Cloud Kitchen Business Model and How it Works?

Cloud Kitchen Business Model and How it Works?

Cloud kitchen is a contemporary model of food business which aims to fulfil consumer’s cravings for food through doorstep delivery. Such a kitchen is also known as ‘ghost kitchen’ or virtual kitchen as they mostly don’t have physical visibility to the customers. Thus, cloud kitchens need no lavish set up in the form of a restaurant to attract customers for having their food. 

With the increasing demand for online food delivery, cloud kitchen is gaining popularity among food entrepreneurs. The concept is food delivery-oriented and thus, the delivery kitchen does not provide spaces for dinners to din-in. More and more food businesses are opting for cloud kitchen spaces for increasing profit margin and customer reach. Before thinking of developing a cloud kitchen or working through such a kitchen, it is advisable to learn about the different existing models of cloud kitchen.

Independent cloud kitchen

Independent cloud kitchen is the most typical form of cloud kitchen where a virtual restaurant operates having no physical storefront visible to customers. This virtual kitchen model helps small food business owners cut down on capital investment due to the absence of service and maintenance cost involved in a standard restaurant.

How they work

Such a cloud kitchen operates in a compact cooking set-up of approximately 500 to 600 sq ft. A unique feature of independent cloud kitchens is that it specialises in a single cuisine only. These kitchens are fully equipped with professional cooking tools for optimising delivery-oriented operations. Foods cooked in such a kitchen can be put up for sale only through online delivery apps. These kitchens mostly self-manage their delivery services by their in-house staffs but may also depend on delivery agents for delivering their food to the consumer.

Multi-brand cloud kitchen

This is a tech-specialised cloud kitchen model where a single mother brand operates through multiple food brands, each specialised in a cuisine having high demand. This cloud kitchen model aims to meet the demand for a popular cuisine in a particular neighbourhood. As all the brands share a common kitchen for operation, the operation cost remains significantly low in such cloud kitchens.

How they work

This cloud kitchen model specialises in multiple cuisines through various brands. Each brand is strategically positioned as separate establishments specialising in a single dish or cuisine. Brands operating under such a model tries to identify the most ordered dish in an area and then supply it in that area where a less number of competitor brands deliver the same item. The demand for a cuisine in a particular area is analysed by tracking the online ordering records, demographic details of native residents, social listening, etc. Only online orders are accepted in this delivery kitchen model and the food delivery is fulfilled either through an aggregator or by their own delivery staff.

Hybrid cloud kitchen

This model is slightly different from an authentic cloud kitchen model. It is a partial cloud kitchen where a single food brand operates in a storefront. Even though such kitchens have a store, they don’t offer dine-in services. The brand can have multiple physical outlets visible to customers but operates in the way just like a typical cloud kitchen. 

How they work

Food brands operating through a hybrid cloud kitchen can frame a multi-cuisine menu depending on customer demand. They also offer seasonal menus to meet occasional demands for particular dishes like biryani, cakes, pizza, etc. The unique feature of hybrid cloud kitchens is that consumers can go visit their store and see how the foods are prepared and services are managed. However, customers can only take away their order or place their order online for availing food from such a kitchen.

Delivery app owned shell cloud kitchen

This is a unique aggregator-based cloud kitchen model. Restaurants working through this model use a particular delivery agent who owns the kitchen space in which they operate. It is also commonly known as ‘shell kitchen’. As multiple restaurants can function under one roof in this model, it is a good option for small food entrepreneurs to start selling food without lump-sum investment. Also, the association with a single reputed delivery vendor helps these partner brands to increase their brand awareness through the delivery app.

How they work

This form of cloud kitchen operates as a commercial kitchen space where new or established restaurants can rent a kitchen and operate side by side with other restaurants. The owner delivery app only provides an empty kitchen space with basic infrastructure such as ventilation, gas pipelines, electricity supply, etc. Each restaurant has to bring their own cooking equipment, recipes, staff, etc. They can take delivery records of the owner delivery app and frame their menu according to customer demands. Also, such partner restaurants gethigh visibility on the delivery app ensuring better customer reach. The deliveries will be managed and executed by the owner app only.

Delivery app owned built-in kitchen model

This app-oriented cloud kitchen is almost similar to the above model but with some added features. Here multiple brands work in a single fully equipped kitchen owned by a delivery app owner. This cloud kitchen model also has a storefront accessible to people. The network restaurants just need to manage the food preparation part while the owner delivery agent takes care of equipment supplies, order reception as well as food delivery.

How they work

Under this model, the owner delivery app provides not only the kitchen space but also customised cooking stations, cooking equipment and other necessary facilities to optimise the food preparation process. The restaurants just need to rent a kitchen space during their time of operation and they will receive online presence on the owner delivery app through which customers can place their order. As already mentioned, people can visit the store of such a kitchen and see for themselves how their food gets prepared. However, orders from such restaurants can only be placed online through the owner delivery app.

Outsourced cloud kitchen

Outsourced cloud kitchen is an innovative concept in which most of the food preparation process is conducted in a centralised cloud kitchen. However, the final touches to the dish is given by the partner restaurant and then again delivered through the cloud kitchen owner brand. This kitchenconcept is beneficial for restaurants receiving huge orders on a regular basis as the work is shared and assisted by the cloud kitchen brand.

How they work

In this form of cloud kitchen, the owner buys and stores raw materials, receives orders and then pre-prepares the dish in its own centralised kitchen. However, it sends the dish to the partner restaurants for final touch-ups by their in-house chefs. Once ready, the dish is again picked up from the restaurant and the order is delivered by the cloud kitchen company. Orders are received only online by the cloud kitchen brand and multiple restaurants can align with the brand to get assistance in food preparation and delivery.

Also, Read: Kitchens Centre raises $500K

Co-working Cloud Kitchen 

The co-working cloud kitchen model involves a large number of available infrastructure facilities. These facilities can be rented by different restaurant brands to operate their business from different locations. These multiple kitchen spaces are situated strategically with separate units of the kitchen for each brand, which is provided with the essential kitchen amenities and facilities. These cloud kitchens are provided with certain facilities such as provisions of security, water and electricity supply, maintenance of the appliances and so on. 

How they work 

The co-working cloud kitchen space enables multiple restaurants to rent a cloud kitchen from a single entity. However, each brand is allowed to maintain their individuality, as they are provided with their own working space which does not overlap with the other restaurants or cloud kitchens operating in the same or different location. Basic amenities such as maintenance and security facilities are provided under this business model. 

Cloud kitchen business models are still evolving and some newer and more convenient forms of cloud kitchen can appear in the near future. If you are looking to start a food business with a small capital, cloud kitchen is the best option for you to prosper in the ever-flourishing food industry.

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