May 12 • 5 mins read
How to Start Cloud Kitchen: 5 Proven Steps to Launch and Succeed
Cloud kitchens have emerged as a highly effective solution for managing high rental costs and reduced profit margins in the restaurant industry. With the advent of cloud technology, online ordering, and the ongoing Covid outbreak, digital restaurants have quickly become a formidable format, offering a smarter way to run the business amidst extreme competition and rising costs. The Global Cloud Kitchen Market is estimated to reach USD 71.4 Billion by 2027, with a CAGR of 12.0% from 2021 to 2027, indicating significant potential for this format. This article provides an in-depth guide on how to start cloud kitchen business, covering everything you need to know.
How to Start Cloud Kitchen in India
Market Research and Planning
If you’re looking to launch a cloud kitchen in India, conducting in-depth market research and planning is vital to achieving success. To begin, it’s crucial to gain a comprehensive understanding of the market landscape and identify potential areas for growth. This involves analyzing your competitors, studying consumer preferences and trends, and assessing the demand for your cuisine or concept.
Once you have a clear understanding of the market, you can define your target audience and create a menu that caters to their specific preferences and requirements. Careful consideration of your location is also essential, taking into account factors such as accessibility, rent, and zoning regulations. By conducting extensive market research and planning, you can make informed decisions that increase your chances of success in the highly competitive world of cloud kitchens in India.
When starting a restaurant, obtaining the necessary licenses is a critical part of the process. To ensure smooth operations, it is essential to secure licenses such as the FSSAI license, municipal health trade licenses, GST registration and fire licenses in the first month of business. However, obtaining these permits can be tedious and time-consuming, so it is recommended to get in touch with an agency to handle the process. The total cost of acquiring all the required permits, excluding the FSSAI license, typically amounts to around 10,000 INR.
Choosing the right technology to accept orders is another crucial consideration. Online ordering and delivery platforms like Swiggy, Zomato, and Uber Eats can accept online orders and deliver food to your customers, typically charging 18-30% of your revenue per order. Integration fees may apply for some FoodTech companies.
Since a cloud kitchen primarily relies on its online presence to attract customers, it is essential to have a website with the option to order food online. Several website developers are capable of creating a highly optimized website that simplifies the food ordering process and provides effective customer management and order tracking systems.
To establish a successful cloud kitchen in India, it is crucial to invest in a well-equipped kitchen. This requires procuring high-quality equipment and appliances capable of handling the demands of a commercial kitchen, such as ovens, stovetops, grills, fryers, and refrigerators, depending on your cuisine. Moreover, implementing a robust food storage and inventory management system is essential to maintain ingredient freshness and quality, and to minimize food wastage.
In addition, designing an efficient kitchen layout that facilitates smooth operations and easy access to equipment and supplies can further streamline your cooking process and maximize productivity. By prioritizing these critical factors, you can establish a well-equipped and efficient cloud kitchen that can succeed in India’s fiercely competitive food industry.
Staffing and Management
The success of any restaurant depends on the quality of its team, and the Chef holds a vital role in both food preparation and menu creation. This is particularly true for online kitchens, where efficient teamwork is essential for meeting the demands of a rapidly growing customer base.
To run a successful online kitchen, it’s recommended that you have a minimum of five employees, including two Chefs, two helpers, and one housekeeper. The salaries of the staff members will depend on their level of experience, with an average salary for a Chef at Commis level 1 ranging from Rs.16,000 to Rs.18,000, while helpers and other staff members earn between Rs. 8000 to Rs. 10,000 based on their responsibilities.
Along with kitchen staff, you will also need two employees for delivery and one to manage online and telephonic orders. We suggest partnering with third-party delivery services that operate on a per-order basis, as this can help reduce your overhead costs.
While a uniform may not be necessary for a cloud kitchen, it’s essential to have a dress code to maintain discipline, cleanliness, and hygiene. Additionally, provide your staff members with essential equipment, such as masks, hair caps, and gloves, to ensure that they can maintain proper hygiene and safety standards.
Remember, building a great team is crucial for success in the food industry, and investing in your staff members’ well-being and professional development is essential for long-term success.
Marketing and Promotion
Marketing and advertising play a critical role in a restaurant’s success, particularly for a cloud kitchen, as it represents the primary source of getting new orders. Since cloud kitchens save on location and maintenance costs, allocating funds to marketing becomes even more important. Online marketing is particularly effective for cloud kitchens. To start, it’s essential to list your restaurant on popular review sites like Zomato, Tripadvisor, and Burrp and encourage positive reviews from your regular customers.
Additionally, advertising exclusive deals and discounts on popular social networks like Facebook and Instagram can be an effective way to reach potential customers. Collaborating with food bloggers and influencers can also be a powerful marketing strategy. By implementing these tactics, cloud kitchens can effectively promote their brand and drive greater success.
Financing can be a critical factor in the success of your cloud kitchen business in India. There are several options available to consider. Bootstrapping is a viable option where you use your own funds or seek assistance from friends and family. Crowdfunding is another alternative where you can raise funds from a large number of people through online platforms. Angel investors and venture capitalists are also potential sources of funding, offering not only financial support but also valuable business guidance and networking opportunities.
Bank loans are a more conventional option, with various choices available, such as secured loans, unsecured loans, and working capital loans. Government schemes like the Pradhan Mantri Mudra Yojana may provide financial assistance as well. Small business loans and business credit cards could be other feasible options, providing flexible terms and lower interest rates than traditional bank loans.
As a last resort, a personal loan could be considered, although the potential impact on your personal finances should be carefully considered. Understanding the various financing options available to you can help you make informed decisions and secure the necessary funds to launch your cloud kitchen business successfully.
Starting a cloud kitchen business in India can be a lucrative opportunity for aspiring entrepreneurs. With the rise of online food delivery services, the demand for cloud kitchens has increased exponentially. By following the steps we’ve discussed in this article, you can lay the foundation for a successful cloud kitchen business. It’s important to do your research, plan carefully, and execute your vision with passion and dedication. With hard work and perseverance, you can turn your dream of owning a cloud kitchen into a reality. So what are you waiting for? Start planning today and let your culinary journey take off!