When not to start a Cloud Kitchen in India

March 17, 2020

Cloud Kitchens are booming. They’re also NOT safe if the whole reason for going cloud is not present. Cloud Kitchens mainly help with cutting costs. And usually work-out when there are more online orders in the city. 70% of the population still lives in The Villages. Even among the 30%, the metros are outliers in online ordering. Mid-tier towns are unpredictable. Restaurants are still an experience and are trusted more.

Single brand
One thing you can’t expect when you are starting a cloud kitchen is getting viral. The restaurant can’t get viral without having a physical space. A new restaurant will more likely have a spike in sales when it’s open whereas, for a cloud kitchen, the graph is up gradually. In most cases, the average rent is not affordable if you rely on a single brand.

When online orders are lesser in your area
People adopt but not at once. Many of the mid-tier cities in India love eating-out rather than ordering in. It is an experience to eat out on the weekends. Unless the city is dense and the orders are more, it’s harder to start a cloud kitchen.

Zero Delivery Fleet
A delivery fleet gives you an edge and helps in maintaining a good relationship with customers. They mean a ‘partnership’ and take a good portion of the business. As soon as you think you have developed a loyal customer base and list them, it’s time to switch them to your tech.

Cloud Kitchens are budget-friendly to start. It doesn’t mean it’s inexpensive to run them (if you want to grow). You may have to reinvest your profits or freshly invest your money if you see or strongly anticipate growth. A lot of the capital may have to be spent on standardization, growing the fleet, and adding more resources. After all, it’s about consistency in service and taste that runs restaurants.

Medium prices
On-demand products with low margins or culinary wonders with high margins attract more prices. So, you may have to roll out ad-campaigns to grow fast or take it slow. Either way, medium prices won’t work, as you will be competing with a segment of the market composed of and dominated by brick and mortar restaurants.