How to build a successful cloud kitchen business in India in 6 steps

Digital restaurants or the cloud kitchen is the latest trend that has emerged in the global F&B industry. While restaurants and F&B outlets suffered a decline in activities during the pandemic, the emergent cloud kitchen model helped in giving breathing space to the industry. During the pandemic, Cloud kitchens offered an alternative way to run the restaurant business, by largely containing the operational costs and rental charges. 

In India as well, a host of successful cloud kitchen enterprises have emerged such as Rebel food (Faasos, Behrouz Biryani, etc.), Fresh Menu, Biryani by Kilo, Chai Point, Box 8, etc. In line with global trends, the cloud kitchen model will continue to climb upward in a positive direction in India. It is set to become a lucrative business model in the coming years and will attract investors and entrepreneurs in big volume.  

About Cloud Kitchen and Its Functioning 

A cloud kitchen is a restaurant that accepts food orders through online ordering systems and generally does not provide a dine-in facility. Cloud kitchens either have their online ordering website/ app or accept food orders through multiple food delivery platforms (Zomato/ Swiggy). Cloud kitchens have Point-of-Sales software that allows them to accept food orders from different sources. Though mostly cloud kitchens operate on a purely online model, there are cloud kitchen ventures which have both, digital distribution as well as retail outlets. 

How to Open a Cloud Kitchen in India in 2022

Foraying into any business requires proper knowledge and the know-how of the complete process of opening and operating the business. Right from the investments, to licenses, to location and essential requirements, you need to be aware of the entire process. In the following section, we will discuss the steps to open a cloud kitchen business in India. 

Choose the Location of the Cloud Kitchen Restaurant 

The cloud kitchen restaurant is a low investment business, as you don't have to choose a location that has good footfalls, parking space, and a high-end site. You just need to choose a location that has proper sanitation and a good supply of water and comes with low rentals. This will allow you to reduce the cost of opening a cloud kitchen compared to a traditional dine-in restaurant. You should also choose a location depending upon the type of food/ cuisine to be sold along with the customer demography. Choose a location that has a high demand for the food that you are selling. 

Implement Process for the Online Food Ordering 

After choosing the location, you need to implement a process for accepting food orders. You can either associate with any of the online food ordering delivery platforms like Swiggy, Foodpanda, or Zomato, or can create your ordering system integrated with your website and app. 

The 3^rd party food delivery platforms such as Zomato, Swiggy, etc accept food orders on your behalf and deliver the food to customers and usually charge 18-30% of the revenue per order, along with a one-time integration fee. (Meanwhile, you can create your website with the help of web developers and can opt for POSist services that will allow you to integrate with your POS software and increase your efficiency in taking orders and also in managing customers. A prudent approach is to implement both, a 3^rd party-based partnership as well as a custom POS mechanism.) 

The cloud kitchen restaurant business that mainly comprises online food ordering and delivery greatly relies upon an effective system for acceptance and processing of the order. It requires keeping a record of the number of orders received from multiple ordering platforms. Likewise, to ensure the smooth functioning of the cloud kitchen, order tracking and reporting systems are also needed. 

Obtain Licenses 

You need to obtain a few licenses to set up a cloud kitchen restaurant, as this will ensure a hassle-free business. The major licenses that are essential to start a cloud kitchen business are FSSAI, GST Registration, NOC from the Fire department, and municipal health trade license, etc. You need to have these licenses in place before starting this business to avoid any inconvenience at a later stage. The FSSAI license is valid from one to five years and should be periodically renewed, as this regulates how food is cooked, stored, and delivered. To gain further confidence from customers, you can specify the FSSAI number on the packaging.  

Purchase Kitchen Equipment, Raw Material, and Packaging Material

You need to wisely purchase equipment, furniture, etc. It is advisable to acquire second-hand furniture items like tables, racks, and shelves to save money. Depending upon the type of food being offered, you will require the raw materials. You should carefully choose the vendors for purchasing the raw materials. Identifying the right vendors will help in building efficiency in the overall business cycle and positively impact profitability. 

Likewise, you need to be extremely cautious while purchasing packaging material because the packaging should be good enough to preserve the quality of the food. Your packaging should also leave a good impression on the customers' minds. The packaging material should contain the restaurant's logo to keep the brand presence fresh among the customers.

Recruit Staff

To successfully run a cloud kitchen business, you need to recruit a minimum of a five-member team. You need to recruit two chefs, two helpers, and one housekeeper. Chefs are the vital part of the team that prepares the food also helps in designing the menu. The salary of the kitchen staff depends upon their experience. Besides, kitchen staff, you will also need staff for delivery and for receiving orders. If you are not interested in hiring staff for delivery and receiving the order, then you can associate with third-party delivery services that work on a per order basis. 

If you wish to maintain discipline, cleanliness, and hygiene in the cloud kitchen business, then should also have a dress code for the team. You should also provide them with essential safety standard equipment such as hair caps, gloves, and masks to maintain hygiene in your kitchen.

Proper Marketing Strategy  for the Cloud Kitchen 

Advertising and marketing are not only essential for the success of the restaurant businesses but any business. However, cloud kitchen business requires heavy marketing as your website/ app will be the single source for receiving orders. 

Firstly, you have to go the extra mile to build a powerful, content-rich, and easily navigatable website/ app. You have to use attractive visuals, concise  but well-written content, blogs, etc. Likewise, you have put in place exhaustive digital marketing comprising of SEO, social media promotion, emailers, etc. Your digital marketing needs to be backed by an equally effective digital reputation strategy pinned on online PR, ORM, customer reviews, etc. 

In the initial days, cloud kitchen needs to implement discount offers and other promotional activities to gain access to a larger market share. Food delivery platforms such as Zomato and Swiggy also offer custom marketing and promotional packages and upcoming cloud kitchens can think of using them as well. 

How India Watch can help 

The India Watch is a  market intelligenceand research advisory. We have a strong understanding of India’s hospitality, F&B, cloud kitchen, food processing sectors. If you are an existing food enterprise in India or a start-up/ investor with future interest, then you can consult us for  research assignments. We offer a host of research-focused services such as market research, business research, business feasibility studies, etc. Alongside long and detailed research assignments, we can also be hired for one-time data requirements. Our services are tailormade according to the client’s budget and business requirements. For any business query, feel free to drop us a mail at Info@theindiawatch.com