What is a Cloud Kitchen? How do Cloud Kitchens Make Money?

A cloud kitchen is an innovation in the food space made possible through the use of technology.

In simple words, a cloud kitchen is a restaurant re-imagined!

A typical restaurant serves food through a seating or take-away arrangement. A cloud kitchen is a restaurant sans such dine-in or take away arrangement.

A cloud kitchen operates solely on the home-delivery model, where orders are accepted solely over call or the internet and the food which is prepared in-house by the kitchen staff is delivered to the location of the customer.

Here are the typical features of a cloud kitchen:

• A cloud kitchen is a restaurant that operates on the delivery-only model where there are no dine-in or take-away options for customers.

• In case of a typical restaurant, location matters. A cloud kitchen located anywhere – what matters is the brand name and the quality of food served.

• A cloud kitchen may serve only a particular cuisine or branch out to multiple cuisines. There may also be multiple brands under a particular cloud kitchen startup each catering to a particular cuisine.

• Cloud Kitchen restaurants may also work with food-aggregators like Swiggy or Zomato to reach out to additional customers.

Why do we call it a cloud kitchen?

When we say we are storing a digital file on the “cloud”, we mean that the data is stored in a server which could be located anywhere in the world. Here, we are not concerned about the physical location of the server.

Imagine this for a cloud kitchen, we are placing an order online, not concerning ourselves with the actual location of the kitchen where the food is being prepared.

How do Cloud Kitchens Make Money? What is the Revenue Model of Cloud Kitchens?

Well, a cloud kitchen makes money much in the same way a typical kitchen would.

The revenues generated from the sale of food less the costs of running the kitchen typically represents profits for the cloud kitchen.

Typical costs for a cloud kitchen include:

1. Space rentals for setting up the kitchen. Here the cloud kitchen model offers a cost advantage over other restaurants given the fact that kitchen need not be located in a prime area commanding premium rentals.
2. Equipment cost.
3. Cost of ingredients.
4. Staff costs which include salaries to chefs, delivery personnel and support staff.
5. Costs of running and maintaining a website for accepting online orders.
6. Brand promotion and marketing costs to ensure brand recall among customers.

Hope you found our presentation on cloud kitchens informative. Do share your views using the comment form below.