Food business through cloud kitchen saw major push during Pandemic peak people started a no of businesses but somehow felt caught between operation and growth, this article will talk about how can you make cloud kitchen profitable using latest technologies as well as focusing on best practices.
Recent data is encouraging:
In recent time cloud kitchen business model is the most successful model among all e-businesses, More than 60 percent of respondents in US identified drive-thru, curbside pickup, online ordering, and the ability to order from a mobile device as some of the most important factors when selecting a restaurant.
- Market for Cloud Kitchens looks promising and why not need for safety is on the rise. These recent surveys and data should be enough to boost the morale of the hotel owners or enthusiasts in this field, if not then probably you need to ask the critical question “how to make cloud kitchen profitable?” In my video below I am attempting to demystify the big question
- According to the National Restaurant Association’s 2021 State of the Restaurant Industry Report with more than 110,000 restaurants closing in 2020, some never to open again. But the same report also found that 68 percent of consumers are now more likely to order takeaway than they were before the pandemic.
- More than 60 percent of respondents in US identified drive-thru, curbside pickup, online ordering, and the ability to order from a mobile device as some of the most important factors when selecting a restaurant.
These recent surveys and data should be enough to boost the morale of the hotel owners or enthusiasts in this field, if not then probably you need to ask the critical question How to make cloud kitchen profitable?
I will help you answer this: First, let us understand the Cloud Kitchen Business Model in detail:
There are basically two areas where this business operate, Front of House (FOH) and Back of House (BOH).
FOH: mainly involves Customer who get to see only your app, menu, offers, rewards, the delivery person and the product(food) nothing else BOH refers to all the activities that go in to prepare that order. I would like to divide this area into two parts, Kitchen and Cloud.
Kitchen focuses on: Physical Kitchen, inventory, resources, orders, supply chain, capital requirement, packaging, quality & hygiene, In case of cloud: we have Point of Sale software, CRM, Menu plans, Feedback, Data, growth plans, investors, finance and Marketing We will be focusing on areas and sub areas that are highlighted in circle because they form the critical success factors to make your cloud kitchen work.
Let’s understand these areas and how to set them up for success:
FOH:
Mobile App or Website:
While partnering with online food aggregators it’s worthwhile to consider implementing your own kitchen’s website or mobile app for accepting orders as an additional sales channel. Ideally business owner should be investing in an industry leading app where all your orders are available and you haves seamless integration with delivery channels. For guests they should be able to browse the menu, save favourite orders, make payments and give feedback. Do go for an app where guests can track coupons and exclusive offers in a “rewards wallet”.
Starbucks saw 15% increase in overall sales in company operated outlets, Chipotle’s reward membership grew to 20Mn from lessor than 10 mn 2 years ago.
BOH:
Shared Space: “Kitchen plus” is one company which provides prime space for cloud kitchens in three cities Mumbai, Bangalore and Delhi. You can ask for such shared space where you don’t need to bother on safety, fire and aesthetics, these are meant for cloud kitchens only.
Equipment: Do you wish to go for new ones of used ones? Initially when you are testing your idea its is wise to go for used equipments like burner, chimney, stove, big vessels etc this will save huge cost for you.
(KDS)
In a fast-paced cloud kitchen, order preparation time is usually around is 10-12 minutes, if you want to deliver the order within 30 minutes. An integrated Kitchen Display System (KDS) will optimise order preparation time.
As soon as the order is received, it gets updated in the KDS. Kitchen staff can view the order details and the order pickup time immediately, and can prepare the order accordingly. This streamlines kitchen management, maximizes efficiency, and enables you to identify any lags to further optimize the preparation time.
Eliminate Waste and improving Profit margin for a cloud kitchen or virtual brand can be very attractive, Effectively managing inventory is essential for any restaurant, and the same stands true for a cloud kitchen. A smart inventory management system enables you to track daily stock consumption and also prompts you to order more stock when needed. It helps you reduce wastage and keep control of your food costs.
Human Resources:
In an online kitchen, a minimum of five employees is required. You’d need at least two chefs, two helpers, and one housekeeper. The salary of the staff depends on their experience. Organise Training for staff which helps improve overall satisfaction and improve your order serving efficiency.
POS:
Ghost kitchen and virtual brand reputations are built upon speed of service and food quality. Manually processing orders wastes time and introduces errors. A cloud kitchen requires an integrated technology system for accepting online orders, processing payments, and efficient kitchen management.
Point of sale (POS) system that accepts orders from various channels, such as delivery aggregators and online ordering platforms, ensures orders are error-free and hit the kitchen in real-time, regardless of channel.
Some examples are: Toast $75-$150, Oracle $2k to $5k, SlickPOS, Ordermark, grubtech
Perfect Your Menu:
Agile menu management requires close and frequent analysis of your profitability, down to the ingredient level. With POS reporting and analytics are included out of the box so you can experiment to your heart’s content, while keeping a pulse on revenue and profit.
Finance & Accounting:
this can be very well integrated with POS system, some CRM and POS system helps you with Taxation requirements as well so consider that option as well.
CRM:
There are multiple CRM system available for monthly subscription model, if your POS system does not offer this feature then you can integrate third party CRM into POS for better understanding of your customer and their needs.
Think about AI solution for enhances analytics. It can help with menu optimization, operations efficiency and labor deployment, and drive-thru efficiency.
Having access to sales data is critical to developing strategies that maximize your sales.
Marketing:
When lot of data is generated, customers are served obviously you need to do marketing of your business as well. In today’s world marketing is must, you can’t get business in their fiercely competitive market.
Ultimately, I would like to say that Technology plays a critical role in the smooth functioning of a cloud kitchen business and ensures operational efficiency. Having a comprehensive technology platform with seamless integration between POS, KDS, and inventory management will ensure operational efficiency and the smooth functioning of your cloud kitchen business. Please watch this detailed video I have created on this topic.