Cloud kitchens have presented an opportunity for F&B businesses to reach wider audiences with a low-risk and cost-efficient approach. With a noticeable decline in the demand for dine-in restaurants, cloud kitchens are getting more and more popular among established F&B brands.
So what’s that all about? What’s so special about cloud kitchens and where did all of that come from? What should that mean for your F&B business? Let’s find out!
How It All Started
The COVID-19 pandemic was one of the most significant driving forces behind the increasing popularity of cloud kitchens.
And while cloud kitchens have been around even before the outbreak, they weren’t considered as an option that frequently.
After the pandemic, many F&B businesses were looking for innovative ways to cut costs while maintaining a solid market presence and reaching the highest number of customers.
As a result, lots of restaurant businesses considered shifting to ghost kitchens for two primary reasons: risk mitigation and cost efficiency.
What Is a Cloud Kitchen?
A cloud kitchen, also known as a virtual kitchen or ghost kitchen, is a commercial food production facility that allows multiple restaurants to offload their entire kitchen operations and order fulfillment and delivery processes to a service provider.
In that case, the menu offered to customers is delivery-optimized, where the item selection criteria are deliverability, demand, and quality.
There are different business models for ghost kitchens, which include:
- Independent Ghost Kitchens. An independent ghost kitchen that operates exclusively for a specific F&B business.
- Coworking Ghost Kitchens. This model provides the resources to cook food and allows brands to rent booths in a shared kitchen environment.
- Multi-Brand Ghost Kitchens. This model maximizes cost-efficiency by enabling various brands from one parent company to operate under one kitchen roof.
- Outsourcing Model. In an outsourced model, the cloud kitchen provider takes care of everything in the F&B business’ lifecycle, including kitchen operations, resource planning, order fulfillment, delivery, and analytics.
Difference Between a Cloud Kitchen and Delivering at a Brick and Mortar
There are substantial distinctions between the ghost kitchen and brick-and-mortar models, which can be summed up in the following points of comparison:
Delivery Speed
Cloud kitchens enable you to offload the entire order fulfillment and delivery process, ensuring that your customers get their food as quickly as possible.
Things are different in a conventional brick-and-mortar setup. You won’t be able to cope with sudden increases in demand since your resources are limited. Not to mention, the operational workflow is rarely efficient, especially if your delivery drivers struggle with parking.
Order Tracking
Another issue with brick and mortar restaurants is that tracking orders can be challenging, particularly if your restaurant is partnered with multiple delivery services and apps. This often results in incomplete orders or even accidental order exchanges.
With ghost kitchens, each kitchen has a dedicated app that makes order tracking much more straightforward, drastically helping in reducing delivery time. With all your orders grouped in a centralized interface, tracking orders becomes more efficient, irrespective of the specific delivery app each customer uses.
Additionally, cloud kitchens have dedicated fulfillment teams that make sure each order is handed to the right driver. By eliminating the possibility of order mismatches, you’ll increase your customer satisfaction levels and get more happy customers ordering food from you.
Flexible Delivery Menus
Ghost kitchens provide a different version of your menu that only includes items suitable for delivery. Items that can be challenging to package for delivery or change taste during travel are excluded from the menu.
A ghost kitchen also allows you to track demand for all your menu items based on customer data and analytics, so you can resource ingredients more efficiently. This data-driven approach can save you a lot of money and reduce ingredient waste.
In a traditional brick and mortar facility, you’ll never be able to monitor demand as accurately as in ghost kitchens since your customers use multiple delivery services. Your menu remains the same for takeout and dine-in customers, resulting in more wasted ingredients and revenue loss.
Online Visibility
In the post-pandemic era, the demand for online delivery services has skyrocketed. Even people who traditionally preferred to dine in began to appreciate the convenience of online food ordering services.
In a brick and mortar setup, bringing in new customers is entirely dependent on your physical storefront. Adopting a cloud kitchen approach is the exact opposite: your location becomes less relevant, and you’ll get a huge influx of customers looking for food choices online.
Setup
Setting up your brand with a cloud kitchen service provider is much faster than coming in brick and mortar. You don’t need to source materials, hire staff, print menus, or handle any of the work required to launch your brand in a new market.
Benefits of Cloud Kitchens
Here are some of the perks of making the move to a cloud kitchen:
Risk Mitigation
Launching your brand through a virtual kitchen is much less risky than a traditional brick and mortar environment. The latter means you’ll have to rent a property, deal with hefty monthly overhead costs, and hire staff.
Whenever a disaster with the magnitude of a global pandemic strikes, your response strategy wouldn’t be of much help: you’d still end up losing a lot of money.
Higher Growth Potential and Faster Speed to Market
Launching your brand in a new market is much faster with a cloud kitchen approach. Once you sign a contract with a cloud kitchen provider, expect your first order to be fulfilled within 3 to 4 weeks. Traditionally, opening your first restaurant branch in a new market can take up to 8 months.
Cost Efficiency
Cloud kitchens provide lower risks and a higher ROI (Return on Investment) than coming in brick and mortar, making this approach a less-costly alternative.
Due to the current economic crisis, many F&B businesses are struggling to reduce costs. If you’re trying to expand your presence into new markets, you’d want to take an accurately calculated risk if you want to break even in a reasonable amount of time.
Even then, there’s no guarantee that unusual events like pandemics and wars won’t force you to shut down your operations and lose your investment.
Operating a restaurant requires massive initial and overhead investments such as property leasing, interior design, management, and staff hiring.
On the contrary, virtual kitchens require a much lower initial investment, and moving forward, it’s a single monthly subscription fee that you can opt out of with zero exit fees or liability.
Improved Accessibility to Customer Data
The concept of a cloud kitchen allows F&B businesses to gain better visibility of their customers’ big data. Since many cloud kitchens rely on third-party apps for food delivery, you’ll be able to learn more about your customers’ eating habits, behavior, and preferences.
The collected data can be analyzed to help you come up with innovative ideas and solutions to optimize operations and increase revenue.
What Does This Mean For Your F&B Business?
The rising popularity of cloud kitchens has made many F&B businesses rethink their growth strategies to survive the current economic crisis.
Launching your F&B brand in a new market can be expensive and risky, with limited potential for growth.
At Brito, we offer a Cloud 9 Kitchen service model that handles the entire lifecycle for you. From data-driven market research to material planning and order preparation and fulfillment, your brand will be ready to ship its first order within a month. We can also provide assistance with recipe development and cost calculations.
Here’s why Brito is the right cloud kitchen partner for your brand:
- We provide consultation services. Our cloud kitchen services are only one part of the equation. Brito also acts as your private legal and financial consultant, so you can enjoy the peace of mind of launching your brand, minus the legal and financial headaches.
- We are techies. We leverage the power of food tech by integrating powerful analytics tools right into our platforms, providing you with deep insights into what your customers love or hate through our real-time dashboards.
- We care about the environment. Honoring our commitment to a greener Earth is a priority for us, and by minimizing waste and optimizing your menus based on demand data, we directly contribute to protecting the environment.
Fill out this form now, and let us know how we can help you