Cloud Kitchen Business Model – A Complete Guide

Cloud Kitchen Business Model – A Complete Guide

The whole country is facing a global crisis caused by COVID-19 which led to a change in the way restaurants operate. Coronavirus pandemic created a massive agitation in the restaurant industry. 

With the crucial expected changes in consumer eating habits after Coronavirus, Restaurants are whirling to online deliveries, dark kitchens, or ghost restaurants or Cloud kitchens businesses are becoming more relevant to survive in the F&B industry. 

Over the next few years, delivery-only restaurants are being seen as a crucial part of the business in the restaurant industry, as per a report, the predicted market size of cloud kitchens is to reach $1.05 Bn by 2023.

According to a recent article by Economic times, Future Group will soon start “cloud kitchens” to supply hot meals to consumers in the coming month, said Kishore Biyani, CEO of Future Group said.

What is a Cloud kitchen? 

A cloud kitchen also recognized as the dark kitchen or ghost kitchen or we can say a virtual restaurant, is a kind of restaurant establishment that offers only-delivery services with no dine-in convenience. 

Cloud Kitchens take customers’ orders either online or by telephone. They primarily rely on online food aggregators such as Swiggy, Zomato, or online websites or apps.

Related Read: List of Licences Required to Open a Cloud Kitchen in India

Types of Cloud Kitchen Business Model – 

1. Single Concept cloud kitchen – It operates on a single theme that typically offers 1-2 cuisines and has a small menu with 10-15 menu items. 

2. Virtual Restaurant – Also know as a ghost kitchen, that is a restaurant inside an existing restaurant that serves food exclusively by delivery. 

3. Multi-brand Cloud Kitchens – As the name suggests, it’s a model that allows running different brand name restaurants in a one roof using the same material, equipment, and resources. 

4. Co-working kitchen space – Where the number of restaurants can rent, establish and operates. These kitchen spaces have individual kitchen units for every brand, provided with the required facilities and conveniences.

5. Aggregator based Cloud Kitchens– Cloud kitchen spaces which managed by online delivery aggregators. Two major players Swiggy, Zomato have tried their hands in the cloud kitchen business as well. 

Pros & Cons of Starting a cloud kitchen in India

pros and cons of starting a cloud kitchen/dark kitchen business model

Cloud kitchen is a survivor in this pandemic situation – 

We’re going through an unusual situation, restaurants are shut down for dine-in, only online deliveries are allowed that too with complete health and safety measures.

From large restaurant chains to smaller standalone restaurants all are turning to online deliveries. Some of the brands also introduced a contactless delivery model for safer and healthy food delivery.

The relevance of Cloud-Kitchen Business Model – 

Rebel Foods,, Box8, and Freshmenu are some of the largest cloud kitchen brands who are progressing in the cloud kitchen domain.
Although the concept has been in the spotlight because of many benefits, their potential has swiftly raised during this nationwide lockdown, now restaurant owners are pivoting to staring a ghost kitchen. 

A) Cloud kitchens are acknowledged as a low investment, low risk, still, a high-profit business model since the cost of setting up a cloud kitchen is significantly less as compared to starting a traditional dine-in restaurant in India.

B) The cloud kitchen business allows restaurant owners to experiment with multiple concepts and formates. In result, has given birth to different food delivery business models.

C) Owning to low capital expenditure and high operational efficiency. It represents huge profit opportunity, Cloud kitchens have low indirect costs as compared to traditional restaurant businesses. It can attract budget-conscious consumers and grow their market share in the industry.

D) Restaurant running cloud kitchen can take help of online food aggregators, like outsourcing food delivery to these brands like Swiggy and Zomato. 
As per a report by News18, Some of the popular food brands such as Haldiram’s, Keventers, Chaayos, Saravana Bhavan, etc. have started cloud kitchens in partnership with Zomato.

E) Also, starting a dark kitchen eliminate front-line operational and in-house seating arrangement cost as well as managed by less staff. 

Starting a cloud kitchen represents an opportunity for both, the restaurant owners, and the online food aggregators. For new or for well-established cloud kitchens are now fast becoming the most preferred restaurant format for opening a new business or for rebounding the existing one.

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