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Overview of Cloud Kitchen Business

calendar17 Feb, 2023
timeReading Time: 5 Minutes
Cloud Kitchen Business in India

Cloud kitchens, also known as virtual kitchens, ghost kitchens, or dark kitchens, are a new type of food service business model that has recently gained popularity in India. In a Cloud Kitchen Business, food is prepared and cooked in a central kitchen facility and delivered directly to the customers through various online food delivery platforms.

This business model is gaining traction in India due to several factors, including the rise of e-commerce, increasing demand for food delivery services, and the growing preference for affordable, high-quality food options. Cloud kitchens are also more cost-effective than traditional brick-and-mortar restaurants, as they require lower overhead costs, such as rent, utilities, and staffing.

Acts and Regulations

  • Food and Safety Standards Act, 2006[1]
  • Companies Act, 2013
  • Shop and Establishment Act, 1948
  • Income Tax Act, 1961
  • Environment Protection Act, 1986
  • Trademark Act, 1999

Pre-Requisites for Cloud Kitchen Business

Before starting a cloud kitchen, a person must fulfil the following pre-requisites

Step 1: Selection of Rental Space

One of the main reasons cloud kitchens are a low investment is the rental space. However, one should not consider the amount of rent as the only aspect but should consider other things, such as the location of the kitchen, the demography of the people and the type of food in the area, along with this constant supply of water and electricity.

Step 2: Acquiring Licenses and Permits:

Owners must have appropriate licenses and permits to run any business in India. Having all the required permits will enable the business to steer clear off interventions from authorities and, at the same time, instil a sense of trust amongst its customers. Some of the registrations and licenses required by cloud kitchen are

  • GST registration
  • Trade license
  • Pollution NOC
  • FSSAI license

Step 3: Finalising the Cuisine

Cloud kitchens are well known for having a particular type of cuisine. They often offer high-quality food for people who prefer a distinct type of cuisine. So, the business must find out the demand for the cuisine and preferences of the people at large to make their business successful.

Step 4: Sourcing Equipment and Supplies

Setting up a cloud kitchen requires significant investment in equipment and supplies, including cooking appliances, refrigeration units, packaging materials, and delivery vehicles.

Step 5: Online Ordering System

 A cloud kitchen relies heavily on technology to manage operations and streamline processes. This includes having a robust online ordering system, efficient order management and tracking software, and reliable communication channels with customers and delivery partners.

Step 6: Marketing

The cloud kitchen cannot have physical marketing, but it has immense potential in online marketing. A person can deploy multiple online marketing strategies such as online listing on websites, running ads on social media platforms, and SMS & email marketing are a few strategies that have proven to help build a large consumer base.

Types of Cloud Kitchen Businesses

  • Single Cuisine Cloud Kitchen: A single cuisine cloud kitchen specialises in a particular type of cuisine, such as Indian, Chinese, Italian, or fast food.
  • Multi-Cuisine Cloud Kitchen: A multi-cuisine cloud kitchen offers a variety of cuisines on its menu, catering to diverse tastes and preferences.
  • Health Food Cloud Kitchen: A health food cloud kitchen offers healthy and nutritious food options catering to health-conscious consumers.
  • Gourmet Cloud Kitchen: A gourmet cloud kitchen offers high-end and exotic food, thereby catering to the upscale market.
  • Cloud Kitchen Franchise: A cloud kitchen franchise operates under a franchisor’s brand and business model, providing franchisees with a proven business concept, operational support, and marketing expertise.
  • Hybrid Cloud Kitchen: A hybrid cloud kitchen operates as a combination of a physical restaurant and a cloud kitchen, offering dine-in services and food delivery.
  • Commissary Kitchen: A commissary kitchen is a shared kitchen facility that rents out its space and equipment to multiple cloud kitchen operators, reducing their overhead costs.
  • Ghost Kitchen: A ghost kitchen is a delivery-only kitchen with no physical storefront, operating entirely as a cloud kitchen.

Documents required for Cloud kitchen business

There are various licenses and permits required to start a cloud kitchen business.

  • Company Registration: The business has to be registered with the company’s registrar under the Companies Act, 2013 or with the Ministry of Micro, Small and Medium Enterprises (MSME).
  • FSSAI License: Cloud kitchen must obtain an FSSAI (Food Safety and Standards Authority of India) license. FSSAI has provided different categories of licenses based on the type of food business.
  • GST Registration: GST stands for Goods and Services Tax. It is a type of value-added tax applied to all types of goods and services in India and is necessary for the cloud kitchen business.
  • Health Trade License: This licence is required by all businesses that can directly impact an individual’s health. Food, the commodity for the cloud kitchen business, needs to obtain this license.
  • Fire Department NOC: Various highly flammable equipment is used for cooking in the cloud kitchen. For this, the business has to get a No objection certificate from the fire department.
  • Shops and Establishment License: To operate a food business in the country, an establishment owner has to obtain the shops and establishment license.
  • Trademark Registration: The business requires a name that is catchy and descriptive of the food business. Once this has been finalised, the business must get its trade mark registration so that no one else can use it without their permission.
  • Pollution NOC: The business must acquire a No objection certificate from the state pollution control board or the Central pollution control board. To ensure that it is not polluting the environment.

Frequently Asked Question

  • What Is A Cloud Kitchen?

A cloud kitchen is a virtual restaurant that operates solely through online food ordering platforms and delivery apps. They do not have a physical storefront or dine-in area and, instead, focus on preparing food for delivery only.

  • What Are The Advantages Of Starting A Cloud Kitchen Business?

Some advantages of starting a cloud kitchen business include lower overhead costs, the ability to scale up or down quickly, the ability to reach a wider audience through online platforms, and more flexibility in menu offerings and pricing.

  • How Can I Promote My Cloud Kitchen Business?

You can use social media and digital marketing to promote your cloud kitchen business, create a website or mobile app for online ordering, offer discounts or promotions, partner with food delivery apps, and engage with your customers through feedback and reviews.

  • What Licenses And Permits Are Required To Start A Cloud Kitchen Business In India?

Common licenses and permits required for starting a cloud kitchen business in India include FSSAI license, Goods and Services Tax (GST) registration, Municipal Health Trade License, Fire Department NOC, Shops and Establishment Act License.

  • Are There Different Types Of Cloud Kitchens In India?

Several types of cloud kitchens operate in India. These include independent cloud kitchens, which are standalone kitchens that prepare and deliver their own food; aggregator cloud kitchens, which host multiple food brands under one roof and handle order management and delivery logistics; and franchise cloud kitchens, which allow established brands to expand their reach and offer delivery-only options. There are also speciality cloud kitchens, which focus on a specific cuisine or menu, and shared kitchens, which provide a shared space and equipment for multiple food businesses to operate.

  • Can I Run Cloud Kitchen from My Own Home?

Yes, you can run a cloud kitchen from your own home. However, obtaining all the licenses and permits from the authorities is still necessary before you begin your business.

Read Our Article: How To Start A Cloud Kitchen Business In India? – A Complete Analysis

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