June 19, 2023

The concept of virtual kitchens: Why they are a hit with restaurants

With cost-effectiveness becoming a major focal point among restaurants in today’s economy, it has spurred the rise of virtual kitchens. Providing an innovative yet effective way for companies to operate without having to bear the costs incurred from running a traditional restaurant, the concept of virtual kitchens has caught on with eateries of all sizes, meaning it’s here to stay for the foreseeable future.

Virtual kitchens have become the answer to many of the challenges faced by both new and veteran restaurant owners. Through the utilisation of this popular solution, businesses can reduce costs and increase efficiency in order to stay competitive in the ever-changing F&B landscape. In this blog, we’ll venture on an in-depth journey into the wondrous world of virtual kitchens, why many restaurateurs are turning to them to stay afloat, and guide you to capitalise on this trend for your own virtual restaurant business.

A deeper look: What exactly are virtual kitchens

Virtual kitchens are units within larger facilities where food is prepared, cooked, and packaged before being picked up by the customers or delivered through a third-party delivery service. They are typically more cost effective than traditional restaurant businesses because they don’t require expensive kitchen equipment or a dine-in area. Since the space is significantly smaller than a brick-and-mortar establishment, a lot of money can be saved when it comes to staff and other overhead costs, such as rent and utilities. The concept of virtual kitchens allows restaurants to provide food to consumers in different locations, as well as enabling them to expand their customer base beyond their local area once they have established a name for themselves.

These kitchen spaces are designed to be optimal for small business owners, as they involve little financial risk. That being said, though, veteran restaurateurs find these spaces invaluable when wanting to reach a new demographic or test a different concept or type of cuisine. Virtual kitchens are also proving pivotal in supporting those in the F&B industry who want to reach a wider range of customers without skimping on the quality or level of their food.

What type of businesses use virtual kitchens?

Virtual kitchens offer immense versatility to restaurants as they can implement their ideas and concepts right from the get-go. With numerous types of businesses using these units for a variety of reasons, let’s take a look at the most common ones and how they get off the ground and running.

1. Restaurants with multiple delivery service partners

Due to their unique business model, which involves an eatery collaborating with one or more delivery service companies to provide food to customers all over Singapore, virtual kitchens have grown in popularity in recent years. This is because they provide the perfect pathway for businesses to branch out to areas that were once out of their reach.

2. Restaurants that specialise in fulfilling takeaway and delivery orders

These types of eateries are flourishing due to the rising trend of customers ordering food at home or in the workplace. Such restaurants typically provide a tempting menu that offers a wide selection of dishes that can be picked up or delivered with ease. Since every dollar spent matters in these kinds of businesses, the goal is to lower expenditure without sacrificing quality.

3. Food businesses with numerous brands

Many food groups have multiple restaurants under their portfolio, and since this is the core concept of their business model, they use virtual kitchens to save costs from having to rent numerous spaces for each entity. By operating out of one kitchen unit, they can use the money saved to ensure their food is of the highest quality and offer a diverse range of cuisine that can catapult them to stardom in the local area and beyond.

What are the advantages of using a virtual kitchen?

Virtual kitchens haven’t been accepted with open arms for no reason. They are becoming more widely used due to the plethora of benefits they offer to eateries. Furthermore, they set the foundation for growth as a lot of businesses use these spaces as the first step in their plans for expansion.

1. Much lower initial investment

The ability to significantly reduce costs is one of the alluring aspects of virtual kitchens for young restaurateurs. This is because they won’t have to spend as much money on setting up shop in a central location in the city as virtual kitchen providers like Smart City Kitchens already have designated facilities in the heart of Singapore. With plenty of offices, education institutions and residential neighbourhoods in the surrounding area, businesses can start developing their reputation right away and win the hearts of customers through delicious food. It is also worth noting that businesses working in virtual kitchens don’t need to spend as much on equipment as brick-and-mortar restaurants, as there is no dine-in area. On top of that, the number of staff needed is drastically lower as well.

2. Experiment with ideas

Businesses can more easily change their offerings in response to what is in demand at a given time or in a particular location. They are also free to experiment with their menus and gauge customer reaction before making these adaptations permanent. Along with switching up and refreshing the menu, it is also vital for eateries to come up with new ideas that may not be available in the local vicinity, such as a specific type or region of cuisine. If they are able to do this and create a lot of hype about it, they will dominate the market, with their sales and profits reflecting that.

3. Rapid expansion to new locations

Since little investment is needed for restaurants to move into a virtual kitchen, they can break even and enter profitability quickly. This provides the perfect conditions for them to start looking into the prospect of expanding to new markets and growing their customer base. With the locations operated by Smart City Kitchens already having plenty of foot traffic and online orders, eateries that move into these units won’t have to look hard to find new consumers. One of the easiest ways to bring in a wave of new business is utilise the power of social media and share intriguing insight and behind-the-scenes content about the virtual restaurant. This will allow a more personal connection with customers, who will subsequently be increasingly inclined to place an order. In order to win a loyal following, the simplest way is to run promotions and discounts on a regular basis.

4. Building on a successful concept

Once restaurants have nailed down a concept that works, they can build a network of virtual kitchens and grow their market penetration and overall revenue. Since it costs much less to get started in a virtual kitchen than in a traditional eatery, F&B businesses can branch out with confidence as they know they won’t need to shell out an obscene amount of money.

Things to consider before opening a virtual restaurant

Virtual kitchens have gained significant popularity for good reason. They are increasingly embraced by eateries due to the aforementioned advantages they bring. Moreover, these kitchens serve as a launching pad for growth, serving as the initial stepping stone for many businesses’ expansion plans. If you wonder whether you should start your own restaurant with a virtual kitchen, it’s crucial to take into account the following considerations before riding the trend:

1. The concept and branding for your virtual kitchen business

Choose a business model that aligns with your investment of time, money, and resources. Options include a single-brand cloud kitchen or an operator-managed virtual kitchen.

2. Figuring out the operational setup

It’s crucial to invest in technology, well-equipped kitchen infrastructure, and trained personnel such as chefs and delivery drivers to serve digital orders. Whether your menu is delivery-focused enough with appropriate pricing is also an important step to consider.

3. Provide the right training for the staff

Although the overhead costs of launching a virtual restaurant are relatively low, it’s important to consider training kitchen staff to handle new menus and maintain a balance between preparing new and existing dishes.

How to open a virtual restaurant business

Opening a virtual restaurant presents a unique opportunity to enter the food industry with a concept that caters to modern consumer preferences and online ordering trends. To capitalise on the booming online food delivery market, follow the below key steps to establish a successful business from virtual kitchen.

1. Develop a unique and compelling concept

Carefully craft your virtual restaurant’s concept by considering factors such as available resources, investment capabilities, and your target audience. Different virtual restaurant business models, such as single-brand cloud kitchens or operator-managed ones, can each cater to specific concepts for a unique customer base.  

2. Select the right kitchen partner

Find a reputable and well-suited virtual kitchen provider that aligns with your goals. Factors like their track record, range of services, technological capabilities, and geographic coverage can significantly impact your operations. In Singapore, you can consider well-known commercial kitchen partners, such as Smart City Kitchens, TiffinLabs, and Deliveroo, to ensure future success with your virtual restaurant business. 

3. Ensure compliance and meet legal obligations

Before launching your virtual restaurant, dedicate time and effort to complete all the necessary preliminary tasks to avoid potential legal issues. This includes obtaining relevant certifications, registering your business, securing appropriate insurance coverage, and ensuring compliance with local health and safety regulations. 

4. Establish a robust technological framework and optimise delivery partnerships 

Invest in a reliable technology infrastructure that supports seamless online ordering and order management systems. Prioritise first-party delivery options, which allow you to retain control over the customer experience, data, and profit margins. This approach enables you to build a strong brand identity for a virtual restaurant.

5. Curate a menu tailored for delivery and assemble a skilled kitchen team 

Design a menu that is optimised for delivery. Think of what specialties you can highlight and focus on while considering customer preferences. Recruiting a skilled kitchen team that excels in efficient preparation and delivery processes is essential in producing consistent food quality and timely service to delight your customers.

The ingredients needed to make a virtual kitchen rise

Running a successful virtual kitchen necessitates careful planning and consideration of all business aspects, from employees to packaging and marketing. An eatery’s sales and profits should be on the upswing if all these areas are well-cared for.

1. The ideal number of employees

The right number of employees is necessary to run a successful virtual kitchen and restaurant. It can be hard to work out how many businesses need to start with, but it’s always wise to have less staff and grow the team when a consistent influx of orders starts coming in. Ultimately, no matter if you have two chefs or five, the total number of employees will still be lower than that of normal restaurants. But, make sure to prioritise quality over quantity as the food prepared and overall business operations depend on it.

2. Perfect packaging

To most businesses, packaging might seem like a trivial matter as their main focus is on producing top-quality food that really hits the spot with their customers. But, in reality, the way the dishes are packaged is incredibly important as it can add to or ruin the overall dining experience. If eateries don’t pay attention to this, it can result in food leaking or spilling en route to the customers, which will result in bad reviews online and negative word-of-mouth publicity in the local community.

3. Helpful technology

Having the right technology in place allows for business operations to run smoothly and seamlessly. Smart City Kitchens’ facilities utilise the latest software to ensure restaurants using virtual kitchens can keep track of all their orders on one tablet, no matter how delivery companies they are affiliated with. By doing this, they can ensure all orders are correct as certain customers may have special requests or dietary requirements.

4. Strong presence on food delivery apps

Whether it’s Deliveroo, Foodpanda, or GrabFood, virtual kitchen eateries will want to be on all the food delivery apps as it gives them access to a much larger customer base than just being listed on one platform. This will increase the likelihood of people placing orders, especially if your virtual restaurant prepares the food in a special way or offers a particular kind of cuisine that cannot be found anywhere else in the surrounding area.

5. Remaining active on social media

Creating a connection with customers through social media and a top-notch user-friendly website is a concept that all virtual kitchen restaurants have to adopt in this digitally advanced age. Both will aid in brand promotion and encourage people to take notice of the eatery and place orders. On top of that, it is ideal to have accounts on numerous social media platforms in order to maximise reach. When posting content, don’t solely concentrate on the food aspect of the business. Instead, focus on what goes on behind the scenes or the incredible staff who help prepare and cook all the dishes. It is also vital to share updates on new items, a change of menu and ongoing or upcoming promotions or discounts.

Embark on a successful adventure from a virtual kitchen

Any restaurant, regardless of the concept or type of cuisine they serve, can achieve incredible success from a virtual kitchen. As long as the key components are looked after, such as having the right amount of equipment and staff in place, there is nothing stopping eateries from reaping the rewards and growing their brand. Once this happens, the sky’s the limit as many businesses choose to expand to other markets in order to maximise profits. Whatever the route, everything begins from the same starting point – a virtual kitchen. Intrigued by the prospect of operating a virtual kitchen business? Fill out the form below or contact us.

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