A new cloud kitchen startup is revolutionizing the restaurant industry. We are changing the way people think about dining out by allowing customers to order food online and have it delivered directly to their door. This innovative concept gives customers easy access to a variety of cuisines without having to travel across the city.
What is a cloud kitchen startup?
A cloud kitchen is a delivery-only restaurant that doesn’t have a physical space to eat. It relies entirely on online ordering through online grocery aggregators, online ordering websites, or mobile apps. The only in-house kitchen for food preparation, acting as a manufacturing department.
A cloud kitchen can have an online ordering website and an online ordering app. You can also accept orders through various food delivery platforms. The main source of income for these Internet restaurants is various food ordering platforms such as Swiggy, Zomato, etc., so it is important to have POS software that accepts orders from multiple sources. This saves you the trouble of manually adding and calculating orders from different ordering services at the end of the day.
Rebel Foods’ Faasos, Hoi Foods, and Biryani By Kilo are famous examples of Cloud Kitchens. The cloud kitchen concept has several other names: Virtual Kitchen, Virtual Restaurant, Shared Kitchens, Commissary Kitchens, Ghost Kitchen, Shadow Kitchen & Dark Kitchen, etc.
How much do you need to start a cloud kitchen?
Cloud kitchens do not allow in-store dining, allowing restaurants to save on assets such as furniture and labor costs. Creating a cloud kitchen in India costs about three times more than creating a restaurant. Cloud Kitchen’s costs are of two parts: operational and marketing activities. About 30 lakhs are a must start a cloud kitchen franchise unit.
Rent for an area of 150 to 300 square feet ranges from Rs 45,000 to Rs 1 lakh, which can be reduced to Rs 700 for an annual lease. Equipment costs range approx Rs 4 lakh. The cost of interior fittings is Rs 3- 3.5 lacks. Fees for licenses, registrations, deposits, etc. should not exceed Rs 2 lakh. Also, if you employ 7 to 8 employees for each shift, it will cost around 1-1.5 lakh rupees per month to run the kitchen.
The remaining funds are for marketing and sales. ie Attract new customers with online and social media marketing, branding, packaging, point of sale, and inventory management. Building a social media presence requires about 35,000 rupees per month. Also, branding and packaging costs range from 55 to 60,000 rupees. You should also consider the costs of third-party aggregators. Aggregators like Zomato and Swiggy only charge when a customer clicks on your listing.
Which license is required for a cloud kitchen business?
Here is a list of important licenses required to open Cloud Kitchen –
1. FSSAI Food Safety and Standards Authority License
FSSAI license, also known as a food license, is one of the licenses required to open a restaurant and is imposed by FSSAI (Food Safety and Standards Authority of India). It assures customers that the food at this particular outlet meets the guidelines of the Indian Food Safety Standards.
This license is essentially a unique 14-digit registration number that is mandatory for food-related businesses in India. License terms range from 1 to 5 years and must be renewed before they expire.
Required Documents for FSSAI License
- ID and Proof of Address
- Valid email ID
- Phone number
- Affidavit
- Declaration of Food safety management plan
- Kitchen plan
- List of food categories
- Water test report from ISI-accredited facility
- Owner or Partner No Objection Certificate (NOC)
- Medical certificate from the employee
2. Health and Trade License
To ensure compliance with hygiene regulations set by the health department, you need a health and commercial license for your cloud kitchen business. This ensures that you achieve the necessary benchmarks in terms of safety and hygiene standards for your specific food business.
Documents required for health and Trade licenses:
- Proof of ownership
- Rent agreement or NOC from the landlord
- Indemnity bond of Rs. 100
- Electricity and water on the bill
- Letter from Delhi Police on pools, cinemas, and hotels
- Sewer connection certificate
- Worker health certificate
- Three copies of the site plan and layout
- Structural Stability Certificate signed by Structural Engineer
- Water quality test report
- Site map
- Medical certificate from the employee
- Proof of property tax
3. Shop And Establishment Act
Food trucks, cloud kitchens, restaurants, and more. To operate a grocery store in India, the restaurant must be registered under the Stores and Establishments Act. Kitchens must be registered within 30 days of starting the business. This license is only valid in that city.
Documents Required For The Shop And Establishment Act License
- Pan Card
- Proof of Identity
- Address proof
- Details of the employees
4. Fire Safety License
The purpose of a fire safety license is to protect employees and property from all types of fire hazards. This is a preventative process to ensure the fire safety of your cloud kitchen business so that you can effectively manage the fire crisis. Therefore, cloud kitchen operations require a No Objection Certificate (NOC) from the state fire department. A list of required documents can be found on the respective state government websites.
5. GST Registration (Mandatory)
GST is in effect from 1st July 2017. Registering for GST is one of the key steps to starting a dark kitchen that keeps your business running smoothly. It also helps protect licensed providers because having a GST number reduces your tax bill. The GST registration process is easy. Individuals, partnerships, or companies can obtain a number by submitting the required documents online at www.gst.gov.in.
Documents required for GST registration
- Restaurant owner/manager photo.
- Image of managing partner/designated partner in the case of tie-up.
- If you are the property owner, ownership documentation such as utility bills, tax receipts/property tax receipts, or registration documents for the location.
- If renting, a copy of the rental contract/lease with utilities in the owner’s name. Assuming you do not own or rent the property, submit your utility bill along with a copy of your NOC (No Objection Certificate).
- Required bank documents.
- A scanned copy of your bank statement/passbook or a canceled check with branch details including name, bank account number, MICR, IFSC, and code.
Also, ensure that you have the following clearances:
- Certificate of Environmental Clearance (CEC)
- Prevention of Food and Adulteration Act Clearance Certificate (PFA)
- Night Operations License (if required)
How to start a cloud kitchen?
Here are some tips to help you get started.
Plan your cloud kitchen
To start your own cloud kitchen business, you first need to create a well-thought-out business strategy. Organizations can use this plan as a roadmap to help set goals, objectives, and strategies. You should also include financial projections for your business.
Choose the style of food you want to serve
The type of kitchen you offer is another important consideration when starting a cloud kitchen business in India. You have to choose the cooking style you want to serve. You can use this to assess the type of equipment you need and focus your search on the right location.
In India, you have a wide variety of cuisines to choose from. You should choose the one that best suits your business. To keep people coming back to the Cloud business, you also need to make sure the food you serve is healthy and tasty.
Find a suitable location
Once you’ve chosen your food style, start looking for the right place. Finding the right location for your food startup is the first and most important thing to do. It is important to choose a location that is close to your target market, has good infrastructure, and is easily accessible from public facilities and transportation. The right location is very important as it affects the performance of your cloud kitchen business.
Government registration and licensing:
It is important to obtain all relevant government approvals before starting your cloud kitchen business. Both local governments and the Food and Drug Administration (FDA) require a license. When cooking with gas, a permit from the fire brigade is also required.
Organize your kitchen
Next you need to set up your kitchen. This includes obtaining the necessary licenses from the government and purchasing or renting essential equipment. Devices required for Cloud Kitchen:
- Commercial Refrigerator
- Gas stove
- Microwave Storage shelf
- Dishwashers
- Portable griddle
- Deep fryer
- Mixer
- Blender and juicer grinder
- Water purifier
- Fire extinguisher
Advertise your business:
Now that you have all the tools you need, the next step is to start marketing your business. You can use various marketing platforms to communicate with your target market and let them know about your new Cloud Kitchen. To do this, create a website for your cloud kitchen and promote it on social media and online directories. Another idea is a presentation at a local trade fair or festival.
How do I select a location for a cloud kitchen?
For Cloud Kitchen, location means good hygiene, constant water supply, and cheap rent. You need to understand the demographics of the place as it helps you understand the differences in age groups, eating habits, and tastes. Good visibility helps attract crowds easily.
If finances permit, you can choose a location with parking to attract mobile customers. frontal location, ie. Street frontage makes the Cloud Kitchen not only prominent but easily accessible. You need at least 350 square feet or a cozy 500 square feet to start your cloud kitchen.
What problems do cloud kitchens solve?
Below are some problems that cloud kitchens solve.
- Food company cuts costs with virtual cloud kitchens. It reduces initial costs by eliminating the need for food companies to spend capital on building inspections construction of expensive buildings; zoning etc.
- Cloud Kitchen handles costly and time-consuming administrative concerns.
- Handle the following administrative tasks: health examination, Device Repair, cleaning services, security monitoring, property tax, and utilities.
- Grow your brand with easier delivery from one location and more revenue streams. Cloud Kitchen enables brick-and-mortar restaurants to meet increased demand without overwhelming kitchen staff with online delivery requests.
- Cloud Kitchen strengthens your brand by empowering new marketing channels and increasing awareness.
What is the scope of cloud kitchen?
The launch of online grocery delivery platforms such as Swiggy and Zomato has increased the demand for online grocery delivery. According to Inc42’s DataLabs, the Indian grocery ordering market is expected to grow at a CAGR of 16%, reaching US$17 billion in 2023. The market value of cloud kitchens is projected to be $1.05 billion in 2023.
As all services are digital, people have turned to online platforms. The same is with eating. You don’t have free time to go to restaurants or drive through traffic to get something to eat.
And this problem was brilliantly solved by the food delivery service. In the near future, cloud cooking will change our eating habits. The reason for its growth is the relatively low level of risk. Financial limitations are easily overcome as the demand for digital platforms reduces operational costs.
What is the difference between a ghost kitchen and a cloud kitchen?
The structure of each concept of the delivery specialty store is as follows.
- Ghost Kitchen is the original Pure Delivery brand, and at its heart is the company that is the Pure Delivery concept.
- Cloud Kitchens franchises Ghost Kitchen and expands its business into other business models. More flexible than Ghost Kitchen.
What are dark cloud kitchens?
Dark Kitchens, also known as Virtual, Remote, Commissary, Ghost Kitchens, or Cloud Kitchens, are professional commercial kitchens that, unlike traditional restaurants, only produce food for sale on delivery platforms. A darkened kitchen rental includes the necessary equipment to prepare meals but does not have a dining area or a place for customers to gather.
Dark Kitchen’s business model makes it easy to create and transition branding concepts that target specific demographics. There are now hundreds of dark kitchens operating. Online ordering and delivery via grocery delivery apps now account for about 30% of food industry revenue.
A restaurant owner decided to add a delivery brand to their existing stationary restaurant kitchen. The integration of Pure Delivery restaurants allows you to take advantage of your own offerings by utilizing your existing kitchen.
What are the advantages and disadvantages of cloud kitchens?
The advantages and Disadvantages of cloud kitchen are
| Advantages | Disadvantages |
| High-profit company: Starting a cloud kitchen can be done with little to no staffing needs, basic cooking supplies, furniture costs, or decoration costs. It’s been successful because it gives restaurateurs the freedom to experiment, cut costs, and gradually break even. | Build your brand: Cloud Kitchen is an online-only business with limited customer interaction, so it can struggle to build a brand at first. Cloud kitchens have no physical location and can only compete in crowded online markets. Customers are less likely to become repeat customers and order through a third-party app that lists a wide variety of restaurants, making it impossible to connect with specific restaurant brands. |
| Easy Expansion: With only one kitchen to operate, the total investment cost is significantly lower than a full-fledged restaurant. By leveraging the scale of Cloud Kitchen, restaurants can test new markets and customer perceptions without spending money on equipment. | Customer Data Masking: By dealing with third-party food aggregators, restaurants no longer have their own customer data. Restaurants are provided with masked customer details so they cannot know who the customer is. This affects sales in the long run as customer retention is minimized. |
| No Investment Business: With less labor and less infrastructure, Cloud Kitchen can be designed as a very lean enterprise, enabling a low-risk effort. Far less capital is required to start a cloud kitchen compared to a traditional brick-and-mortar restaurant. | Dependence on food aggregators: Customers are accessed through third-party food aggregators such as Zomato and Swiggy unless the restaurant has its own delivery app. These aggregators charge restaurants 15% to 35% of the commission. Restaurants don’t mind commissions based on the volume of orders generated through these services. |
| Low Operational expenses: Many of the costs of running a typical restaurant are reduced by cloud kitchens. Cloud kitchens have lower overall costs than traditional brick-and-mortar restaurants, including infrastructure, overhead, logistics, and more. | |
| Reduction in manpower requirements: It takes one-third less time and money to launch a cloud kitchen than it does to launch a conventional dine-in restaurant. There is no requirement to lease a space in a desirable area or hire staff to handle customer service. |
List of cloud kitchen companies in India
| Company Name | Founders |
| Faasos | Jaydeep Burman, Kallol Banerjee |
| Box8 | Anshul Gupta, Amit Raj |
| Kitchens@ | Kizhakkayil |
| Behrouz Biryani | Jaydeep Barman – Parent Company owner of Rebel Foods |
| Sweet Truth | Jaydeep Barman |
| Zomato | Deepinder Goyal and Pankaj Chaddah |
| Swiggy | Nandan Reddy and Sriharsha Majety |
| TravelKhana | Pushpinder Singh |
| Biryani By Kilo | Kaushik Roy & Vishal Jindal |
| Oven Story | Jaydeep Barman |
FAQ- Cloud Kitchen Startup
What industry is cloud kitchen in?
The cloud kitchen concept is considered one of the fastest-growing segments in the hospitality industry and a smarter way to run a restaurant.
Is GST mandatory for cloud kitchens?
Cloud kitchen companies must also charge GST of 5% excluding ITC. However, if you want to claim ITC, you can claim his GST of 18%.
Wrapping Up
Cloud kitchen Startup are low risk and high reward, but you need to be careful about the competition if you want to be profitable. If you plan to grow your business or start a food channel, cloud kitchens are a safer and smarter alternative when it comes to staying compliant.