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Virtual Kitchen Business in India is the Future

calendar13 Jun, 2020
timeReading Time: 8 Minutes
Virtual Kitchen Business in India

The unprecedented extension of the virtual kitchen business in India is serving the vast sky to innovative food business entrepreneurs. Different names of the virtual kitchens are ghost kitchens, cloud kitchens, or shared kitchens. A cloud kitchen or virtual kitchen is the delivery-only food business that performs its operations within the premises of a restaurant. However, it lacks a physical space for the dine-in facility.

The advent of virtual kitchen business in India has changed the perspective of Indian food lovers. If you think that cloud kitchen business is a newly introduced concept at the global level, then you are wrong. Many restaurants operating abroad have already ventured into this field decades back. Technological advancement, coupled with the change in consumers eating habits, has accelerated the growth of delivery-only model.

In recent times, Customers attain more pleasure in staying at home and having the comfort of getting food at the doorstep, without getting stuck in heavy traffic. The functioning of this kitchen depends on online orders on the apps or the website of the restaurant, or online orders get received via third-party food delivery apps. Not only new flourishing restaurants are adopting the virtual kitchen business model but also those restaurants who have made their mark are giving virtual kitchens a go.

Amid the COVID-19 Pandemic, the cloud kitchen business model is gaining a lot of opportunities in the Indian as well as International market. As traditional restaurant business involves stiff competition in the restaurant space along with escalating costs, and high rentals, cloud kitchen looks like a wise option to operate the restaurant business. Since people have started following social distancing rules to stand firm against the COVID-19 outbreak, cloud/Virtual kitchen business in India is all set to be the next big thing.

Legal Essentials for Commencing a Virtual Kitchen Business in India

If you want to initiate a virtual kitchen business in India, then you must acquire licenses for operating your virtual kitchen restaurant business. However, the legal essentials in case of the virtual kitchen are less than the legal requirements for a full-fledged restaurant business.

Virtual Kitchen Business in India

FSSAI Food License

The first legal requirement to open up a virtual kitchen is to obtain an FSSAI food license granted by the apex food regulatory body, FSSAI. FSSAI imparts confidence to customers that all the food items served by the restaurants are in accordance with the Food Safety Standards of India. The FSSAI food license period can range from 1 to 5 Yrs and renewal is mandatory after before the expiry.

GST Registration

GST Registration is mandatory for operating a virtual kitchen business in India. All the businesses must get themselves registered under goods and service tax. The submission of GST must take place on a timely basis. GST helps in getting licensed vendors. If all parties manage to get a GST number, GST will reduce the tax amount.

Trade License

All the businesses, including those who have ventured into cloud/virtual kitchen business in India must possess a trade license. By providing all the essential documents, obtain a trade license from the local municipal office.

Trademark Registration

Virtual or Cloud Kitchen Business must give priority to Trademark Registration as strategies and ideas won’t increase the number of visitors for your business, but it is the brand name of your business that would lure the customers’ and stay in their heart for long. Business owners should file trademark applications for the wordmark, patterns, name, and logo to create a value of the brand along with safeguarding it. Furthermore, it helps businesses in setting their identity.

Fire and Safety License

This license is not mandatory for food business owners to commence a virtual kitchen business in India, but it’s a great one if you want to save yourself from troubles coming your way in the future course of time. It’s an integral part of the law, and every workplace must get into fire and human health agreement.

Eating House License

Another necessary license for commencing a virtual kitchen business in India is Eating House License. In order to open an eating house, obtaining this license is a must. Licensing police commissioner of the city is the responsible person for issuing this Eating House License.

Shop and Establishment License

Getting a Shop and Establishment License is mandatory for a food business entrepreneur. You need to make the submission of the application in the time limit of 30 days of initiation of the business. The application must get submitted in two ways-

  • By reaching the office of the Department of the Labour of the State
  • By directly visiting the government website of the Department of the Labour of the State

The application, along with government fees and essential documents, should get submitted to the Chief Inspector.

Certificate of Environmental Clearance

Acquiring a Certificate of Environmental Clearance is mandatory for restaurant business owners to ensure that all the operations concerning the food business are not causing any harmful or negative impact on the environment in any way.

What are the Benefits of Running a Virtual Kitchen Business in India?

In comparison to the traditional restaurant business, virtual kitchens, or cloud kitchens simplifies the operational process and make it seamless than ever. With the minimum dependency on infrastructure, you will be able to preserve your money. Handling clients is no more a matter of worry with the rise of the virtual kitchen business model. The benefits of running a virtual kitchen business in India are listed below.

Virtual Kitchen Business in India

Low Overheads

Setting up a full-fledged traditional restaurant requires many overhead costs while running a virtual kitchen business in India avoid various overhead costs. Cloud kitchen or virtual kitchen incur lower costs by lessening the demand for floor space seating, front-of-house operations along with high rent for storefronts.

Those restaurant businesses which have adopted the virtual kitchen business model will be able to save the costs of the ingredients by delivering on the merit of economies of scale. Virtual kitchen restaurant businesses dominate the restaurants working on the traditional model by passing the savings in the hands of the consumers.

Offers Freedom and Flexibility

As your entire restaurant business is performing its operations online, you have got the liberty to make changes as per your wish and demand of the market. GEN Y is too experimental in terms of food, and also they love to see the variation in their plate. Introducing new options on the menu would be a way to attract customers. Virtual kitchen business gives the opportunity to the restaurateurs to quickly adapt to market preferences. This adaptability is not visible in the case of the traditional restaurant business. As per your wish, you can include or exclude items in the list by taking customers taste and demand as consideration.

Cheaper Advertising

The best marketing platform for virtual kitchen business in India is the social media platform. By making the proper implementation of social media strategies and plans, restaurateurs can reach out to the heart of their target audience. Being an online-based business, it is well familiar with the needs of modern consumers.

Cost-effective channels like SMS marketing and Email marketing is more useful and would bring effective results for the virtual kitchen business.

Lower Capital Expenditure

Several factors require consideration by those restaurateurs that are involved in running a full-scale restaurant. Managing a full-fledged restaurant is a complex as well as a mind-numbing affair. The cost incurred in the traditional restaurant business is gigantic. Also, there is a burden of rent cost. However, running a virtual kitchen unit is the utmost solution to all these problems. It is keenly-priced as there is no requirement of renting a huge space for kitchen, take away and dine-in.

Setting up a virtual kitchen unit is easy. It would be best if you endeavoured to focus on stay close to an area from where you can proceed ahead for smooth delivery to the location of your target audience.

Higher Scope for Expansion

Virtual kitchen business in India is the need of the hour for food business as it can satisfy the desires of the customers to the fullest. The scope of expansion is higher in case of Virtual kitchen business as compared to other business models of restaurants. Running multiple restaurants from a single kitchen is a better option. Isn’t it sound like a dream run for restaurateur? Think about it for sure. You can enjoy substantial profit margins by utilizing the same space as well as equipment for multiple restaurants. You can add brands without taking tension regarding capital expenditure. Experimenting with a variety of cuisines is an added advantage.

Read our article:FoSCoS for FSSAI License in India: A Replacement of Food Licensing and Registration System

Types of Virtual Kitchen Business Model

If you are planning to commence a virtual kitchen business in India, then you can consider the following virtual kitchen business model-

Fresh-menu Business Model

This model comprises one brand with a single kitchen. Nevertheless, there are several outlets as well as an existing storefront. It’s a blend of a virtual kitchen and a takeaway restaurant. Customers get the freedom to put their feet in and observe the food getting prepared. Furthermore, customers relish the entire interactive experience.

Independent Cloud Kitchen Model

This kitchen model is known as the original kitchen model. Here, one kitchen serves a single brand. There is no seating space available. Also, there is no storefront. This model is an approach through which restaurant business owners can avoid high rental costs by not extending dine-in services. The craze for this business model is on another level with the rising online delivery of food.

Swiggy Access Business Model

In the food industry, this business model is popular as “shell”. It is a cloud kitchen model nestled in perfect space with the merest infrastructure like gas pipelines, ventilation and drainage. Here, Swiggy[1] is the ruling authority. All of the established restaurants, as well as sprouting restaurants, can rent this ideal kitchen space and take advantage of online ordering platform offered by Swiggy, their marketing tactics along with their delivery fleet. The restaurant is only responsible for cooking, and the rest of the things would get looked after by Swiggy.

Rebel Foods or Faasos Business Model

This business model operates with a different approach as compared to other business models. In one single commercial kitchen, several brands provide a wide variety of cuisines. Although multiple kitchens will be available in the city, there will be a lack of dine-in space. It is on the basis of data intelligence such as cuisines in demand, available demand and supply, preferences of customers, etc. There is no storefront in this business model too.

Go with a business model that suits your requirements and move in the same line with your ideas and strategies.

Amid COVID-19 Outbreak- Virtual Kitchen Business in India is in Demand (Latest Updates)

  • Latest guidelines of Indian government suggest that the restaurants can start performing its functions from 8th of June, 2020. However, it’s a fact that they won’t be able to operate in full capacity anytime soon. Thus, restaurateurs explored many alternate options, and they found Cloud or Virtual Kitchen Business Model a solution to their problems.
  • It has been observed that after the lockdown got extended in April, several restaurant clients have started gathering information about this promising model. This profitable model is the perfect example to keep your business afloat while following the guidelines related to social distancing.
  • Most importantly, by setting a virtual kitchen, Restaurant businesses can feed those underprivileged ones who are hungry and have nothing to eat.
  • The largest cloud kitchen chain of India, Rebel Foods would expand its horizons beyond restaurants and create those products which can be useful for consumers at home. As you know, Rebel Foods operates Behrouz, Oven Story, Faasos, and Firangi Bake.
  • The online food delivery market in India will hopefully expand during 2020-2024 at-
  1. CAGR of 30.55 %( Revenue Based)
  2. 10.9 %( on the basis of no. of users)
  • The online food delivery market in India will generate a revenue of INR  -1334.99 Bn.
  • The online food delivery market in India will develop a user base of 300.7 Mn by 2024.

In the Nutshell

It doesn’t matter whether you are an already existing brand or a budding food business in the industry, operating a virtual kitchen business in India can provide various benefits. Especially, amid COVID-19 Pandemic, it’s a way through which many food businesses can revive as well. At Corpbiz, our team members would help as well as guide in getting all the mandatory permits, FSSAI license and GST registration, and thereby, you can kick start a virtual kitchen business in India.

Read our article:A Full Guide on How to set up a Food Business in India

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