During COVID 19, a large number of Cloud Kitchen surfaced since the entry barrier was much lower with CAPEX lesser than 50 lakhs. Lot of home makers and IT professionals who were not adept in the food business entered the cloud kitchen business. Little did they know unless you have food costing below 20%, the food aggregators will eat all your margins. So, in the recently concluded National Restaurant Association India (NRAI) summit Kolkata, I harped on this important dimension.
A cloud kitchen, also known as a ghost kitchen or virtual kitchen, is a food service establishment that operates exclusively for online delivery and takeout orders. These kitchens often lack a physical dining area and focus on preparing food for delivery through various online platforms or mobile apps. They are designed to streamline food preparation and delivery processes, catering to the growing demand for convenient and on-demand food services in the digital age.
Success in the cloud kitchen business requires a combination of strategic planning, efficient operations, and customer satisfaction. Here are some key factors that contribute to success in this industry:
- Location Selection: Choose a strategic location with proximity to your target customer base and delivery services. Understanding local demographics and competition is crucial.
- Menu Development: Create a menu that caters to popular and trending food preferences in your area. Keep it focused and manageable to ensure efficient operations.
- Online Presence: Establish a strong online presence through food delivery apps, a user-friendly website, and active social media marketing to attract and engage customers.
- Quality and Consistency: Maintain high-quality food and consistent taste in every order. Quality control is essential for building a loyal customer base.
- Efficient Operations: Optimise kitchen processes for speed and accuracy.
And most importantly, keep food cost below 20%.
Some of the successful entrepreneurs in this arena like Auntie Fungs Founder Subhradeep suggested a keen eye and vigil on aggregator expenses is needed. This includes CPC Ads, Long distance fees, various discounts and once it exceeds 45% of the total billing that should set the alarm bells ringing. Also, an unflinching commitment to quality and value for money drive the popular Pan Asian brand across Bangalore and Gurgaon.
More matured players like Louis Burgers from the house of Massive Restaurants has focussed on brand building and have a direct communication channel with the customer base. The superior products from the rest of its competitors and well scripted marketing strategies is winning hearts across metropolitan cities.
- Raunak Kundu is the founder of Bangalore Foodies Club and Bluchisel Business Solutions.