Cloud Kitchen- A Case Study
What is a cloud kitchen?
A cloud kitchen AKA ghost kitchen AKA virtual kitchen is a commercial kitchen space that provides food businesses the facilities and services needed to prepare food items for delivery and takeout.
Why did cloud kitchen even start ?
The concept emerged from food truck delivery services. With emerging technologies, the food truck business started gaining momentum and people initially started ordering food through digital channels. Soon many companies with only food delivery service started operating, which came to be known as a cloud kitchen.
Advantages :
1. Affordable Cost: No large amount of capital to building inspections; expensive building construction; zoning compliance; etc.
Sometimes months or years are required for traditional leases or building mortgages but via cloud kitchen this step has narrowed down to weeks or even days.
2. Lower Overhead : Expensive utilities, high property taxes, cumbersome staff payroll and pesky maintenance costs are no more a problem to these kitchen owners. Restaurants that operate in cloud kitchens often employ as few as one to two cooks and share communal expenses with other renters.
3. Added Convenience:
(i) health inspections
(ii) equipment repairs
(iii) janitorial services
(iv) security monitoring
(v) property taxes and
(vi) utility bills
are taken special care of in case of cloud kitchen.
4. Optimized Delivery: These facilitate deliveries out of one location and increasing brand’s revenue streams. These accommodate higher demand without over-burdening kitchen staff with online food delivery orders.
5. Fulfilling Customer Demand: Consumers demand quick meal options at an affordable price. Cloud kitchens facilitate this growing demand for online food delivery by optimizing the delivery experience through efficient logistics, lower costs and technological innovations.
6. Greater exposure: Cloud kitchens focuses on food delivery and reaches a larger audience. Delivery-optimized restaurants advertise through delivery apps and social media rather than more narrow marketing channels. Cloud kitchens can strengthen their brand by fortifying new marketing channels and gaining greater exposure.
Disadvantages:
1. Low Profit Margin & High Competition: Cloud kitchens must pay an aggregator tax, which is a percentage of sales that Swiggy and Zomato charge to operate on their platforms, ranging from 20 to 30% before discounts. Delivery is a source of revenue for restaurants, but it is the only source of revenue for cloud kitchens.
2. Lack of Trust: Cloud Kitchens lacks organic local brand awareness. Top-of-mind memory occurs only when you view a brand repeatedly, which is not possible with cloud cooking. Furthermore, because there is no dine-in, customers do not have memorable experiences to talk about, significantly limiting word-of-mouth marketing, which is the most reliable marketing channel for local businesses.
3. Multiple Brands Bring Multiple Issues: The burden of cooking multiple cuisines falls on that one chef, who may not be well-equipped to handle various cuisines or types of food. When one brand dominates, the other brands do not generate enough volume to justify the increased inventory costs.
4. Hygiene and Working Conditions: Because there isn’t a steady stream of demanding consumers, there’s no need for operators to keep the facilities clean and tidy, which leads to considerable hygiene and upkeep negligence. Even from the perspective of the cooks, these kitchens are frequently undersized and lack adequate ventilation, resulting in harsh working conditions.
5.Lack of pricing power: Customers who purchase frequently from cloud kitchens are searching for discounts, which is not the type of customer who can generate long-term, profitable revenue. As a result, cloud kitchens lack pricing power and must keep rates low and offer deals on a regular basis to attract new clients.
6.No feedback loop: There is no other way to know what your consumers have to say about your meals unless you are actively involved in reviewing reviews on online aggregator sites. This lack of engagement with customers might lead to a disconnect between what you believe to be true and how your customers perceive your meals.
7. Need to tightly monitor inventory: Because cloud-kitchen owners are less likely to visit their establishments, inventory wastage and pilferage are considerably more common concerns owing to monitoring. As a result, inventory levels must be closely monitored in order to maintain increasingly tight margins.
REBEL FOODS
— Its business model is taking kitchen to the clouds.
1.Before diving in the business model learn what cloud kitchen is: A cloud kitchen or a ghost kitchen takes your orders online and delivers them to your doorstep. It’s a physical kitchen that you see in a restaurant but without a seating capacity.
2.such kitchens tie-up with delivery partners like Zomato or Swiggy or Uber Eats because of two simple advantages: lower operational cost and low barriers to entry.
3.Rebel Foods is an Indian online restaurant company that operates 12 cloud kitchen brands, including Faaso’s, Behrouz Biryani, and Oven Story. It is the largest cloud kitchen restaurant chain in India, operating more than 350 cloud kitchens, as of March 2021.
4. The Company moved from being just a single brand restaurant to a parent company with a dozen restaurant brands under the umbrella. You can think of Rebel Foods as a single factory that is churning out multiple brands as products.
