A guide to Kickstarting your Cloud Kitchen
By: Sidharth Pandita
Tags: Food, Delivery, Restaurant Business, Entertainment, Kitchen

What is a Cloud Kitchen

A cloud kitchen a virtual restaurant or satellite kitchen which follows a delivery-only model. Cloud kitchens leverage the power of food aggregator platforms like Swiggy and Zomato to receive and deliver food orders. Cloud kitchens are the hot trend right now and the future of the food industry. They give an entrepreneur all the advantages of having a restaurant and eliminate all the downsides of a running one. In a cloud kitchen, one can experiment with different concepts without much of a risk.

How to Start a Cloud Kitchen

Space & Location

Unlike a traditional kitchen, a cloud kitchen does not require a big space to be set up. A cloud kitchen can be easily set up in a 300 sq ft space. You don’t need any carpentry, painting, or decoration in setting up a cloud. You don’t need to pay hefty amounts to buy tables, chairs, or any fancy cutlery. This means huge savings on cost. In terms of location, your cloud kitchen does not need to be present on prime street. It can be located at a place, somewhere deep down a lane which no one visits. The only thing that matters to our cloud kitchen is high customer demand. One should run customer analytics for a place before setting up a cloud kitchen there.

Licenses

You need the necessary licenses and certificates to start a cloud kitchen depending on which part of your world. If you are starting a cloud kitchen in India, you will need the following ones:

FSSAI: Every Food Business Operator in India is required to be licensed/registered under the Food Safety & Standards Authority of India. You can apply for the license by applying with a Food Safety Compliance System (FoSCoS) fee, which is set up by FSSAI.

GST Registration: Restaurants in India, like most businesses, will require GST Registration after crossing a certain turnover. To obtain GST registration for a restaurant, you will have to complete the GST registration application.

Trade License: A food business should have a Trade License under the Municipal Corporation laws of that state. Any food business operator can obtain a trade license by applying to the concerned municipality.

Fire Department NOC: In India, the Fire safety laws of most of the States require a restaurant to obtain a ‘No Objection Certificate’ from the Chief Fire Officer before commencing the business.

Staff

To kickstart your cloud kitchen, you will not need more than 2 people. One person for cooking the food and the other for handling other tasks inside the kitchen such as packing food. As you are just starting your cloud kitchen, you will not receive a lot of orders initially. Also, a cloud is very different from that of a traditional restaurant, where you require different people for cooking, taking orders, serving, cleaning, hosting, billing, etc. This means that you don’t have to make a big investment in manpower initially.

Kitchen/Cooking Equipment

You need some basic kitchen/cooking equipment to get started. These can include pots, pans, stove, oven, refrigerator, knives, juicer, etc. The kind of equipment you require also depends on the type of cuisine. If you find the equipment a bit expensive, you can search for second-hand equipment (which comes at a way lower price). Also, some vendors provide kitchen/cooking equipment on lease. This can help you cut down the initial investment.

Packing & Branding Items

Having delicious food but wrong packaging can lead to a bad customer experience. Along with cooking good food, it is important to have the right packaging for it. The packaging can also depend on the cuisine you are sending. You will generally require plastic containers, spoons, boxes to pack the food. It should be ensured that the packing material is of high quality and is making it easy for the customers to consume food. One more thing, which people generally miss out on is branding. If you get the branding right while delivering an order, it can prove to be a gamechanger for your business. Printing your brand logo, achievements, milestones on your packaging are some of the things to consider. You can also go the extra mile and provide some coupons, brand merchandise with your order if your budget allows so.

Things To Do after setting up the Cloud Kitchen

Promotion

You need to grow your cloud kitchen with time. For this, it is important to create awareness about your brand among people. While you make tasty food and let customers spread word of mouth, you will also need paid marketing campaigns to grow with speed. For this purpose, as a first step, you should start by promoting your kitchen on the food aggregator platforms you are listed on. This will make your kitchen rank higher on the restaurant list and also in search results for your specific cuisine.

Google Ads is Google’s online advertising program that allows you to create online ads to reach audiences that are interested in the services you offer. Running campaigns on Google Ads by telling your story to people in a precise manner is a good way to generate more orders.

Marketing your kitchen on social media platforms like Instagram and Facebook is something you should definitely try out. You just have to create your kitchen’s page on these platforms and regularly post photos of your food, ongoing discount offers, etc to engage with the audience. You can also make the user generate content (review or recommendation) for you by sending them free food for trial.

You can also create a mailing list of your top customers and start a loyalty program. You can send exclusive coupons and deals to these top customers. You can also send SMS or WhatsApp messages to the users from your business account.

Becoming Independent

Relying completely on food aggregator platforms like Swiggy or Zomato is totally fine. But, if you create your own independent mobile/web application where customers can place orders and then set up your own delivery fleet, you will have an advantage. This will also have a lot of positive effects on your business.

Parallelly selling on your own application along with the food aggregators will bring in additional revenue and save you on the 20–30% margins that food aggregators charge you per order. Not only this, your application will strengthen your brand image within the people. Once you grow profitable enough to afford to build your own application, definitely go for it.

Managing the Food Menu

Managing the food menu is a science. You might, in general, feel tempted to include a lot of items on your menu and as a result, actually, even do so. But the trick to a successful menu is not in including a wide number of items. The trick is to keep the menu short and focus on the few items you decide to put on the menu.

In Food Industry, the profit margins are not very high. If you decide to include a wide variety of items on the menu, it will become difficult for you to focus on more important parts of the menu. Also, you will not able to have premium pricing for your food as you will not have any specialty you are famous for.

But, if you keep your menu short, you will be able to fully focus on those particular items and you’ll also be successful in associating your brand name with your specialties. This will lead to people ordering specific food items only from you which be further lead to repeat business.

You can combine your existing menu items to forms different combos. To understand it, let’s take an interesting example. Have you seen the McDonald’s menu? On a quick look, you might feel that is it just gigantic. But if you closely notice it, you will actually find that McDonald’s keeps a limited number of main items on the menu. It just creates so many different combos and blendings of those limited few items to churn out a variety of meals. This is one strategy you can also follow.

A problem that affects almost every food business is food wastage. A short menu helps to overcome this problem. When you receive food orders predictably, you can closely regulate your cooking and inventory. This way you will also be able to save money.

Upgrading your Kitchen

After a certain period of time, when you start receiving a high volume of orders (let’s say 500+), your 2 people, 300 sq ft space kitchen won’t be able to handle it anymore. Now, you‘ll need to increase the manpower. Also, much of your equipment like the oven and refrigerator will start to look small to the eye. Now it is time to upgrade your lovely kitchen and buy bigger machinery. It will also be good to install an Integrated Kitchen Display System. This will help everyone in the kitchen to keep an eye on the status of different orders and prioritize orders accordingly.

Multiple Brand Names under the same Roof

You can try out the concept of having different brand names under the same roof. For example, you can have ‘ABC’ brand name under which you sell only Mexican food and ‘XYZ’ brand name under which you sell only Indian food. This way your different brand names will be able to strike the right chords with the customer. Your customer will be able to associate a particular cuisine with the respective brand name. This will boost your sales without even having to spend a lot of extra money.