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Cloud Kitchens The Rising Wave Of Profitability

by Abdul Shaikh
Cloud Kitchens The Rising Wave Of Profitability

Do you notice a lot of delivery-only restaurants opening up?

Does the term ‘Cloud Kitchen’ fascinate you?

Are you concerned about the profitability of your newly opened Cloud Kitchen?

Well, read along and all your questions will be answered convincingly, maybe to a point where you decide to open up your own Cloud Kitchen very soon.

Cloud Kitchens, also known as ghost kitchens or delivery-only restaurants, have taken the food industry by storm. These are essentially set-up with only the required kitchen equipment and function by providing the option of delivery or take-away to the customers. They do not offer a dine-in option.  Additionally, if the owners decide to adopt an efficient Cloud Kitchen Software, it can further ease their business operations. 

Lately, cloud kitchens are rapidly sprouting across the globe and more restaurants in India are pivoting to become cloud kitchens.

Well, you can’t blame them !

Along with its numerous benefits, cloud kitchens are also highly profitable. And who is going to shy away from earning a few (in this case, a lot of) extra bucks?

Here are some interesting insights on the rise of Cloud Kitchens and how they have emerged as one of the most profitable F&B models.

Here are some interesting insights on the rise of Cloud Kitchens and how they have emerged as one of the most profitable F&B models.

The concept of cloud kitchen has been around since a long time but came in limelight due to the pandemic. The closure of restaurants due to lockdown had pushed a majority of the population to opt for home dining. Hence, the food delivery industry witnessed a major surge of demand and this rise boosted the introduction of Cloud Kitchens and has opened a new avenue of business for both budding and existing restaurateurs.

RedSeer Management Consulting, in a recent report, said cloud kitchens were set to become a $2 billion industry in India by 2024, up from $400 million in 2019.

That’s a 400% increase in just the span of 5 years!!!

That’s a 400% increase in just the span of 5 years

The primary reasons behind the profitability of cloud kitchens can be attributed to the lower infrastructure costs, substantial business opportunities, concentrated services and optimal usage of food delivery applications.

The most important benefit of operating as a cloud kitchen is the reduced capital expenditure on your initial set-up. For starters, the infrastructure and real estate costs are reduced as you don’t need to set up the restaurant at a prime location or have to spend heavily on the interiors. Additionally, the overhead costs of operating a cloud kitchen are much lower than that of setting up your own restaurant, which increases your profit margins by roughly 10-15% as opposed to 5-10% in restaurants.

  • Ease in Experimentation and Expansion

For example: If your restaurant already serves Indian cuisine and plans to introduce a new cuisine, then instead of adding it to the same menu, you could create a new brand altogether. This allows the customers to try out a new brand, but in reality, you can prepare all the dishes in the same kitchen. Rebel Foods is a prime example that utilises this strategy and operates brands like – Faasos, Behrouz, Oven Story, The Good Bowl, etc.

Furthermore, cloud kitchens allow restaurant owners to focus on experimenting with their menus and create delicious dishes rather than managing the tables, hiring and training the servers and maintaining the dine-in space.

  • Rise in Usage of Food Delivery Applications

Due to the pandemic, a large number of foodies have turned to food delivery applications. In 2020, there had been an approximately 20% increase in the usage of delivery services. Cloud kitchens have capitalised on this opportunity very well, which in-turn increases the overall business profits.

Rise in Usage of Food Delivery Applications

These are some of the reasons that highlight how Cloud Kitchens have emerged as one of the most beneficial F&B business models in recent times.

Pairing your cloud kitchens with the right tech savvy solutions can lead to significant business growth, streamlined operations and long-term profitability. With low initial costs and higher scope of profits, Cloud Kitchens are proving to be a new way to scale up your restaurant business and guarantee success in the post-COVID restaurant industry.

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