A novel Start up Concept that emerged during Covid 19
The strike of a terrible pandemic like COVID-19 which expanded in March 2020, affected millions of lives, and soon, countries had to implement lockdowns like never before. It was a rough phase for many kinds of businesses around the world. People suffered from the financial crisis, loss of jobs, and whatnot. Amidst all this, food businesses were also severely affected.
In the meantime, a new concept emerged in which people started ordering food that tastes like food in good restaurants but is also close to home-cooked meals. This concept helped masses enjoy restaurant-like food at their homes and made it equally profitable for food- entrepreneurs. This concept is known as Cloud Kitchen, and experts accept it as the future of the food industry. Many people are unaware of this revolutionary concept for the world. So let us explore about this concept a little more and understand its profitability for the market and masses.
WHAT IS CLOUD KITCHEN?
Cloud kitchens are also known as ghost kitchens or virtual kitchens. It is a trading space that gives food businesses the provision and services to make and deliver food items with minimum overhead. According to a research, food delivery orders grew by more than 15% from 2019 to 2020, and the food delivery market is expecting to see a steep growth in coming years.
Now restaurant owners and food entrepreneurs are adapting cloud kitchens as the perfect business solution to catch this growth in food delivery order. In short, a cloud kitchen aka ghost kitchen refers to a place where food is made and delivered door to door by taking meal orders via calls or messages. It is similar to an online food ordering system but at a much lower cost involvement. Firstly they do not serve tableware services. They prepare food and deliver on a call, or they tie up with food ordering portals to make sure it reaches a large base of customers.
HOW TO START A CLOUD KITCHEN? (Requirements and Steps)
It requires several documentation and maintenance, compliance of various factors to set up a cloud kitchen. For instance, health/trade license, FSSAI license, pollution certificate, fire, and safety license, shop and establishment act are some of the documents required.
Then there are factors like capital to start a franchise, availability of raw material which are also crucial for the startup of a cloud kitchen. To further improve the sales, you can register your kitchen with different online ordering platforms.
With proper documentation and fulfilling other basic criteria, you can start a cloud kitchen at your home only which saves up your expenses and lots of effort in looking for a decent place with the right equipment scaled down substantially.
The basic steps required in the startup of a cloud kitchen are:
- Determine the type of food business
- Get a place to work
- Get the required cooking and packing equipment
- Get the inventory or the raw materials
- Recruit reliable staff
- Tie-up with online ordering platforms
BENEFITS OF A CLOUD KITCHEN
The dine-in restaurants require a very high price for their maintenance which is not the same for a cloud kitchen. Since a cloud kitchen neither requires a huge place for customers to sit nor a serving porch location and therefore it can be managed at homes. So the main focus shifts from beautification and maintenance to the quality of food preparation, packaging and its delivery.
During this pandemic, people look for less expensive food rather than traditional expensive dine-in restaurants. Also, people prefer eating at homes during this pandemic rather than going out. Food with reasonable prices and delivery at homes is one reason for the success of cloud kitchens in this pandemic.
A cloud kitchen has lower startup costs concerning dine-in restaurants since it only requires raw material, food, kitchen equipment. Janitorial fees while traditional restaurants require furniture, more staff, and fancy utilities.
There is a bright future, If the investor in this business keeps in mind the quality and capital.
IS IT WISE TO START A CLOUD KITCHEN DURING COVID TIMES?
DurIng this pandemic, cloud kitchens have had a huge profit since several measures like lock downs, partial seating in restaurants , fear of catching Coronavirus at a crowded place, norm of social distancing were enforced and restaurants are closed, so there has been a shift from dine-in restaurants towards home-delivered food.
Due to the rise in cloud kitchen activity, delivery of goods has become very significant and many people are using online websites to order goods like food and groceries. Online food delivery has been growing rapidly for the last four years, and COVID-19 has significantly impacted it further.
During Covid, the cloud kitchen business has given profit to a lot of people and has impacted the lives of many. The stats also don’t deny there has been a quantum jump in this sector in the past few years. With proper measures and adequate investment in this business, it can be held as a profitable business.
CHALLENGES OF SETTING UP A CLOUD KITCHEN
Among all the rosy scenarios, there are certain challenges also that you must be aware of. Nowadays there is a lot of competition in the market. First, the price of food should be as low as possible because customers want good food at a lower price. It has been noticed that a majority of the customers are so cost-sensitive that sometimes loyalty becomes secondary. There is a need to find a good and attractive at-the-moment deal, and the quality of food should be very good since it is related to the health of people, which you cannot ignore.
People associated with the food businesses believe that cloud kitchens are running more than restaurants and hotels in Covid times and there are some challenges as almost in any other business. Orders are sometimes less in number due to the situation and one needs to keep pricing low and optimum to attract customers.
Hence, the cloud kitchens are forced to give the client’s discounts, but this starts a cycle of increasing discounts and coupons for the customers in the future. There has also been a problem with technological expenses for many people who do not have much to invest in. Technological expenses require devices for communicating directly with food delivery apps which have been a major issue for many new cloud kitchen owners.
The business of cloud kitchen has both its pros and cons. This business will contribute majorly to the economy from the tertiary sector in the future, as various factors influence this business. Cloud kitchen got a great boost during the pandemic. The real estate in big cities costs a bomb, and thus the concept of cloud kitchen sounds relatable to a lot of businessmen. The cost of setting up a cloud kitchen is lesser than starting a restaurant.
The risk factor is lesser, making this a beneficial model for investment. There are certain flaws in this business, as the availability of tech expenses and less capital for opening a quality franchise, but these can be overcome sooner or later. The pandemic has given the much-needed jump required as many homemakers have become entrepreneurs with setting up their cloud kitchens at home. It would be interesting to see if the cloud kitchen business takes over the restaurant business in the next few years.