The Ultimate Guide to Building a Cloud kitchen

Meta Description – A cloud kitchen is an emerging trend in today’s food industry. Here is everything you need to know about starting a cloud kitchen in 2021.

Table of Contents

1. Introduction
2. What is a Cloud kitchen?
3. Current trends in the cloud kitchen industry
4. Different types of cloud kitchens
5. Building a Cloud kitchen
6. What is Yelo, and why use it to build your Cloud kitchen?
7. Promoting your Cloud kitchen
8. Summary

Introduction

The food industry is a perennial one as the demand for food can never subside till the end of humankind. Most entrepreneurs who are part of this industry experience immense satisfaction with their work as they get the privilege to feed people with tasty and healthy food. 

Customers are always inquisitive to trying and exploring different cuisines, and chefs are more than willing to quench their thirst, thanks to their never-ending passion for cooking.

Managing a food business is an art, and we are not talking just about cooking here. It involves other aspects of running a business such as marketing, managing human capital, operations, and so on. A common thread that connects all these elements is technology. Yes – technology has successfully made its impact felt for many years now, even in a conventional industry like food.

The world has already seen many technological innovations in the food industry, starting from simple reservation apps to complex robotic restaurants. But if there is one concept that has stood out amidst the plethora of technological innovations, it has to be the ‘Cloud Kitchen.’ 

The concept of Cloud Kitchen took the global food industry by storm when it arrived. The earliest known cloud kitchen could be traced back to the 1950s when pizza delivery became a raging phenomena in global households. Restaurateurs found running a cloud kitchen not only profitable but also easier than running a traditional restaurant. 

The onset of the pandemic reinforced the popularity of cloud kitchens even further, as more and more people wanted the food to be delivered to their homes instead of going to a restaurant. The penetration of smartphones and the improved technological literacy among people have made it easier for both cloud kitchen owners as well as customers to manage orders.

However, like any other industry, a challenge that most cloud kitchen owners face today is the marketing of their business. Reaching the masses takes time, and many people do not have the luxury to wait that long. This is where an online marketplace can help. Just like many retail sellers found a new lease of life through a marketplace like Amazon, cloud kitchen owners can look forward to joining a dedicated marketplace for them. Such marketplaces can connect multiple cloud kitchens and serve thousands of customers in an area. This comprehensive guide navigates you through the complete process of creating a Cloud kitchen and the ways to market it.

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What is a Cloud kitchen?

Cloud Kitchen is an interesting concept that came to prominence in recent years. Here is a classic definition of a cloud kitchen – 

“It is a food business where you prepare food at a central kitchen and deliver it to customers at their doorsteps. The customers will place an order through telephone, website or an app”

A cloud kitchen is also known as a ghost kitchen and dark kitchen – probably because a customer can’t see where their food is being prepared. 

In a cloud kitchen concept, there are neither dining nor takeaway facilities –  It is a delivery-only system. As a result, the owners can save costs on physical space, furniture, manpower, and electricity. 

To run such a business, you need to do one of the below – 

1. Build your own website
2. Build your own app
3. Have a dedicated phone line to take orders
4. Partner with a multi-vendor Cloud kitchen.

Building a website or an app takes time, effort, and money. Also, a website, app, or dedicated phone line will not produce desired results right away as you need to spend a lot of time to reach your target audience through marketing. This leaves us with a Cloud kitchen. It is the quickest and easiest option to scale up your cloud kitchen. 

A multi-vendor marketplace or multi-vendor Cloud kitchen is an online aggregator where multiple cloud kitchen businesses can register, list their menu and start selling their food through it. 

What this also means is that if you are a budding entrepreneur looking to enter into the food industry without actually cooking food, building a Cloud kitchen may be a lucrative option. You can connect thousands of customers in your area with hundreds of cloud kitchens scattered around, who are looking to reach customers with minimal effort.

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Current Trends in the Cloud Kitchen Industry

If you are planning to build a Cloud kitchen, you need to know the ins and outs of this industry. 

To start, the online food ordering/delivery sector is growing at a staggering rate of 300% since 2014.

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The main driving force behind this rapid growth is the ‘convenience’ offered by online food businesses. Millennials and the Gen Z population (who are always on the move) are not really bothered by where they consume food. They instead value delivery speed and ease of ordering the food in a few clicks.

Another trend that is on the rise is, the demand for loyalty programs and offers that are mostly provided by food delivery aggregators. Such offers encourage consumers to keep using online ordering services due to the affordability factor.

The United States is also projected to be the fastest-growing market for Cloud Kitchen in the next few years, closely followed by the Asia Pacific and Europe. 

“87% of American citizens feel that third-party food delivery apps make their life easier.”

Different Types of Cloud Kitchens

Cloud kitchens can be divided predominantly into five categories. The operational process of all these types is the same – receive an order from the app, food is prepared in the kitchen, and delivery of the food is done at the customer’s doorstep. The difference lies in the execution of their operations.

Shared Kitchen Space

In this, a large kitchen space is occupied by multiple kitchen brands, all working under the same roof. The brands pay rent and operate alongside each other harmoniously. Such a workplace is also called a commissary kitchen. 

Each brand will be allotted individual units that will be equipped with all the required utilities and equipment. Such shared kitchen spaces are usually located in strategic locations such as city centres or a business area where the order demand is usually high. Such central locations will help them reduce the delivery time and fulfil more orders therefore customers can rate the delivery service and later give feedback on the quality of food and service. 

Virtual Restaurants

A virtual restaurant shares the pre-existing kitchen of a traditional restaurant and uses its infrastructure and equipment. These virtual kitchens have their own unique identity and usually don’t adopt the identity of the restaurant where they have set up their kitchen. 

In fact, they can even offer a completely different menu from the original restaurant, thereby eliminating any possibility of competition between both brands. There are also situations where a traditional restaurant would start a new virtual restaurant with a unique name and identity to boost their overall business. 

Aggregator Managed Cloud Kitchens

This is similar to a shared kitchen space; the only difference being such cloud kitchens are entirely operated by online food aggregators (such as Uber Eats). Such a business is popularly known as the Shell business. Here the kitchen space is owned or rented by the online food aggregators, who then invite their most trustworthy and popular vendors to utilise the kitchens. 

These kitchens are also open to new players, but the decision of onboarding lies with the aggregator. Being a part of this business, cloud kitchens can benefit from the vast delivery fleet of the aggregator, advanced ordering systems, etc.

Standalone or Single Brand Cloud Kitchen

This is the most basic business model of cloud kitchen. In such a model, there will be a restaurant with a single kitchen space with no storefront or seating facility. The restaurant entirely operates online and can partner with various food aggregators for order and delivery management. They generally focus on single cuisine and a single theme.

Operator Managed Cloud Kitchen

In such a model, a 3rd party operator runs and manages the whole cloud kitchen business as a franchisee. A popular food brand will partner with this operator, who takes care of getting the required equipment, license, location, and staff. The entire process like order acceptance, preparation of food, and delivery is handled by the operator. 

All the brand needs to do is provide the different recipes and provide training to the staff. The brand would receive a percentage of revenue for each order placed.

Building a Cloud kitchen

Currently, there are many cloud kitchens prevalent in the market, but a limited number of marketplaces. This opens a great opportunity for people to start a Cloud kitchen, onboard different restaurants, and take a fee for using your services. Here is a step-by-step guide on how to build a Cloud kitchen?

Build a Prototype

Once you have decided that building a Cloud kitchen is your thing, the first step is to pull the idea from your head and put it on a piece of paper. And the best way to do this is by building a prototype. The prototype can be of any format – a simple sketch or a complex wireframe on software. All you need is a mini version of your Cloud kitchen that you can refer to while building the actual product.

A prototype can also be an important introduction tool for your business as it would be used to present your idea to investors, employees, and cloud kitchen owners. Partnering with a multi-vendor marketplace platform like Yelo can help avoid this step. Yelo offers multiple customised templates for you to pick and start creating your Cloud kitchen in minutes.  

Testing the Prototype

Building a prototype is just one part of your ideation phase. It is also equally important to test your prototype by exploring all the different possibilities (both positive and negative) you can encounter while running the business. 

To test, send the virtual prototype to cloud kitchen vendors, food experts, or friends and ask their feedback on whether anything can be improved or altered in the product. A perfect prototype with all the technical aspects is the outcome of this phase.

Prepare the Project Documentation

Project documentation is an important step towards developing your Cloud kitchen. Once you have a prototype and a clear vision of various features and paths you need to take, prepare a detailed report on the same. This might seem to be a tedious task, but the importance of documentation cannot be emphasised enough. It will save you time and money during the process of marketplace development, especially if something goes wrong. It doesn’t matter whether you are using an in-house team or hiring freelancers to develop, project documentation provides a clear roadmap for the developers. 

Build a Marketplace website

Now that you have the prototype and the project documentation ready, you can start developing the Minimum Viable Product (MVP) of the marketplace. An MVP is a product that has most of the features required to attract the early cloud kitchen owners. Start onboarding some cloud kitchen vendors for free into your MVP and ask them to test it. You can expect a lot of feedback in this stage to help you make the required improvements. 

Grow Your Marketplace User Base

Do not expect hundreds of cloud kitchen vendors to join your marketplace as soon as you launch. You need to start building trust and attract loyal cloud kitchen owners into your marketplace through various incentives and promotional activities. 

What Is Yelo and Why Use It To Build Your Cloud kitchen?

Yelo is a multi-vendor marketplace platform that can help you build marketplaces for any industry, including cloud kitchen. You can pick a personalised theme from hundreds of available ones and get your marketplace up and running in less than a day. You do not need any programming knowledge to build a marketplace with Yelo.

By using Yelo, you also enjoy an array of services like:

• A fully customisable and responsive mobile-friendly website
• Order management
• Inventory management 
• Order fulfilment
• Easy onboarding of vendors

Using a theme-based tool like Yelo also helps you avoid most of the steps discussed in the previous section, such as building and testing prototypes, product documentation preparation, and even building a website from scratch. All the themes in Yelo are tried and tested for success and are highly customised for your Cloud kitchen.

With Yelo, you can further:

• Perform unlimited transactions in a day, and no charges will be levied on it. 
• Allow visitors to either create an account or place an order as a guest user. 
• Manage the schedule of the restaurant, automatic update of menu based on time, import/export of menu, and inventory management – all in a few clicks. 
• Even the vendors can upload unlimited items into their menu. 
• Track your business in real-time with advanced analytical tools.
• Make changes to your reporting dashboard through easy drag-and-drop operations.
• Integrate Google Analytics with your marketplace to track referrals, visits, and sales.
• Easily export analytical reports daily to other platforms for accounting purposes. 

Promoting Your Cloud kitchen

The most important step to grow and bring in cloud kitchen vendors to your marketplace is effective marketing. Here are some ways to attract cloud kitchen vendors to your business-

Register in Google Business

Google Business is a wonderful free tool that helps your visitors find you easily. As a first step, register your marketplace with Google Business and be easily visible to cloud kitchen owners over Google search. Doing this will easily improve the searchability of your brand through Search Engine Optimization (SEO). Once registered, the cloud kitchen vendors will not only be able to see you but can also contact you easily. Try incorporating keywords related to your locality in your profile. For example, you can try including “Food delivery in Mumbai” or “Order food online in Chennai” based on your location.

Blog

Blog about different foods, cuisines, diets, etc., on your marketplace, and external blogging platforms like Medium will put your brand right on the radar of food enthusiasts in your area. Again incorporate location-based keywords to attract relevant audiences to your business. Always have a call-to-action button in all your blogs to redirect the customer or the vendor to the homepage.

Social Media

Having an engaging social media presence will multiple your visibility in a short span. You can connect and build your network with various cloud kitchen owners. Social media also paves the way for you to share unique offerings about your industry that is likely to be reshared across many people. This improves your chances of being viewed by the top cloud kitchen owners in your area. 

Video

Run multiple video marketing campaigns promoting your brand on a regular basis. Videos are one of the fast-growing marketing channels and people tend to engage more with video content than any other content.  87% of video marketers have seen a rise in website traffic. The cloud kitchen owners can easily find you through a relevant video marketing campaign and start engaging with your marketplace. 

Influencer Marketing

There is no better way to reach people than good word-of-mouth publicity from someone they trust. A study revealed that 6 out of 10 people follow an influencer’s advice than anyone else. There is a good chance that many of the cloud kitchen owners follow one or the other influencer in their social media accounts. So, hearing a good word about your marketplace will not only make them join your marketplace but can also pull other cloud kitchen owners to your marketplace resulting in a positive domino effect.

Summary

Online delivery has made our lives simpler by bringing one of our key necessities – food, right to our doorsteps. Convenience was always the key driving factor for people to opt for online delivery over a fine dining experience. But in this pandemic-stricken world, online delivery also plays an important role in safeguarding people from venturing out and increasing the chance of catching the infection.

A business model that is an extension of online delivery is cloud kitchens. It is a delivery-only food business model where there is no dining experience for the customers. More and more cloud kitchens are sprouting these days owing to the minimal investment needed to start one. 

Helping in the growth of cloud kitchens are multi-vendor marketplaces. Such marketplaces can house multiple cloud kitchens, allowing customers to place an order with any vendors. In short, it is the ‘Amazon of cloud kitchens’.

Building a cloud-kitchen marketplace involves several steps and takes a lot of time. However, if you use a theme-based tool like Yelo, a major chunk of your work will be taken care of. All that you have to do is promote your marketplace in multiple channels to attract different cloud kitchen vendors in your area to register. 

To know more about Yelo and how it can help you build your Cloud kitchen, contact us today.