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What You Need to Know Before Starting Your Own Cloud Kitchen

Cloud kitchens—sometimes called a ghost, dark, or virtual kitchen—conduct their business entirely online. Meaning, there are no dine-in options, and everything is delivered straight to the customer’s door. Since the pandemic started, food delivery services have reached an all-time high, with many places still disallowing close contact and dining in.

Cloud Kitchen

So many people are now opting to have their food delivered to their homes instead, and budding entrepreneurs are quick to pick up on this trend. If you’re looking to start your own cloud kitchen business or online food delivery service, here are some basic guidelines to keep in mind to ensure that your business runs as smoothly as possible:

Decide on a Name and Menu

Of course, the first step to starting any business is deciding what you’re selling and what you’re going to call your enterprise. When it comes to the food industry, picking a good name is just as important as choosing a menu. Pick something catchy, on-brand, and, most significantly, one that doesn’t sound too similar to another existing restaurant. Naming your business after your family name or your nickname is always a classic choice.

Other than that, developing a menu is another thing that’ll set you apart from your competition. While having a variety of food can work, focusing on one specific niche or type of cuisine is best for first-timers. There are many cuisine options—classic American, seafood, vegetarian, and even desserts. You can also focus on drinks, such as juice, smoothies, or boba tea. Developing your menu is all about finding what you’re good at and what sets you apart from other restaurants.

The Right Price

Pricing can be tricky. You have to take into consideration a lot of factors. There’s the food cost, the labor cost, the delivery fees, and your gross profit margin. If that sounds like too much already, prepare to do some more math when you’re running the business. Pricing your menu is all about finding the right balance between offering affordable prices for your target audience while still getting enough to maintain a considerable profit. Finding that balance while maintaining a set quality can be tricky. But once you’ve got it down, the rest won’t be as hard anymore.

When in doubt, look to your customers. Are you catering to working adults or students? How about offering significant portions for parties or large groups? There’s also a market for square meals for one or two diners. Whatever the case, think about what your target audience can feasibly afford with the portions and quality of the food you offer and don’t overprice.

If you offer meals or snacks for university students studying late at night, you can’t price your stuff with the income of a working adult in mind. Don’t skimp out of turning a profit, but don’t be too greedy either.

Build Your Kitchen or Find a Commercial Space

Finally, it’s time to find your kitchen. Food safety laws in some states prohibit a home kitchen when running a business. So unless you live in a place where it’s OK to work from your own home, finding a commercial kitchen space is your next step. If you can afford to, you can buy your own kitchen space and use it exclusively for your business. Not only will you have exclusive rights to everything in it, but you’d be in charge of all your working hours and the type of equipment you use.

Of course, you’d have to pay upfront for the space. Another cost is equipment maintenance, such as fridge repair, stove maintenance, and overall kitchen upkeep. You’d have to submit yourself to routine inspections and acquire all the necessary permits and insurance. But the good thing about it is that the space is all yours to use and you don’t have to share it with anybody or work around other people’s time, giving you more freedom and more storage space.

Additionally, since you’re a small business, you don’t have to worry about your storefront location. You can run your business from any neighborhood, provided that it meets all safety regulations, and it won’t affect your customer retention or sales.

While buying your kitchen is undoubtedly an option, the economical choice is to rent a commercial kitchen. A commercial kitchen allows you to use it for a set period, such as by the hour or day. This does entail that you won’t have sole use of the kitchen, and you won’t be able to work for too long. But it’s a much more affordable option than buying your own kitchen space.

Think about what you can afford or what you’re willing to invest in. Owning your kitchen can be good in the long term, but renting a commercial kitchen is a low-cost option if you’re just starting.

Find a Delivery Service or Make Your Own

Arguably the most crucial step in starting your remote delivery service is finding a delivery service provider. Companies like GrubHub, DoorDash, and UberEats specialize in food delivery. They are the obvious first choices for delivering your products and marketing them to a large audience. While it’s certainly true that it can expose your business to a larger audience, remember that these companies take a set commission fee from your profits as payment. The percentage can be daunting, with some taking as much as 30 percent. But it’s still worth considering for the reach and the service they provide.

If you’d rather not lose any of your profits, you can be in charge of your deliveries. So long as you have your means of transportation, whether it’s by bike or by car, and can hire a person to handle the deliveries, then you most certainly can do it yourself.

Market, Market, Market

So you’ve found a place, found a target audience, memorized your menu by heart, and decided on a delivery service provider. Now it’s time to market the hell out of your business.

If you opt for a third-party delivery service, you’ve already done half your job. Your business shows up in an online marketplace that millions can view, and you can pay for additional advertisements on their mobile app or site as well.

Other than that, you can try different online marketing strategies, such as social media campaigns, paid sponsorships, and email marketing. You can also offer discounts, exclusive deals, and loyalty benefits to your customers. The most effective form of marketing for any restaurant is the quality and service you offer. If you serve consistently good food, provide excellent service, and punctual delivery—your customers will do the marketing for you for little to no price.

As with all businesses, you are opening a cloud kitchen will be difficult, especially if this is your first venture. Before investing in a dedicated kitchen, ensure you get your menu, pricing, and branding right. After that, decide whether you want to deliver the food yourself or find a third party to do this for you. And most important of all, don’t forget to market.

Jeremy D. Mena
Alcohol geek. Future teen idol. Web practitioner. Problem solver. Certified bacon guru. Spent 2002-2009 researching plush toys in Miami, FL. Won several awards for exporting tar in Libya. Uniquely-equipped for managing human growth hormone in Libya. Spent a weekend implementing fried chicken on the black market. Spoke at an international conference about working on carnival rides in Miami, FL. Developed several new methods for donating jack-in-the-boxes in Edison, NJ.