In the ghost kitchens, or cloud kitchens that they are usually called, there’s no host to welcome the diners, no seating availability, and zero customer-facing space. What a cloud kitchen platform has are some tablets for taking orders and a pick-up window for the delivery drivers.
Imagine having a restaurant in a kitchen where you share the space with companies like McDonalds, KFC, etc. The delivery person comes and collects your order to take it to the customers at their location. Here you won’t have to worry about the restaurant setting up costs, hiring staff to take care of the guests, and choosing the right ambience to get the most Instagram likes. All you will have to focus on is your food and its marketing. This answers what a cloud kitchen is.
Now, cloud kitchens tend to take many forms as you must have seen in the case of C3, Kitchen United, or Kitopi Kitchen. So later in the article, we will be diving into the different operating models that come within the ghost kitchen platform ecosystem, explaining how does cloud kitchen work. But before we get to that stage, let us peek into the market that this food delivery model comes with.
The Cloud Kitchen Market: Where it stands today
Since 2016, the delivery has been the fastest-growing space in the restaurant sector. Before COVID-19 hit us, more than half of Americans were ordering food delivery almost once a week. But the pandemic led to a space where restaurant owners had to relook at their operations and decide on a model that would get them maximum profit at low management cost. Around the same time, cloud kitchen platforms became a thing.
- Former Uber CEO Travis Kalanick invested millions of dollars into cloud kitchens, which was developing facilities in the US, UK, and India.
- Zuul Kitchens and Kitchen United created virtual food halls in cities like Chicago and New York, where the diners could order from multiple local favorites – all at once.
- SBE – known for restaurants having chefs like Wolfgang Puck, Jose Andres, and Masaharu Morimoto, etc., – launched hundreds of delivery-only locations for Sam’s Crispy Chicken, Umami Burger, and Krispy Rice.
- Celebrities like Wiz Khalifa and Rachael Ray got in on the delivery space in 2019 with HotBox and Rachael Ray to Go.
As you must have guessed, there is an abundance of fame and money in the cloud kitchen space, something which can be expected to grow.
Who are the top cloud kitchen providers?
Believe me when I tell you this. There are millions of cloud kitchen platforms in the world. In the US alone, there are hundreds of them. However, the good thing is that a majority of them are hosted on these top ghost kitchen providers –
Out of these cloud kitchen providers, the one we are going to be basing our focus on today is Kitopi Kitchen. The platform, which in July 2021, raised $415 million from investors, including SoftBank Group Corp.’s Vision Fund 2, before achieving its unicorn status.
[Also Read: Cloud-Based POS vs Legacy POS Systems: What to Choose for your Restaurant Business?]
Everything about Kitopi kitchen
One of the most popular cloud kitchens in Dubai, Kitopi connects with restaurants that need to deliver their food online. Established in 2018, they enable restaurants to work out of different locations without making any infrastructure and software investments.
What is special about Kitopi kitchen is that they help restaurants make a great customer experience through a platform where orders are received, delivery is managed, and customer reviews are handled.
Now, understanding how one of the most popular food delivery business ideas in Dubai works will bring you closer to understanding how to start a cloud kitchen of your own.
Here’s how the Kitopi kitchen platform works.
- Restaurants pay an onboarding fee to be a part of Kitopi. The platform keeps a portion of it while giving them back a 10% royalty fee on the sales.
- Kitopi does the end-to-end operation on behalf of the restaurants. They have a hub kitchen in every city they operate in, where the food making takes place. Following this, the food is taken to a smaller kitchen closer to the delivery area for final touches and delivery.
Now that we have looked into what is a cloud kitchen and how does cloud kitchen works in the context of Kitopi, let’s get down to the part where we help you enter the space.
How to start cloud kitchens in Dubai or anywhere in the world
There are multiple aspects of starting a cloud kitchen. For ease of digestion, we have divided those into three parts – Choosing a model, operational considerations, technical requirements. Let’s start from the first.
Choosing the best cloud kitchen model
Standalone Kitchen
This is the most popular cloud kitchen model where a single concept is followed, and one or two food options are provided. For example, think of a pizza joint where the menu is anywhere between ten to fifteen items.
Cloud Restaurants
A cloud restaurant is usually a brand that works inside a restaurant. Here, the infrastructure of an existing restaurant is used for offering a range of food menus. These kitchens are typically listed on third-party food aggregators like UberEats under different brand names.
Co-working Cloud Kitchen
It is a model where there are individual kitchen units for every brand – all operating out of one kitchen space. These kitchens are very large in size, with ample space for multiple restaurants to rent out and expand their business.
Aggregator Cloud Kitchen
This is typically an extension of a coworking cloud kitchen system. The main purpose here is to give an infrastructure to the restaurants that need to make food for delivery-only. Here, there is a huge reliance on food aggregators to handle the delivery operations.
Usually, the cloud kitchen cost varies, depending on the model you choose. Here’s what the approximate valuation looks like –
| Cloud Kitchen Model | Platform Development Cost |
|---|---|
| Standalone Kitchen | $20,000+ |
| Cloud Restaurant | $20,000+ |
| Co-working Cloud Kitchen | $30,000+ |
| Aggregator Cloud Kitchen | $35,000+ |
Operational considerations of cloud kitchen
Location
While it is true that the cloud kitchen does not need a high-end location and space to match the vibes owners are aiming to match, it should be closer to the target group. Since the essence of ghost kitchen lies in making deliveries faster, it is essential that they are near the deliverable areas.
The best thing about them is that cloud kitchens can be set up in residential areas, unused parking lots, and even movable food trucks.
License
Unlike generally assumed, licenses are an important part of the cloud kitchen ecosystem. Since the customers cannot personally visit the outlet to see the food safety, hygiene, etc., it helps to get certifications and licenses, which give confidence in your food quality.
Kitchen and packaging equipments
The equipment you use will depend entirely on the food you want to prepare. The more complex and wide you keep the menu, the more extensive the list of equipment will be. To start off, you can only invest in a fridge, stove, oven, counters, and cooking utensils.
The next part you will have to consider is the packaging. This, you will have to pay a key attention to as irrespective of how good the food is, bad packaging can ruin the customer experience.
Kitchen staff
Since the cloud kitchen is usually the backend of the restaurant system, you will only majorly need the cooking and cleaning staff. A team that knows how to cook food while ensuring complete hygiene will be enough to get you started in the restaurant business.
Technical requirements of cloud kitchen
POS system
A POS system that would gather orders from multiple aggregators is possibly the biggest restaurant feature needed for a cloud kitchen. The integrated POS system would take in orders from multiple sources while maintaining real-time records. This way, you will be able to analyze which platform is working best for your business and eventually how to take that traffic to your own software.
Online ordering software
When you partner with a third-party aggregator to host your menu and manage deliveries, you end up paying them 12% to 18% for online orders while 18-25% for deliveries. Now, while the visibility they can get you is unquestionable, it would be equally crucial to have your own online order software – a web app or mobile application. This software can be linked with your POS and KDS to ensure a holistic in-restaurant experience.
Call-center like system to receive orders
This is for businesses that receive phone orders. If you are one of them, you would need an integrated call center system in place. The POS-based call center system would help in streamlining the telephone orders, especially when you have multiple outlets. By digitalizing the system, you will also be able to see customers information and order history to prevent making repeat or incorrect orders.
Integrated kitchen display system
Food preparation in the case of cloud kitchens typically takes some 15-20 minutes. Here, using a kitchen display system comes in very handy when optimizing the order processing time. How? The order gets updated in the KDS when it is received; from there the staff can view, prepare, and plan order delivery accordingly.
This doesn’t just make operation smooth but also helps identify delays and loopholes in the process.
Food delivery system
When it comes to food delivery in a cloud kitchen, you have two options: either take control of the delivery in-house or partner with a third-party aggregator. While the former makes the delivery convenient, it comes with management and hiring cost complexity. In case of the latter, you can easily assign orders to the nearby delivery person by using a food delivery system.
Inventory management system
For any restaurant business, managing inventory is crucial. A robust inventory management software would enable tracking of daily inventory usage while giving you insights into when to restock items. This, in turn, will help lower wastage costs.
Another aspect of understanding how to start a cloud kitchen business would be to know the mistakes to avoid. While there could be multiple, this video summarizes the top issues you should look out for –
So here are the different aspects of what is a cloud kitchen, what you need to know about the Kitopi platform, and how to build a cloud kitchen platform of your own. The only thing that remains is gathering an understanding of how much do cloud kitchens cost. Let’s look into that next as we conclude the piece.
[Also Read: Cloud Computing – An Ultimate Guide for Businesses]
How much do cloud kitchens cost?
The answer to what can be the Kitopi-like cloud kitchen cost will depend entirely on the features you want to be added there – both for your management and for the ease of the restaurants you are partnering with. Typically, the cost of building a restaurant app on the cloud kitchen platform model like Kitopi, which consists of both an app and website, will cost you around AED 60k to AED 80k.
This range also depends heavily on the solution provider you partner with. When you invest your time and money in a cloud consulting services company like Appinventiv, you know that they have experience in building cloud kitchen apps, know what mistakes should be avoided, and have the technical expertise to scale your brand, you know you are built to succeed.
We hope that everything we covered in the article would be enough to get you started on your aspirations to become a cloud kitchen owner with utmost confidence. There’s only one thing left to do now. Get in touch with the Appinventiv team of restaurant app engineers and initiate your journey.
FAQs
Q. How does cloud kitchen work?
A. Cloud kitchens are a type of centralized commercial food production facility where more than one restaurant can rent space for preparing delivery-optimized cuisines. A single restaurant may have multiple brands under it, all operating under a single roof. Cloud kitchen is all about featuring a large warehouse with numerous mini restaurants stationed with stainless steel prep tables, stoves, hood vents, sinks, and ovens each having it’s soon order coming from different customers.
Cloud kitchens are highly tech-enabled and they take advantage of the ubiquitous food delivery on your smartphones like Grubhub, UberEats, and Doordash.
Q. Are there any challenges in setting up ghost kitchens?
A. Any new technology like a ghost kitchen setup also has some potential drawbacks or challenges along with the benefits. Let’s check them out.
- Reliance on third-party delivery apps
- Working with on-demand staff
- Competition in a crowded digital marketplace
- Food safety and food quality
- Compliance with local food safety regulations
Q. How to build a cloud kitchen platform?
A. Here is a step-by-step process on how to build a cloud kitchen platform.
- Opt for a cloud kitchen model including stand-alone kitchens, cloud restaurants, aggregator kitchens, and co-working cloud kitchens
- Choose a setup location as a cloud kitchen cannot work without a specific kitchen space
- Get the proper license required to run your cloud kitchen and stay legally secured
- Hire experienced kitchen staff
- Gather all the kitchen equipment required for preparing cuisine and serving your customers
- Hire a software development partner
- Integrate inventory management and restaurant management system
- Integrate payment, CRM, and POS system
- Integrate order management system
- Test and promote
Q. What are some of the popular cloud kitchen business models?
A. There are basically four types of cloud kitchens including cloud restaurants, aggregator kitchens, stand-alone kitchens, and co-working cloud kitchens. All you need to do is choose an ideal type of cloud kitchen model type for your business expansion. Let’s dig deeper into each type:
Standalone kitchen: In this model, the business directly takes orders and prepares meals and has a limited number of dishes.
Cloud restaurant: This business model works inside the kitchen of an existing restaurant and uses its infrastructure for preparing dishes based on orders.
Co-working business model: Various online restaurant operates in a single place where each brand pays rent.
Aggregator cloud kitchen: This is an extended version of the co-working cloud kitchen. In the aggregator model, the kitchen infrastructure is offered to restaurants which required to make food for delivery purposes only.
Q. What is the cost of building cloud kitchens like Kitopi?
A. Usually, the cost of a cloud kitchen varies depending on the type of kitchen model you choose. For stand-alone kitchen and cloud restaurant models, the platform development would cost you around $20,000+. For a co-working cloud kitchen, it would cost $30,000 + and for an aggregator cloud kitchen, it would be $35,000. The cost also depends on the type of features and functionalities you choose for your cloud kitchen app and its complexity level.
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