well. Consider using a biodegradable
material for your packaging to make an even better impression.
Soup Stock Tokyo
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9. You could also save on commissions by giving your customers a reason to order from
you directly (an offer).
See LimeTray’s packaging solutions.
Further reading on Cloud Kitchens
The cloud kitchen business model and who should consider opening one.
How to start your own Cloud Kitchen.
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