Planning to start your Cloud Kitchen? Here are the things you need to know
What is the point of having a dine-in restaurant when the majority of people love to get their food delivered at home?
The growth in technology has changed every aspect of human life. Now, it’s hard, not to find technology in anything that human needs. From education to health, or from finance to agriculture, Technology has deepened its roots in every walk of life.
The same is the case with the food sector. Growth in the foodtech sector has been exponential over time.
And this growth has attracted many investors. Between 2014 to H1 2019 total funding raised by food tech startups is $2.93 Billion. Nobody could have ever imagined such growth a few years back.
Things You Need To Know Before Starting
Back in the day, people used to go out and eat with their family and friends to have a good time. But with 24×7 digital jobs, people prefer to stay indoors. Now, they just call and get their food delivered at home. Such consumer behaviour was the reason Cloud Kitchen originated. And now, the Indian Cloud Kitchen market opportunity by 2023 is forecasted to reach $1.05 Billion.
What is a Cloud Kitchen & How Does It Work?
A Cloud Kitchen is fundamentally a restaurant kitchen that accepts customer orders online and provides no dine-in facility for customers. In short, it is a kitchen that delivers food to the customer’s doorstep.
The majority of the cloud kitchens receive orders through their mobile app or website or via various food delivery platforms (Zomato, Swiggy, etc.). Some Examples of Cloud Kitchens are Faasos, Curefit, Box8, etc.
It is a Pune based startup, founded in 2010.
Total funding- $281.5 Million
It is a Bangalore based startup, founded in 2016.
Total funding- $294.6 Million
Box8 is a Mumbai based startup, founded in 2011.
Total funding- $34.9 Million
Twigly is a Gurgaon based startup, founded in 2015.
Total funding- $955.3K
Reasons For The Growth of Cloud Kitchen in India
Changes in consumer behaviour led to the rise of CK. And when compared to conventional dine-in restaurants, a cloud kitchen generates much revenue.
- The profit margin of a dine-in restaurant is 3% whereas the profit margin of a cloud kitchen is 10%
- Research also shows that 87% of the Cloud Kitchen market is still untapped
- The setup cost(Average annual) for opening a restaurant in India is approximately 3.05x times than that of a cloud kitchen
How much does it cost to set up a Cloud Kitchen in India?
As stated above, a cloud kitchen requires 3.05x times less capital than opening a conventional restaurant in India.
But have a look at this detailed segmentation of capital required to set up a cloud kitchen in India.
Costing is divided into two categories
- For Operations
- For Marketing and sales
The operations part includes rent, licenses, Kitchen and equipment, and staff.
Rent-It majorly depends on the location and land prices. Space of 800 Sq. Ft (Rs. 25,000-Rs. 40,000) is sufficient to operate a CK.
Licenses– Some necessary licenses to open a cloud kitchen are Health Trade License, FSSAI, Tax Registration License, etc. And it would require Rs. 15000-Rs. 18000 to get these licenses.
Kitchen and Equipment– Rs. 5 Lakh-Rs.10 Lakh, and it mainly depends on the requirement.
Staff– Rs.40K-80K for Kitchen Staff.
For Marketing and Sales
This part includes Online customer acquisition, social media presence, branding, and packaging, PoS and inventory.
Online Custome Acquisition Cost (CAC)– Rs.40K – Rs.100K
Social Media Presence– Rs. 20K – Rs. 40K per month
Branding– Branding, and Packaging Cost Rs. 50K- Rs. 70K
PoS and Inventory– Rs. 4K – Rs. 5K per month
With this growth and less setup cost, Cloud Kitchen is the next big thing in the Indian Startup Ecosystem.
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