Add cloud to any IT operations and it becomes edgy. The same is true for the latest craze in the food industry – Cloud Kitchens. So, are the two related? Not really but conceptually. A cloud kitchen is an online-only restaurant that supports food delivery, no dine-in or take-away. These have matured in the past couple of years as food delivery services have flooded the market and people have taken to at-home binge-watching options than expensive dine-out ones.
An online-only restaurant is a simplistic definition. A successful cloud kitchen comprises of these components
- A well-designed industrial kitchen
- Food delivery apps serving the area
- Ample parking and waiting space for drivers
- Technology-enabled order management systems – there is a lot of optimization to costs that can be done once order data for the entire kitchen is available at one location.
- Not necessary, but restaurants serving cuisines where ingredients synergy is feasible.
Cloud kitchens were already a growing trend and COVID has provided the necessary boost. Why were these growing so fast in the 1st place
- Reduced Operations Costs – Maintaining a full-fledged restaurant is a costly affair and costs must be borne for all facilities regardless of foot traffic. Cloud kitchens reduce overall operations costs drastically.
- Easy to set up new restaurants – Setting up a new restaurant needs a lot of approvals from different authorities. Adding a restaurant to a Cloud Kitchen reduces a major set of those making setting up new restaurants extremely easy. This is true for both upcoming brands as well as brand extensions of established names.
- Increases Operation Efficiency – Since the restaurants have to only focus on cooking and packaging which eliminates a lot of activities that traditional restaurants endure, the efficiency of their operations increases a lot.
- Easy Brand Awareness – Instead of promoting their restaurants on different channels, brands only need to promote them on the food delivery apps. This reduces the overall advertisement costs and improves customer acquisition costs.
- Improved customer habits awareness – By collecting data from different kitchens, it becomes easier to be aware of customer behavior as well as understand changing trends. This helps restaurants plan as well as to adapt to any changes faster rather than playing the guessing game.
Now we need to understand the demerits of Cloud Kitchens too before jumping on the trend
- Devoid of the “Experience” – Major restaurants serve the full experience of the visit rather than just the food. That experience contributes a ton to the customer loyalty aspect. Cloud Kitchens must be perfect with the food and packaging as there is no human experience beyond that.
- Dependency on third party apps – Cloud Kitchens are reliant on 3rd party food delivery apps, on most occasions. As such, the performance of the food delivery service directly impacts their business.
- Increasing competition – The competition is increasing fast in the Cloud Kitchen business, even from the food delivery companies too. Food Delivery companies are opening their Cloud Kitchens and competing with others, clearly working to their advantage.
As this trend catches on, we can be sure of one thing – customers will be flooded with cuisines and offers to grab their attention as they lie in front of their TVs watching their favorite game or binge-watching their favorite show.
