A Basic Guide to Cloud Kitchen

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Ever since the ‘delivery-only’ business model made its mark in the food industry, more and more brands have been in the limelight. We are talking about the cloud kitchen.

Alone in Global Pandemic, the at-home food delivery culture grew by 167%, and cloud kitchen proved itself as the finest solution by appropriately catering to customers’ requirements.

In the post-pandemic era, the growth of the cloud kitchen concept is consistent with no stops. The momentum in cloud kitchen demand has peaked over the past few years. But some folks are still ending up with the question, what is a cloud kitchen?

To them, it is still something new they daily get to hear from restaurants and food brands. Therefore, this article is entirely dedicated to a brief guide on Cloud Kitchen. What exactly is it? How does it operate? And what can you do to get it started? The entire information is revealed in this article.

Besides, you will get a bit of extra helpful info on the cloud kitchen through this guide. This will cover the following –

  • What is a cloud kitchen with a basic concept?
  • What is the business model of cloud kitchen?
  • Things to consider when starting a cloud kitchen
  • How to smoothly operate a cloud kitchen?
  • How to grow a cloud kitchen?

And even more. So without stretching it further, jump straight to the guide which has brought you here.

What is a Cloud Kitchen?

A cloud kitchen is a business model that focuses exclusively on takeaways and is often referred to as a “delivery-only” kitchen. Simply put, these kitchens typically do not offer customers dine-in facilities, but they serve a restaurant-like experience.

, food businesses with small physical outlets check in this “Delivery-Only” business model to deliver food to the customer – at their requested location. Physical outlets are often used for food preparations and order management only.

Besides, all orders are accepted online via an aggregator platform or an online food ordering system in the cloud kitchen.

In short, these kitchens are designed to serve customers with delivery-friendly restaurant services. Also, there’s no limit on how many brands or menus you can launch.

These tech-enabled kitchens benefit from food applications, websites, and online portfolios in multiple ways to attract online sales for the food items they make.

It must not be too confusing to answer what is a cloud kitchen now. Next, we will figure out the cloud kitchen business model in depth to get a clear insight into the “delivery-only” kitchen.

Understanding Cloud Kitchen Business

“Food Preparation Unit” and “Online Food Delivery Services” are the two main components of the cloud kitchen business.

But above all the mainstream components, Food Preparation Unit – also refer to as the production unit – plays a chief role in the entire cloud kitchen business cycle. It is a place where food is prepared, packed, and dispatched to the customers.

Online food delivery services support this business cycle of cloud kitchens by guaranteeing the timely delivery of the products ordered online by the customer.

What is a cloud kitchen? You know it well. Now things may appear relatively straightforward, but they aren’t exactly!

There’s always a digital platform involved between these two components that act as a customer hunter for these kitchens. However, we aren’t taking a privately owned restaurant website or delivery websites into account.

They are helpful, no doubt! But in the end, they aren’t appropriate options for small businesses having less capital for the investment.

This is where online food ordering systems – like App2Food – come to their rescue.

An online food ordering system acts as a gap filler between demand and supply for a restaurant’s operations. Simply put, this software lets restaurants build their portfolios online and attract customers to ensure a successful run of cloud business operations.

Things to Consider When Shifting to Cloud Kitchen

Knowing what a cloud kitchen is isn’t enough. There are a few other necessary things considered by almost every restaurant before entering this business horizon.

Understanding Inventory
Inventory should be taken seriously when transitioning to a cloud kitchen. During the transition, most restaurants use software for cloud kitchen operations to automate inventory management tasks. Simply put, the software may help generate inventory consumption statistics.

Such as what inventory is being increasingly utilized. Whether dishes are being prepared appropriately or standardized practices have been followed to generate more output from the inventory.

Early preparation of inventory is helpful to optimize the operational costing in the processes hereafter. In short, deploy smarter tools when shifting to the cloud kitchen business model.

Central Order Tracking
There’s always centralized order tracking software available in the cloud kitchen operations. The software foresees all good and bad things happening within a business. Such as, an online order management system lets you run multiple kitchen brands while managing orders at the same time.

Everything from the orders executions to the successful delivery of orders is highlighted on these systems. The programmatic algorithm used in these systems is an additional helping hand that makes all good things available on a single interface.

Telephonic Order Acceptance (Optional)
Telephone orders still exist and aren’t going anywhere in the coming years. Across many restaurants in the U.S. operating as a cloud kitchen, call center panel features are integrated with the POS system to route customer orders to the kitchen.

Most orders are placed either via a website or an application but in some events, customer place orders on hotline numbers. And being a responsible business owner, if you endeavor to cater to customers’ dynamic requirements, you can enable the telephone order acceptance feature at your restaurant.
Initially, you can do the job by yourself, but you can also hire a representative to attend the calls as your business grows larger in size.

Streamlining Menu
The menu is the king of the cloud kitchen operation. It will be speaking in this digital world for you. So try making it attractive enough that it stands out above the competition. But pay even more attention to the management section.

For instance – the cloud lets you build five different brands, which means you will be handling five different menus simultaneously. To avoid disturbance or complexities, an online food ordering system combined with POS integrates different brands into a single dashboard that streamlines the restaurant menu.

Optimizing Operations
Optimized operations are worthwhile as cloud kitchen bring up orders in heavy amounts right from the first day of launching. Speedy order execution combined with quality taste should be served together to impress a customer.
Also, orders must not be mismatched, or there must not be faulty orders that tend to slow down the restaurant’s operational efficiency. To make it happen, most tracking-based tasks should be automated, and only necessary and easy-to-use equipment must be deployed inside the kitchen.

Total Sales Overview
By the end of the day, get your eyes on the online food ordering systems and POS system and have an overview of total sales made in a day. Check it on a weekly, monthly, and yearly basis hereafter to figure out how much you have progressed so far.

Running a Cloud Kitchen
Above mentioned are the few important things you will require for the cloud kitchen setup. But now we are heading to bring a cloud kitchen into being for your business. These are the five important aspects of this ‘delivery-only’ business model.

Site Preparations
Cloud kitchens don’t have a storefront or occupy a dine-in space to welcome customers. All services are offered remotely via a website. Therefore, as a starter, you will first create an online portfolio to enter the cloud kitchen model. However, investing in a private website isn’t required at all.

You can check in online ordering systems like – App2Food – to get a customizable website at a small monthly fee. Don’t worry; it isn’t going to impact your business profitability in any way. Keep your menus enticing and catchy to ensure the customer can’t hold themselves from placing the order.

Accepting Orders
Online food ordering systems offer customers and restaurant operators flexibility in order placements. So have their support and make it easier for your team as well as for the customer.

Accepting orders through these platforms makes sense. These platforms provide users peace of mind as the cost of repairs and developer services are borne by them entirely. Restaurant operators need to pay a small monthly charge only.

Preparing Orders
Cloud kitchen operations are quite similar to regular restaurant kitchens. The only difference in this business concept that may make operations handling a bit challenging is “real-time order details.”

If they aren’t being fulfilled within the timeline, they can be rejected and can even contribute to a bad user experience. So make sure you denote this point as a drawback when learning what the cloud kitchen is.

There must be a precise balance between demand and supply in online order processing as they are going to happen faster than order tickets transferred between waiters and chefs at dine-in restaurants.

Packaging is an indispensable subject, worthwhile to consider, especially when you are delivering food via a food delivery service provider. By not doing this, branding benefits may be halted for your business.

Food packaging or parcels allows the restaurant to give their food items a personalized touch with contact details and brand logo mentioned on it. It ensures customer remember your brand and place orders exclusively from your restaurant in the future.

Packaging should also be strategically opted to ensure food safety and serve an excellent customer experience.

It should not take more than 45 minutes for the order to be delivered to the customer’s doorstep from the time of placing the order. But if your orders take more time, consider upgrading your delivery services because it tends to ruin your relationship with the customers. Go through the three best options and find an ideal delivery option that fits your requirements.

  • Food Delivery via Online Food Aggregators
    Food delivery via Aggregators is one of the fastest ways to get food delivered to the customer. Since the customer’s details and delivery address is already available on the aggregator platforms, delivering food to customers happens in minutes.
  • Food Delivery via Third Party
    Third-party delivery service providers can be a great alternative to ensure the instant delivery of orders. But these service providers work on a commission-based model. This implies an extra delivery charge will be added to the pricing of the food delivered. As soon as the order is confirmed, details are sent to a delivery executive who then picks up the courier from cloud kitchen and gets it delivered to the customer next door.
  • In-house Delivery Fleet
    An in-house delivery fleet is better than anything else because what is the cloud kitchen concept is you need to ensure door-to-door delivery of orders. Hence, you need a team of fast and responsive executives who can deliver the food on your behalf to the customers. Delivery errors can come from third-party service providers but not from the in-house delivery fleet, as a single brand manages everything. But it can also prove to be an expensive deal.
How Can a Restaurant Grow On Cloud Kitchen Business Model?

Cloud Kitchen doesn’t promise guaranteed results, as it has also grown competitive over the past few years. However, experts utilize special techniques to grow in the industry. Hence, it becomes our next most important discussion of the topic.

Marketing Cloud Kitchen Business

Marketing is prioritized everywhere, and so cloud kitchen operators as well are expected to pay great attention to it. To market a cloud kitchen, you can either use an organic strategy or can drive faster results from paid campaigns. But before going ahead, respect a standard protocol of marketing first.

Creating an Online Brand
Over 77% of market leaders claim that branding is critical for their business growth, and the Internet is one of the best mediums to do that. Online branding doesn’t just fetch instant results but uses data analytics. You can also retain customer data in your database, which can be used for business promotion in the future. The best sources for creating an online brand are –

A website is an online portfolio that makes a brand accessible on search engines, e.g., Google, Yahoo, or Bing. It extends the reach of your brand, product, and services to customers online. However, extensive capital may go into the process of website building and running; that’s why most people prefer outsourcing an online ordering system.

Social Media
Social media platforms are one of the finest ways to approach customers and draw them directly to your business model. There are over 4.59 billion social media users around the world. In the U.S. alone, over 84% of adults are active on these platforms. In a nutshell, they are the best gateway to solid brand building.

SMS Marketing
Once you have established yourself on the Internet, start launching your campaigns. Start with SMS marketing and entice your existing customers over the phone. Some study reveals over 75% of consumers want to receive a text message from a brand to confirm services.

Email marketing
Email is one of the best sources for lead generation. More than 89% of world marketing leaders harness the power of email marketing to generate leads. It’s worthwhile to take special lessons on it after learning what cloud kitchen is.

Revolutionize Your Operations

As you have established yourself on the Internet, you can proceed to improve your operational efficiency. Upgrade your POS system, integrate data-related tasks together and centralize workflows to ensure that the most important things are on the main focus.

Expanding Cloud Kitchen

Focus on expanding the business only when you have all the necessary components working properly within the business’s infrastructure. It’s worthwhile to avoid unnecessary expenses. Marketing and upgrading menu quality are the two essential things to take into account.

Key Performance Indicators of Cloud Kitchen

Whether a cloud kitchen is working for you is an important metric that needs to be properly assessed right after the first few months of launch. Right after knowing what a cloud kitchen, getting well-versed with its business model, overall cloud kitchen assessment is the next critical thing you are advised to do.

Customer Loyalty
A business has a higher chance of survival and growth if it has more good numbers of loyal customers compared to customers that come and go. You can call them a fan of a business who are interested in a particular brand’s service and dislike going to other brands. Some market research reveals that over 70% of small businesses earn their revenue from repeat customers over new ones. Each of these customers can be loyal to your restaurant, either for the unique food quality you serve or for any additional factor that makes them feel proud of being your customer.

Powerful Promotions
Powerful business promotions largely drive cloud business success. By the term ‘promotion,’ we meant spreading brand awareness and making more people aware of the brand’s existence. Promoting your business across social media and other online networks is also included here. Powerful promotions are a true indicator of business expansion as it enhances the probability of the brand being recognized by more-n-more people in the city.

Accuracy in cloud kitchen workflow is another solid indicator helpful in identifying how long a restaurant brand can go on this business model. Simply put, whether a restaurant is handling its orders effectively and whether the cloud kitchen is serving its purpose and meeting customers’ requirements on time. Has food quality been improved or prevented from being affected by the innovative packaging solution? All these important metrics must be assessed cautiously to verify precision and accuracy in cloud kitchen productivity.

Competitions in cloud kitchen space continue to soar. Luckily the business concept is still in its early stage; there’s much to come ahead in the future. Thus, preparation beforehand is worthwhile. Your restaurant niche can be competitive, but a cloud kitchen serves the benefits of running experiments. You can use the tracking data and make up a strategic mind with data-driven insight. It will help you identify whether or not your restaurant has a fair possibility to flourish in the cloud environment.

Even though cloud kitchens run on the delivery-only business concept, smart employees are still required. Cloud kitchens must hire manpower that can handle computer-operated activities by themselves, qualified enough to handle any unforeseen challenge. A great team is a prime indicator of whether or not a restaurant will succeed in its execution in the cloud kitchen. So consider the best hiring for your brand.

Advantages and Disadvantages of Cloud Kitchen

What is a cloud kitchen and how it works is no longer an unknown subject. But, it’s time to break down the major advantages and disadvantages attached to the usage of Cloud Kitchen. So take a look –

Advantages of Cloud Kitchen

  • Affordable startup cost
  • Added convenience
  • Increased reach
  • Lower overhead
  • Optimized delivery experience
  • Less capital requirement
  • Less staffing required

Disadvantages of Cloud Kitchen

  • Rising competition
  • Multiple brands
  • Uncontrollable orders
  • Difficult to adapt to the modern workflow
  • Confusion in tasking sometimes
Final Words

Cloud kitchens are a tech-enabled business model for restaurants that eliminates the requirement for dine-in facilities or physical outlets. All food items are delivered to customers as well as orders are accepted via online mode. This means you can launch your own cloud kitchen at minimal investment capital or real estate costs. Cloud kitchen, what it is, shouldn’t be an unfamiliar thing for you now. If you are also making up your mind to start a cloud kitchen but have no idea where to get started, the App2Food online ordering system makes it easier. So contact and experience limitless growth of your restaurant business.