June 19, 2023

CloudKitchens® delivery kitchens concept and business model: All you need to know

CloudKitchens® delivery kitchens, also known as virtual kitchens or ghost kitchens, have emerged as a revolutionary new way for F&B businesses to fulfil customer orders without the associated overhead costs of a traditional restaurant. The entire concept of CloudKitchens® delivery kitchens is changing how customers interact with their favourite businesses, allowing for far more convenience and flexibility for patrons. It is also becoming a more widely adopted business model among both newcomers and veterans in the restaurant industry as CloudKitchens® delivery kitchens provide the perfect pathway to test new markets without taking a hefty financial risk.

In this blog, we’ll explore the history of CloudKitchens® delivery kitchens, which businesses use them, and some of the benefits they provide. We’ll also compare and contrast these spaces with traditional restaurants so that restaurant owners get a better understanding of the differences between them. Ultimately, this in-depth guide should provide a clear understanding of what a CloudKitchens® delivery kitchen is, how they are being used, and why an increasing number of eateries are shifting to this particular type of venture.

How it all works

CloudKitchens® delivery kitchens are a delivery-only business concept that utilises existing kitchen facilities combined with advances in cloud-based technology to bring food from local restaurants directly to the consumer. In essence, a CloudKitchens® delivery kitchen is a restaurant that operates without having a physical dining space. Instead, orders are taken through various digital ordering platforms, such as GrabFood and Foodpanda, and subsequently cooked in the kitchen and delivered directly to the customer. CloudKitchens® delivery kitchens are beneficial for customers as they are able to order food on demand and have it quickly delivered, meaning it enhances speed and efficiency, which is a must in today’s fast-paced world.

These kitchen spaces are usually geared towards smaller businesses as they require minimal overhead and capital investments. However, established eateries also utilise this business model, especially if they seek to use CloudKitchens® delivery kitchens as a means to tap into a new market or test a new brand or concept to see whether the punters bite. Additionally, CloudKitchens® delivery kitchens are helping to bridge gaps in the food industry by allowing restaurants to expand their reach without sacrificing their quality of food or customer service.

The different CloudKitchens® delivery kitchens business models

One of the main unique selling points of CloudKitchens® delivery kitchens is that they offer versatility, meaning eateries operating out of them can adopt any type of business model that they believe will help boost their sales and profits. Since many types of restaurants utilise these spaces, here are a few of the main ones, along with accompanying information on how they operate.   

1. Restaurants that offer takeaway and delivery services

They have become increasingly popular in recent years as the business model involves an eatery focusing on preparing food that can be picked up or delivered straight to the consumer. Typically, these restaurants offer an enticing menu with plentiful options so that their customers are spoilt for choice. Furthermore, they partner with one or more delivery companies to expand their reach to locations throughout Singapore.

2. Virtual restaurants

A new concept is gaining steam in the CloudKitchens® delivery kitchen sector as they don’t require a physical space to operate. Along with providing a low-cost option for entrepreneurs looking to get started, it is also a viable choice for businesses looking to open multiple virtual brands out of a single space, which would enable them to maximise their profit without investing in numerous kitchen units.

3. Shared CloudKitchens® delivery kitchens

Like virtual kitchens, this particular business model is also flourishing. Essentially, it enables eateries to use the space as a central kitchen specifically for food preparation. With the ability to produce large quantities of food from one unit, it opens the door for these types of businesses to cater to multiple restaurants, customers, events, etc.

Benefits galore

CloudKitchens® delivery kitchens are revolutionising the F&B industry by offering considerable advantages to businesses looking to save time and money. Among the benefits they provide are lower costs, easier adaptation to customer demand, extended reach to new customers and markets, and rapid scalability.

1. Huge investments are a thing of the past

Among the most prominent advantages of CloudKitchens® delivery kitchens is that they can help to significantly lower costs. This is due to the fact that businesses don’t need to invest as much money into finding an ideal location for a restaurant, which can be quite costly. CloudKitchens® delivery kitchen providers like Smart City Kitchens take the hassle out of this step as they have facilities in central locations. Furthermore, leased-out spaces in CloudKitchens® delivery kitchens are usually much more affordable than traditional brick-and-mortar restaurants due to the fact that less equipment and staff are needed.

2. Quick and easy adaptation

CloudKitchens® delivery kitchens also make it easier for businesses to adapt to customer demand as it is easier for them to modify their offerings depending on what’s popular at a particular time or location. Additionally, businesses can also experiment with their menus and gauge customer response before deciding to make any changes permanent. It is also worth identifying what type of cuisine is underrepresented so that restaurants can take advantage of that and establish themselves as the go-to destination for people looking to order that specific type of food.

3. Branch out to new customers and markets

Finding new customers or expanding out to new markets can be incredibly tough for new businesses as they will be under pressure to make their presence felt almost immediately. By operating out of CloudKitchens® delivery kitchens, they already have a huge number of customers in the surrounding vicinity, which provides them with a launching pad to branch out to new markets with complete confidence. One of the key ways to gain a larger following is to be active on social media, which allows eateries to share their story and connect with their customers on a more personal level. On top of this, having regular promotions and discounts is a great incentive to keep the public ordering from your establishment.

4. Grow with confidence

It is much easier to scale and grow a business if it is based in a CloudKitchens® delivery kitchen, as restaurants will already have a successful concept or business model in place that they can replicate at another location. With lower costs needed to set everything up and the time needed to hit the ground running being minimal compared to regular restaurants, business owners using CloudKitchens® delivery kitchens can expand their network of restaurants without having to fork out a significant amount of money.

How to run a successful CloudKitchens® delivery kitchen

While the concept and business model are important, running a successful CloudKitchens® delivery kitchen also requires careful planning and consideration of all aspects of the business, from staffing and packaging to technology and marketing. If all these areas are well looked after, expect sales and profits to trend in the right direction.

1. Having enough staff

Running a successful CloudKitchens® delivery kitchen requires the right number of staff. While fewer employees will be required in comparison to brick-and-mortar eateries, it is still wise to have enough chefs in the kitchen to fulfil all the orders expected to come in. Don’t go overboard when hiring, though. Start with a couple of cooks and grow the brigade as the business expands. It is also essential to have properly trained staff as this will ensure that all food is prepared exquisitely and exceeds customers’ expectations.

2. The right packaging

Packaging might seem like a small thing to worry about, but it’s actually a concept that many businesses operating out of CloudKitchens® delivery kitchens need to pay close attention to. It’s one of the key ways to create a great customer experience, as the last thing restaurants want is for food to leak or spill when being delivered. Furthermore, using the right packaging for each order can help keep food and ingredients fresh and allow for a smooth and seamless delivery process.

3. State-of-the-art technology

Modern technology is also necessary to ensure orders are tracked and processed efficiently. One of the advantages of working with Smarty City Kitchens is that our CloudKitchens® delivery kitchen businesses have access to the latest food technology and software that allows them to track all orders coming in on one tablet, meaning if they partner with multiple food delivery companies, they don’t have to worry about a messy set-up that consists of numerous tablets. Utilising reliable online order and delivery management systems can help streamline the process and provide accurate updates on order statuses.

4. Accessible on multiple delivery apps

To expand customer reach and generate more orders, partnering with multiple delivery apps is essential and a widely adopted business model for many CloudKitchens® delivery kitchen businesses. This will increase visibility and encourage more people to place orders, especially if eateries have a unique selling point or have a special type of cuisine that is not readily available.

5. A strong online presence

A well-thought-out marketing strategy and website should always be part of the plan. Building a user-friendly and attractive website will help promote the brand and drive more customers to place orders. In addition to a website that is easy to navigate, be sure to have social media accounts across multiple platforms and post updates regularly. Don’t just focus on the food, but provide insight into the backstory, the people behind the cuisine and any promotions or discounts that are currently going on or about to be launched. Utilising these online tools is also a good way to build hype if a restaurant plans to unveil a new dish or revamped menu.

Get started in a CloudKitchens® delivery kitchen today

There are many things to consider when businesses consider transforming their business model into one that runs from a CloudKitchens® delivery kitchen. Given their growing popularity, it is important to understand the different elements that come with them, such as their cost, responsibilities, benefits, and challenges. For those looking to start their own CloudKitchens® delivery kitchen, it is wise to do thorough research and consult experts in the field in order to make a well-informed, successful decision. With the right framework in place, restaurateurs can establish a successful business that is both financially and operationally rewarding. Ready to open your own CloudKitchens® delivery kitchen in Singapore? Complete the form below or contact our friendly and helpful staff today.

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