Cloud kitchen and how to make them profitable

Are cloud kitchens really more profitable than dine-in restaurants? Though cloud kitchens imply lower upfront investment and no front of house costs (decor, lighting, furniture, and other such), there are still expenses that need to be covered. For example, delivery costs, website or app for recording orders, packaging. Besides, as you don’t have a physical location, you need to spend more on cloud kitchen marketing to build trust.

However, these facts shouldn’t make you feel worried. This post is specifically dedicated to helping you make your cloud kitchen more profitable. Whether you just plan to open your business or look for ways to increase revenue, keep on reading!

Is cloud kitchen profitable? With these tactics, it is

  1. Have fixed recipes for all menu items

    Do you know exactly how many grams (ml) of each ingredient should you use for 1 portion? Those numbers should be fixed and you can use your restaurant management software to list all ingredients, their costs, and associated recipes.

    Imagine that you use 2 middle-sized tomatoes for 1 portion, another time you use 3 tomatoes for the same recipe. Similar one-time mistakes won’t force your business to close down, but in the long run they will negatively impact your bottomline.
  2. Automate your operations

    If you plan to hire employees to answer phone calls, record orders, analyze data, etc you need to allocate a certain % of your revenue to pay your team members. But if you plan to automate those operations, you simply pay a few dollars monthly for the restaurant management system and have all tasks done for you.

    A similar system will allow you to add recipes, calculate their costs, record orders, track your inventory, generate sales reports, and much more. Thus, will help you improve your bottom-line by up to 20%!
  3. Get listed on food aggregator and delivery platforms

    If you have researched the food industry in your country, you should be aware of the top online ordering platforms. Grubhub in the USA, Zomato and Swiggy in India, SkipTheDishes in Canada, etc. Similar platforms help you build trust and also get found by interested users.

    Of course, getting listed on similar platforms isn’t free. Some of them require monthly fees for getting listed, others charge commissions. You may also need to spend on marketing yourself better in the initial days to get more eyeballs. You can test for 1-2 months to see how this service works and understand whether it’s worth investing in it. Being a pure cloud player, you necessarily have to list on top aggregators to get orders.
  4. Reduce food wastage

    Wasted products are wasted money and irreparable damage to our planet. You can donate leftovers to charity and even take advantage of tax deductions. If the ingredient isn’t past its “use by” date, you can use it the next day for another recipe.

    However, if you want a systematic approach to the problem, you should follow the data and recommendations by your restaurant management software. The system will analyze which recipes are more popular and consequently what ingredients are in demand. By tracking spoilage and wastage patterns, you will also understand whether it’s necessary to review portion sizes, substitute the ingredients, remove ingredients that are used in very few recipes, etc.
  5. Partner with food bloggers on Instagram

    Food-related content is the most popular on Instagram. And 30% of users will avoid a restaurant that doesn’t have a strong Instagram presence.

    If you send a tasty recipe to one of the bloggers, they will be able to share their real emotions and authentic feedback with their followers. Many bloggers might also charge a fixed or commission-based fee in addition to receiving the delivered food.

    Not all food bloggers are suitable for advertising your services. It won’t make sense to advertise meat-related products with a vegan blogger. Or fast food with a blogger if his/her followers want to lose weight.
  6. Regularly review your menu and prices

    As ingredient costs go up and down, people lose or start to show interest towards a certain recipe, your menu can’t remain the same. Besides, if you don’t reveal your most  and least profitable recipes, you won’t know which ones to promote and which ones to simply remove from your menu.

    That’s why you should plan menu revisions at least every month. It will allow you to find your profitable & popular, profitable & unpopular, popular & unprofitable, and unprofitable & unpopular recipes and decide how to plan your menu for maximum profitability.
  7. Launch your food blog on Instagram

    If you think that running a website blog and writing 1-2 articles weekly is expensive, move to Instagram! We already mentioned that food-related content is extremely popular on this platform. Besides, people are so busy now that they will prefer to read a quick and useful post on Instagram than a long-form detailed guide on a blog.

    Posting regularly about your ingredients, talking about their benefits to health, even sharing recipes will help you quickly build a loyal and targeted following. Users won’t easily follow a page that only publishes its menu and pricing, without giving anything first.

    Every post is an opportunity to feature your service, but you shouldn’t do it 7 days a week. Focus on sharing knowledge and professional facts about food and then naturally talk about your services. In the long run, this will allow you to build awareness, following, show your expertise, and turn them into profits.
  8. Take part in events and expos

    As offline life is again back, events and expos can become part of your cloud kitchen marketing strategy. Find the most popular food expos in your city and research their terms. Booking a booth will cost you money, but usually you get discounts if you pre-order it.

    Remember that the expo will combine food lovers under the same roof and it’s in your hands to stand out from your competitors. Communicate with the guests in real life, offer them to try your recipes, and make their experience memorable. Many of the expo guests will become your customers and increase your profit.
  9. Implement penetration pricing

    Penetration pricing is a strategy for businesses who plan to enter a competitive market. So if you are still new and your brand awareness isn’t high, you can implement this approach for a few months.

    The aim of this strategy is to offer lower prices than your competitors to attract people and increase brand awareness. For a few months, you may have very low or no profit, but you can build a base of satisfied customers and then increase your prices.

    However, you should be very careful with this approach as customers might not return to you after prices have been increased.
  10. Improve your profit without increasing the prices

    If you want to make more profit without increasing the prices, you should lower your cost price. You can do it by reviewing your portion sizes or substituting the ingredients without changing the taste.

    Look for new suppliers and negotiate the costs with them. Choose a supplier who offers the most competitive price for the best quality and use their services. Occasionally review your list of partners to find the best deals in the market. The same approach is applicable for ordering packaging.

    Last but not least, lowering your marketing spend will also help you reduce your cost price. For example, organic marketing is typically less expensive than paid marketing. When it comes to paid advertising, Facebook ads tend to be cheaper than Google ads.

    However, no organic or paid method will work if your product isn’t satisfying and customers don’t fall in love with the experience. Give your customers something to talk about, exceed their expectations and word of mouth will be the cheapest and most effective way of marketing.

  11. Automate staff onboarding

    Onboarding new team members is time and energy consuming. To avoid that monotone and expensive task, you can turn your policy and procedures into easy-to-understand guides and videos.

    Of course, creating onboarding resources won’t be free, but once done, you can use it every time a new member joins your team. You will spend your valuable time on growing your business and researching new opportunities while new members get trained on their own.
  1. Become a host kitchen

    Host kitchens exploded in popularity during the pandemic when the physical locations of restaurants were closed.

    The essence is inviting other cloud kitchens to your space and allowing them to prepare and sell their food.  So if you have extra space and an existing infrastructure that you don’t use, why not generate additional revenue? 

Final thoughts

Considering the changes that the pandemic brought in 2020, cloud kitchens are a safe and popular way to run your business. Buyers got used to staying at home, eating the ordered food at home and cloud kitchens have a big role to play in their lives.

Use these cloud kitchen marketing ideas to better market your services and sustainably grow your revenue. If you need investment to expand your business more efficiently, you can connect with IndiaBiz.

Author Bio

Aida Grigoryan is a content writer and content marketer who writes on SaaS and eCommerce marketing. She has contributed to 30+ publications with her articles and guides. The content she writes helps SaaS & eCommerce companies get better at promoting their products.

3 thoughts on “Cloud kitchen and how to make them profitable

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