Even existing restaurants and QSR chains are now venturing into having cloud kitchens because of its operational efficiency and low starting up costs.
Cloud Kitchen –a fully equipped commercial kitchen that cooks food like a regular restaurant, except it doesn’t have any restaurant seating or even a takeaway counter but delivers food to its customers on their doorsteps.It’s an easy concept that is gaining momentum in the restaurant industry. Even existing restaurants and QSR chains—Faasos being the most popular example—are now venturing into cloud kitchens because of its operational efficiency and low startup costs.
Read on to explore why thecloud kitchen model is viable for someone who wishes to venture into the restaurant industry.
Lower Operational Costs
As per the general notion, the operational cost of a restaurant is very high. This is because of various factors like startup costs, real-estate or rent costs, interiors, IT, inventory, manpower, salaries, material cost, and other miscellaneous expenses like safety and security, and so on. Whether it is about starting a restaurant afresh or it’s about owning a restaurant franchise, the total investment in a fine-dine restaurant could easily go up to Rs 80 lakhs to 2 crore.
On the other hand, in a cloud kitchen, so many of the expenses get cut down. It doesn’t require investment on real-estate and interior costs. The investment in a cloud kitchen franchise could be from Rs 30 lakhs to 50 lakhs.
Higher Margins and Competitive Pricing
In spite of added cost of delivery, a cloud kitchen is still a much affordable model than running a brick-and-mortar restaurant where infrastructure and operational costs don’t let you earn higher margins. While operating a cloud kitchen, as the operational costs are reduced, there are greater possibilities of earning high margins. Ultimately, with higher margins, one has the ability to offer competitive prices and see the market’s response towards your venture, both in terms of food and service quality. The best thing about the cloud kitchen is that it does not need to be at prime locations since customers are never to visit the place. This creates a room for cutting down the costs of food, hence attracting more consumers.
A cloud kitchen provides limited and simplified menus so that more automation can be introduced. These companies have successfully automated all the packaging activities, which contribute to about 25% of the total workload. Everything is automated to carry out time consuming activities, ranging from pre-preparation activities to packaging. Cloud kitchens are also aggressively exploring more technologies that allow them to automate the entire operation.
Food Quality and Price
The regular restaurants face a lot of overhead expenses. This is one of the major reasons why they have to compromise on either the quality of products they use in preparing the food or the price. Ultimately, the quality of food which should be the USP of the restaurant becomes its negative point.
However, in a cloud kitchen, the objective of the kitchen is to add value to the customers through their food only. It’s not the ambiance of the kitchen or any other factor that is going to bring the consumers to the cloud kitchen but the food. Therefore, the entire focus is on the foodand since the operational costs are small, that remains top priority with no compromises.