A cloud kitchen, also referred to as a “ghost kitchen” or “virtual kitchen”, is a commercial kitchen space that provides restaurant owners the facilities and services needed to prepare menu items for delivery and takeout. Here are some of the reasons why restaurants are turning to them in record numbers.
Cloud kitchens can offer endless opportunities for rapid expansion. The cloud kitchen model has sustainable economics for restaurateurs and can improve market share by understanding customer needs and making data-driven decisions. Cloud kitchens provide restaurant brands a massive opportunity to expand their network.
The traditional dine-in restaurant business has been on a decline, and it is only getting tougher to sustain operations during COVID-19. To keep the operating costs down and compensate for the ongoing downturn, brick-and-mortar restaurants are likely to cut down on the workforce. Cloud kitchens, though, only operate with minimal headcount as they do not need any front-of-the-house staff.
Cloud kitchens offer substantial and improved margins on infrastructure and operational costs. With higher margins, cloud kitchens have the ability to offer competitive prices and change the menu quickly as market preferences shift. Successful cloud kitchens also earn about 15-25% of profit, as compared to the 3-9% profit of a traditional brick-and-mortar restaurant.
The cloud kitchen business model has the advantage in terms of responding to market demands and trends immediately, as they can quickly understand and react to consumer’s behavior. This is a flexibility for menu experimentation that a traditional brick-and-mortar restaurant has difficulty providing. Cloud kitchens not only have the agility for menu versatility, they can also easily optimize their delivery and takeaway standards as well.
With the F&B industry amidst one of its most revolutionary periods of all time, we are likely to see increased interest in cloud kitchen models. This space offers the potential of better unit economics, improved profitability and faster scalability that could result in a more secure and sustainable business for all.
About 3 SQUARE
3 SQUARE provides tech-enabled, turnkey solutions that are both sustainable and profitable by maximizing utilization and revenue per square foot of kitchen spaces to create great tasting food.
3 SQUARE is creating an ecosystem of support for people’s passion in food, technology and business. We provide an infrastructure and build a network of solutions where we are able to share and pool resources, learn from one another and grow together. From our digital food hall network to our virtual restaurant brands, 3 SQUARE is dedicated to offering services for success and profitability so our partners not only survive, but thrive in the ultra-competitive F&B industry.