The dramatic shift in the food and beverage business caused by the unprecedented pandemic has opened up new insights and innovation. While these tough times are making many existing players shut shop, at the same time, a lot of new entrants are entering the vibrant world of food & beverage (F&B). One of the significant and low stress ways to enter the F&B world today is considered to be Cloud Kitchens a.k.a. Dark Kitchens, Ghost Kitchens, or Access kitchens.
It is indeed an intriguing idea – setting up little hidden kitchens across a city at multiple locations and delivering food from these kitchens through online aggregators or one could deliver through their own fleet of delivery champs as well. Dark Kitchens carry a promise of being easy to set up with amazing reach to every corner of the city and a possibility that these could be replicated with immense speed, at low set-up cost.
When one looks into the set-up cost, initial investment, and real estate rentals to launch a dark kitchen, a jump off your chair in excitement may be a normal spectacle. The above-mentioned costs seem minimal compared to setting up a full-fledged restaurant at any prime location.
Though this excitement around Cloud Kitchens can disappear very quickly. A few often-overlooked reasons are:
The only revenue stream is from online delivery order as patrons can order online only.
Revenue from self-pick-up, take away and in-car dining is non-existent as the kitchen would be tucked away in some corner of the building or on a higher floor – only to be called your hidden gem. The ability to give the guests a dining experience is severely limited, practically not possible.
The enormous commissions can be detrimental to the tight profit margins.
Cloud Kitchen will involve a heavy advertisement budget to be visible to your relevant customers online, so you need to ramp up your digital presence significantly.
Ghost kitchens are invisible to most patrons, your outlet can only be viewed by customers online, which certainly limits the prospects of a restaurateur building a Food Brand in the long run.
Dark kitchen may be low on set-up cost but is certainly a limiting concept in terms of revenue, profit, and brand’s visibility. However, it is a great option for a first time food and beverage entrepreneur or someone who enjoys working with limited capacity and scale of production.
So, if not Dark Kitchens, what is the best alternative to that?
A choice that will entail all advantages of a ‘Dark Kitchen’ yet come clear of the shortcomings. The answer lies in the simple marketing mantra – What’s visible sells – so welcome Mini Eateries; small spaces to dish out sumptuous meals walking the fine line between Cloud Kitchens and a full-fledged restaurant.
Mini food eateries are well controlled on set-up cost and rental cost, maybe a little more than a dark kitchen, though worth their asking.
What’s visible sells more. A little eatery, a visible takeaway outlet can do it all – online delivery (through third-party aggregators), take away orders, and outlet’s self-delivery too. Why limit your brand and your food business to cloud kitchens only?
In-car dining has sprung up as a big segment due to the ongoing pandemic and a mini eatery makes it possible to cater to this piece of business as well.
With visible little eatery, an entrepreneur has more avenues to build a stronger food brand – built to Last.
Why have the outlet only listed online when one can show his or her work of passion – brand, food, service to many more eyeballs with a miniature takeaway outlet at a nominal cost!
The setup cost for a cloud kitchen may be low but the operational & recurring cost to run a cloud kitchen with exorbitant commissions is too high. Complete revenue comes due to online platforms hence it may not be a sustainable business model. On the other hand, a Mini Eatery may attract commission free revenue from self-pickups and in-car dining as well – hence undoubtedly more viable.
High standards of well-maintained hygiene could be showcased to the customers at a Mini takeaway outlet. Especially in these pandemic times, a clean visible kitchen/ outlet can boost consumer’s trust in your brand to new peaks.
A Mini eatery that has strong standard operating procedures helps build confidence in customers, limits food wastage, thereby ensuring fresh produce and fresh food.
The hallmark of a good food joint/ brand (mini or mega) is crowd and bustle. And a Mini Eatery may very well create this buzz around your well curated food brand. With precautionary measures here to stay, the food and beverage industry needs continuous cash reserves to keep the business going. Maintaining the promise of fresh ingredients and dealing with food perishables; food and beverage business will need a dose of caution and control to survive and thrive in the days to come. And the solution could very well be Mini Eateries or small take-away outlets across the city or cities helping anyone build an F&B brand of their dreams while showcasing their own passion for Food and hospitality. As they say, where there is a will, there is a way.
(Varun Behl is a Jaipur based restaurateur operating a chain of restaurants and QSRs (Quick Service Restaurants). He is the Managing Director of KCCO India Pvt. Ltd.)