What is a cloud kitchen?

The food industry is changing. High startup costs, burdensome regulations, and now COVID-19 have all threatened the restaurant industry and traditional food business models.

Enter cloud kitchens.

A cloud kitchen—also referred to as a “ghost kitchen” or “virtual kitchen”—is a commercial kitchen space that provides food businesses the facilities and services needed to prepare menu items for delivery and takeout. Unlike traditional brick-and-mortar locations, cloud kitchens allow food businesses to create and deliver food products with minimal overhead. Recent data indicates that meal delivery orders increased by more than 150% from 2019 to 2020—and UBS anticipates the food delivery market to increase more than 10x over a ten-year period from $35 billion per year to $365 billion. More and more restaurant owners and food entrepreneurs are turning to cloud kitchens as an ideal business solution to capture this increase in food delivery demand.

Curious about cloud kitchens and want to find out more? The below guide provides an overview of cloud kitchens and the growing list of reasons to make cloud kitchens a part of your business’s growth strategy.

How Do I Get Started?

Cloud kitchens save your food business time, money, and hassle. The process for securing your cloud kitchen rental varies by each cloud kitchen provider. At Revolving Kitchen we make the steps quick and easy. To begin, contact Revolving Kitchen at (972) 332-3516 or by using our convenient contact form. We will learn more about:

Your Business: We care deeply about your food product and business goals. Tell us a bit about your restaurant or food business so we can better serve you!
Your Preferences: Revolving Kitchen features a range of kitchen sizes and configurations to perfectly accommodate your operations.
Your Questions: We’re here to help you get started as easily as possible!
We will then set up a tour for your business team. After all—we love showing off our brand new and fully-equipped kitchen units and modern amenities.

Who Uses Cloud Kitchens?

Beloved local restaurants to name-brand national chains—are quickly turning to cloud kitchens as the ideal solution to expand their business. Here are a few business types that are incorporating ghost kitchens into their growth strategy.

Delivery-Optimized Restaurants: Delivery-optimized cloud kitchens allow you to accommodate orders without added overhead or hassle. Cloud kitchen-based restaurants use online food delivery platforms (e.g. DoorDash, Postmates and UberEats) or their own white-label platform to source orders and facilitate delivery logistics. Consumers then order through mobile devices and have food delivered to their home or office.

Caterers: Own a catering company and need a private kitchen and plenty of cold and dry storage without breaking the bank? Cloud kitchens are an ideal solution.

Meal Prep Companies: Meal prep companies often need kitchen space for only a few days a week. Virtual kitchens can provide you this flexibility.

Packaged Food Producers: Cloud kitchens can provide ample warehouse space and equipment for packaged food producers to scale.

Food Product Testing: A cloud kitchen is a low-risk, low-capital solution that allows your company to market test new food products and brand concepts.

Benefits of a Cloud Kitchen

Virtual kitchens (a/k/a cloud kitchens or ghost kitchens) are a great alternative to the traditional brick-and-mortar restaurant. Ghost kitchens offer users the freedom to focus on food preparation and product marketing and minimize the administrative hassle and logistics that often burden food businesses.

Here are a few more of the dozens of reasons to rent a virtual kitchen for your business:

1. Affordable Startup Cost

Food businesses save money using cloud virtual kitchens. Leasing a commercial kitchen from a ghost kitchen provider reduces startup costs because food businesses no longer have to commit capital to building inspections; expensive building construction; zoning compliance; etc. Cloud kitchens also allow food businesses to start up in a matter of days or weeks—as opposed to the months or years required for traditional leases or building mortgages.

2. Lower Overhead

Traditional restaurant owners have struggled to stay afloat due to the expensive utilities, high property taxes, cumbersome staff payroll and pesky maintenance costs. Cloud kitchens handle these expensive and time-consuming administrative hassles. Restaurants that operate in cloud kitchens often employ as few as one to two cooks and share communal expenses with other tenants.

3. Added Convenience

Imagine running a food business and being able to focus on your customer and food product. Ghost kitchens make this possible! Ghost kitchen providers often handle the following administrative tasks so you don’t have to: (i) health inspections; (ii) equipment repairs; (iii) janitorial services; (iv) security monitoring; (v) property taxes and (vi) utility bills.

4. Optimized Delivery Experience

Have a brick-and-mortar restaurant that is essential to your brand? Cloud kitchens allow you to expand your brand by facilitating deliveries out of one location and increasing your revenue streams. Cloud kitchens allow your brick-and-mortar restaurants to accommodate higher demand without over-burdening kitchen staff with online food delivery orders.

5. Meeting Customer Demand

Cloud kitchens allow you to accommodate the demands of your clients. The popularity of online food delivery has skyrocketed as consumers demand quick meal options at an affordable price. Cloud kitchens facilitate this growing demand for online food delivery by optimizing the delivery experience through efficient logistics, lower costs, and technological innovations.

6. Increased Reach

Cloud kitchens allow your brand to expand its focus on food delivery and reach a larger audience. Delivery-optimized restaurants advertise their business through delivery apps and social media rather than more narrow marketing channels. Cloud kitchens can strengthen your brand by fortifying new marketing channels and gaining greater exposure.

Cloud Kitchens vs. Traditional Kitchens

Cloud kitchens take the traditional restaurant model and add modern convenience and increased cost savings. Here are a few key differences between traditional restaurants and cloud kitchens:

1. Traditional Restaurants Require More Capital and Administrative Hassle

Traditional restaurants often require a dining area, a host stand, a bar, a waiting area and restrooms for employees and patrons. Additional space means greater expenses and increased maintenance. Cloud kitchens offer users private commercial kitchen spaces but spread the costs of communal elements (e.g. bathrooms and hallways) with other users. don’t need as many areas as a traditional restaurant. Instead, that space can go towards functional areas for your chef staff.

At Revolving Kitchen, many of our options are larger than average restaurant kitchens. You can rent a ghost kitchen anywhere from 250 to 680 square feet. Standard restaurant kitchens can be as small as 300 to 400 square feet. Test multiple concepts, take on plenty of orders and have a more comfortable working environment in a ghost kitchen.

2. Traditional Kitchens Require More Staff

Traditional restaurants require hosts, servers, chefs, bartenders, maintenance personnel and restaurant managers. In a ghost kitchen, you only need staff to prepare the food and managers to supervise the facility. The rental facility provides maintenance personnel for you, and you won’t have in-person customers for waitstaff to take care of unless you offer order pickup.

3. Cloud Kitchens Have Lower Startup Costs

Opening a traditional restaurant requires extensive capital dedicated to payroll, kitchen equipment, furniture and utilities — all in addition to excessive lease rates or burdensome mortgages. Cloud kitchens often feature flat-fee pricing that includes administrative features such as janitorial fees, waste collection and kitchen equipment.

4. Cloud Kitchens Have Higher Profit Margins

Profit margin is the amount a company earns once accounting for expenses like rent, staff wages, monthly utilities and general maintenance. Traditional restaurants typically suffer smaller profit margins than restaurants based in cloud kitchens since traditional restaurants have so many additional overhead costs and startup expenses.

Reasons to Rent a Cloud Kitchen

Cloud kitchens are quickly gaining popularity in light of the booming food delivery business. Multinational investment bank UBS estimates a 16% compound annual growth rate (CAGR) for online food delivery. That’s an estimated increase from $49.4 billion in 2018 to $365 billion in 2030. Restaurants have turned to cloud kitchens as a low-cost, low-risk way to capitalize on this increasing demand.

Here are a few other great reasons to consider cloud kitchen rentals for your food business:

1. Exit the Expensive Real Estate Market

A growing number of restaurants are shuttering their brick-and-mortar locations due to expensive mortgage payments and burdensome lease agreements. Food business operators can rent cloud kitchens at a fraction of the cost of purchasing or constructing traditional restaurants. When you invest in a cloud kitchen, you only pay for space to store and prepare food.

Don’t compete for a costly rental space or let an expensive mortgage in your city weigh you down. Rent a cloud kitchen instead. When you consider how much it costs to rent commercial kitchen space compared to a traditional restaurant, you’ll see why the concept is attracting a growing number of local, regional and national restaurant brands.

2. Capitalize on Home Delivery Trends

Life is busy. People increasingly look to affordable, convenient food delivery options at the end of long workdays and in lieu of bringing lunch to work. As a result, delivery food services are becoming more popular and the need for cloud kitchens is growing.

In 2018 American consumers used third-party services to place $10.2 billion in food orders. You, too, can reach this massive market by leasing a cloud kitchen and having an online presence for food delivery orders.

3. Increase Your Bottom Line

Cloud kitchens are high-profit, low-risk business ventures for restaurant owners, caterers, food entrepreneurs and other food businesses. Experts predict the food delivery service market to grow from $107.44 billion in 2019 to $111.32 billion in 2020, to $154.34 billion in 2023 — a 43.6% increase in only four years.

The rapidly increasing market and growing costs of traditional restaurant models underscore the role cloud kitchens may have in the future of the food industry. Efficient operations and low barriers to entry make cloud kitchens an attractive way for your food business to capture changes in the food delivery market.

Contact Revolving Kitchen to Learn More About Our Cloud Kitchens

Revolving Kitchen is a cloud kitchen facility located in the Dallas-Ft. Worth metropolitan area. Our brand new and fully-equipped ghost kitchens are ideal for food businesses—including delivery-optimized restaurants, meal prep companies, caterers, and packaged food producers.

Interested in learning more about cloud kitchens? Revolving Kitchen would love to help! Our commercial-grade cloud kitchens feature an abundance of amenities and allow your business to thrive in a competitive economy. Fill out a contact form online or call 972-332-3516 for more information about how you can get started with Revolving Kitchen today.

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