The food industry is changing. Advancements in technology, changing consumer habits, and Covid-19 have caused a huge increase in demand for online food delivery. This has given rise to the cloud kitchen—a business model that promises to expand delivery services at a minimal cost.

But what is a cloud kitchen? And what does this mean for your business? Below, we’ll guide you through the pros and cons of the cloud kitchen over the traditional brick-and-mortar type of restaurant and explore how to run a successful cloud kitchen.

What is a cloud kitchen?

Simply put, a cloud kitchen, otherwise known as virtual, dark or ghost kitchens, is a delivery-only restaurant.

Restaurants have an online presence and their food is ordered through a food app, but the restaurant doesn’t have dine-in facilities. Orders are made in one location, picked up by a delivery driver, and enjoyed at home.

Why are cloud kitchens taking off?

Cloud kitchens are not a new concept: pizza delivery restaurants have been around for decades. But the rise of the cloud kitchen in recent years is down to the following:

• Demand for food delivery: the food delivery industry is predicted to grow to 200 billion by 2025 as consumers are increasingly willing to pay for the convenience of having their food delivered.
• Covid: lockdown restrictions forced restaurants to close and switch to delivery-only. And customers are ordering more takeaways as they can’t dine out, but still want restaurant quality food (and a break from cooking).
• Real estate prices: delivery-only kitchens aren’t restricted by location and high rents–highly appealing for businesses looking for a low-cost model.
• Emerging technologies: kitchen automation and drone delivery are set to disrupt the standard restaurant model even further and reduce delivery costs.
  

Brands going virtual

Over the past year, we’ve seen several businesses take advantage of these trends, and launch virtual kitchens to bring new concepts to market:

Thunderbird

Thunderbird—arguably the best fried chicken brand in London—launched an (equally well-named) virtual vegan brand, Jackfruit Junkie.

wagamama

Known for always innovating, wagamama is opening 3-5 cloud kitchens this year to target customers out of reach of its restaurants. And to respond to the increase in demand for online food deliveries.

Hakkassan

It’s not only casual dining businesses exploring this space either. Last June the Hakkasan Group introduced a first-of-its-kind virtual culinary popup to the streets of central London.

Considering launching your own cloud kitchen? Here’s a summary of the advantages/disadvantages associated with this type of business:

Pros

• Lower costs: a 500 ft cloud kitchen can efficiently serve the same number of customers as a 1500 ft restaurant. Plus, there’s no need to pay high rent for storefronts with heavy footfall in prime locations. And labour costs are significantly lower as there’s no need for any front-of-house service.
• Better efficiency: you can design the kitchen to prioritise the speed of preparation and the process of handing over meals to delivery drivers. Lower prep times typically lead to a shorter order duration for the customer, which is crucial as speed is a competitive advantage in this industry.
• Access new customers: restaurants have a maximum capacity on premises, and nearby foot traffic often determines volume—online deliveries allow a wider radius, so businesses can access new audiences.
• Ease in scaling operations: the investment required to open a cloud kitchen is lower, meaning smaller operators can expand quicker than they would have been able to with physical restaurants.

Cons

• Staff retention: teams who are like the buzz of hospitality and customer interaction might miss the atmosphere, and this could lead to unmotivated staff and high staff turnover.
• Food quality and safety: businesses may struggle to keep the product at the right temperature and safe to eat—need the right packaging, short delivery times etc.
• Reliance on third-party apps: high fees can eat at profit margins, and you have little control over the last-mile delivery, which can affect the quality of food and put business reputation at risk.
  

How to run a successful cloud kitchen:

Be agile: speed is a business advantage. Invest in automated tools that streamline operations to ensure a speedy delivery.  

Look after your teams: train employees and empower teams with the right tools to do their jobs effectively. Try to make things easier and more enjoyable for your teams—can you be flexible with the rota or scheduling?

Ensure food safety standards: use an app (like Trail 😉) to log daily compliance checks and ensure you’re creating a positive food safety culture throughout your business.

Use data: you have data about the time of order, location, which meals are popular etc. use the information to optimise operations and make better decisions.

How Trail can help

• Everything an EHO needs all in one place: Trail is a complete historical record of task completion, time and date stamped for accountability.
• Make data-driven decisions: dashboards help spot trends, so you can improve processes and operational efficiency—crucial in a cloud kitchen where quality and speed of delivery is a competitive advantage.
• New starters hit the ground running: training is built into daily tasks, and so easy to follow that anyone can pick it up and know exactly what to do—super important in a cloud kitchen where you rely on casual staff, and employee turnover is high.
• Better visibility: management can see what’s happening in cloud kitchens and on-site.
• Manage brand and operational standards: build more consistent working standards, and ensure tasks are carried out correctly with Trail. So you can be confident the cloud kitchen food is the same quality and experience a customer would get in your physical restaurant.

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