The ongoing Covid-19 pandemic has created a big financial impact on the restaurant business around the globe. It has already broken the backbone of restaurant businessmen and the investors.
An important part of a restaurant is the kitchen. It is where the magic happens. The buzz that cloud kitchens have created in several years has had a great impact on restaurants.
New investors are looking forward to invest in cloud kitchens rather than investing in dine-in restaurants which are closed or temporarily open with a limited capacity.
What is a cloud kitchen?
But before that we get to that, let us learn about the overall concept of online kitchen and how it is different from the traditional dine-in kitchen.
A cloud kitchen or a virtual kitchen serves as a delivery
only kitchen. They blossom only on
online ordering websites and apps and do not have a physical dining
facility. Unlike the cloud kitchen, traditional restaurants have a physical
dining facility and also their distinct branding.
Difference between Cloud Kitchen and Traditional restaurants.
Now the difference between the Cloud kitchen and the
traditional restaurants depends on the basis of location, expenses, marketing, profit
margins. Through this, you can have an idea about the current situation of
cloud kitchens and traditional restaurants.
Location
A traditional restaurant should ideally be located in an area where there is high footfall and is visible to the audience. They need to arrange ample parking space and also comply to local zoning laws.
This requires a lot of investment in terms of renting, planning a layout, interior set-up and safety approval from local authorities.
Another aspect that we have to keep in mind is that dine-in restaurants need to be built according to the audience and the clientele that they hope to serve.
Cloud kitchens do not need parking space or footfall to
generate revenue. This kind of kitchen is blossoming with online
delivering and food apps and websites. All you need is an area of 700-800 square meters to set up your cloud kitchen.
Expenses
Cloud kitchen expenses are comparatively lesser than traditional restaurants. They can be easily set up in 700-800 sq meters which costs 25,000 rupees per month.
If we include other expenses, it can rise up to 70 to 90 thousand rupees including staff members. If operational costs are included, the expense can go up to 1 lakh a month.
Traditional restaurants are very expensive to set up. They are expensive in terms of giving salary to the staff members, renting expenses, interior design, etc.
The expense automatically goes up to 1.25 to 3 lacs of rupees per month which is very
costly for a small time investor. The operational costs of this kitchen would cost about 3.5 lakhs a month.
Marketing
Marketing for cloud kitchens can be a make or break opportunity because they are operating virtually. A comprehensive marketing strategy focussed around attractive websites and social media promotion can help these cloud kitchens to b seen in the public eye.
Having their own website and apps can help them in reaching out to the target audience well and attract customers. Strong social media marketing and discounts coupons help the traditional restaurants to enhance their reach to their audiences.
Marketing of restaurants should be a prime focus to make it a centre of attraction, Marketing is important for cloud kitchen as well as traditional restaurants so as to meet the needs of the new and modern era.
Profit Margin
Profit margins in traditional restaurants are 3 to 5 percent because of the expenses that they need to spend to comfort their customers which include interior design, parking, renting, electricity, cost of staff members, cost of set-up, operational cost, and etc.
While the profit margins in a cloud kitchen is 10 to 15 percent because it operates virtually and does not need to spend money on additional customers in which traditional restaurants spend huge sums of money.
Conclusion
Cloud kitchens surely impact traditional restaurants but
with the running course, traditional restaurants are often more favourable for
events. This means that they earn money for their living but it is not that convenient and a good sum at all times.
If traditional restaurants want to leave a mark in the
market, they need to add new varieties like home delivery, discount
coupons, and maintaining hygiene in their restaurants. Traditional profit margins
in traditional restaurants are up to 3 to 5 percent.
Cloud kitchen is providing mobility to all their customers worldwide and with the current pandemic situation, it has a huge impact on traditional restaurants. While profit margins in a cloud kitchen is 10 to 15 percent, their marketing and digital presence in the world are increasing their customers worldwide.
If traditional restaurants want to keep up with the competition they need to have an effective social media marketing and provide discounts coupons. They need to find methods to enhance their reach and make their restaurants a centre of attraction.
Written by Ritik Gupta
Edited by Jerusha Patel
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