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If you want to enter the food business but do not want to bear the expenses associated with setting up a physical restaurant, you can always go the cloud kitchen route. If you consider the costs attached with setting up a cloud kitchen and compare it against the revenue it can generate, a cloud kitchen can be a lucrative business idea. This article provides guide to open a cloud kitchen so that one may also go ahead and plan their finances and think about a business loan if required

What is a Cloud Kitchen?

To put it very simply, when you offer restaurant-quality food to people directly in their homes without an actual restaurant-like space, you are basically running a cloud kitchen. Essentially, a cloud kitchen is a restaurant business that you run without actually bearing the overhead costs that you would have to otherwise bear as the owner of a physical restaurant. Many entrepreneurs have chosen to open cloud kitchens since the beginning of the pandemic owing to the restrictions that were placed in the initial months. Since then, cloud kitchens have grown in popularity as a small business idea. If you are thinking about opening one of your own, read on to know how you can do that. Wondering how a cloud kitchen works? Read on to find out.

How Does a Cloud Kitchen Work?

There are a few things that you will need to start a cloud kitchen business. First, you will need a rented space to set up your kitchen. Second, you will need the equipment for cooking the food you deliver via your cloud kitchen. Third, you will need a chef or two along with a team to handle multiple orders.

 Fourth, you will need to set up delivery infrastructure; you can tie-up with the likes of Zomato and Swiggy that will help you generate orders and deliver the same to your clients. Fifth, you will need some kind of online presence of your own and establish communication channels so that your customers can reach out to you for orders or just to give feedback.

 

You will receive all of your orders either online or through phone. Once your chef has prepared an order, your delivery person or a third-party delivery partner will deliver the same to the customer. Owing to all these conveniences, you can set up a cloud kitchen anywhere these days, from a warehouse to an apartment. It is entirely up to you. Does a cloud kitchen sound like a lucrative business idea to you? Are you now inclined to open one? Read on to know how you can do so.

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How to Start a Cloud Kitchen Business?

Following are the tips that you can use to set up a successful cloud kitchen:

  • Pick a Demographic: Do you want to serve families, students yearning for home-cooked food, or gym goers who prefer a protein-rich diet? Deciding what section of the society you want to serve will help you determine a menu and the kind of service you would like to offer.

  • Pick a Concept: You must decide the kind of cuisine or delicacy that you would want to serve as a cloud kitchen owner. Do you want to serve South Indian food with a twist or do you want to make protein-rich and gluten-free ice creams for the health conscious? You must clearly define the kind of food you want your cloud kitchen to be known for before going forward.

  • Choose a Location: Once you have decided on the kind of people that you want to have as your customers, you must pick a viable location to set up your kitchen. You should ideally take two main factors into consideration; the proximity of your kitchen to your target audience and the cost of renting the place. Once you have picked a place that you deem to be viable, you should start figuring out ways to lay out your kitchen.

  • Pick the Right Staff: Your chefs can basically make or break your cloud kitchen business as it all comes down to the quality, taste, and nutritional value of the food you offer. If you are your own chef for the initial months, you must be absolutely sure about your cooking skills. If you are hiring chefs, you need to ensure that they have sufficient experience in making the kind of food that will eventually become the identity of your cloud kitchen business.

  • Get the Correct Permissions: If you want to run a cloud kitchen business, there is no way you can do so without getting relevant and appropriate licences. As a cloud kitchen owner, some permissions that you will need to get include GST licences, a FSSAI licence, a No-Objection Certificate (NOC) from the owner of the space you are renting, and a fire licence. Make sure that you have each such clearance to avoid legal troubles, or worse, shutting down in the near future.

  • Get the Best Equipment: The kind of utensils and machinery you will need to cook are just as important as the rest of the things on this list. You should know what kind of cooking pans, bakers, heaters, and utensils you will need to cook quality food and invest in the same.

  • Get a Delivery Partner: The next thing you will need to do is figure out a way of making sure your product reaches from point A to point B. Either you can get a delivery partner on board or hire a few people to do the delivery for you. Both options have their pros and cons. While third-party delivery partners also help you generate orders and leads, you can cut down on the response time if you have your personal fleet of delivery people. It is up to you to decide.

  • Put a Marketing Strategy in Place: As a cloud kitchen owner, you must be fairly aggressive in terms of marketing. You need to have a sound marketing strategy and put aside a budget for the same so that you can make your presence known. You can also use social media to reach out to your target customers as it is a marketing tool and communication channel.

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What are the Potential Challenges With Cloud Kitchens?

As a cloud kitchen owner, you may have to deal and find a workaround the following challenges:

  • Technology-Related Issues: Since most of the business that you will generate as a cloud kitchen owner will be through the internet, any downtime in the servers could temporarily halt your operations. It is due to this reason why you must set up alternate ways in which your customers can reach out to you, like a centralised call centre.
  • Fees Paid to Intermediaries: If you have partnered up with an online food delivery service, chances are the fees will eat up your margin. On the other hand, having a fleet of delivery persons would just be an additional cost for you. At the end of the day, both these options come with their own set of positives and negatives. You must choose how you want to get your food delivered wisely.
  • Lack of Communication: Since you are running a food delivery business without having a physical restaurant space, getting feedback or addressing the grievances of your customers could prove to be a tricky affair. Additionally, the more time you take to address what customers have to say, the more you expose yourself to bad reviews. However, it does not have to be that way. You should put a dedicated feedback/complaint redressal team or hire a team of people to address these customer issues. Whatever route you take, you must ensure that you give the customer an impression of you being a responsive venture that is always open to suggestions.
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