Both before and after the pandemic, restaurants of all sizes have been looking to evolve their business models. Larger brands have looked for ways to enter smaller markets or increase delivery capacity in an existing area, while smaller brands have tried adopting virtual brands to augment their existing menu and further utilize their kitchen’s compacity.
Over the last couple of years, 'cloud' or 'ghost' kitchens have trended with different levels of success. For our purposes, we are defining these kinds of kitchens as commercial kitchens that accept delivery and/or pick-up orders from third-party ordering platforms, and prepare the order following the virtual brand's recipe and guidelines.
What is the size of the virtual dining concept market?
Based on a report by Allied Market Research, the cloud kitchen industry is expected to grow to $112 billion by 2030. That translates to a CAGR of over 13% from 2021 to 2030. That said, current market conditions and consolidation have disrupted early adopter models in this space, but overall, the idea of cloud and ghost kitchens is viable as brands continue to refine their offerings.
The below guide includes helpful tips on how to start your own virtual dining concept:
Determine your concepts location, theme, and cuisine
First and foremost, one must decide on the concept and cuisine before rolling out a full-fledged ghost kitchen business plan. When deciding, be sure to pay careful attention to cater to the needs of the local market.
- If starting a new virtual-only concept, you can save money by picking a location optimized for delivery, but without the customer-friendly brick-and-motor appearance or location. But don’t get too far off of the beaten path as you still need to be near a high volume of customers and within the delivery radius of most local drivers.
- According to Doordash, the typical delivery radius is about 5 miles, so make sure that the bulk of the customers you need are within a five miles radius.
- Local preference towards the type of food and pricing bracket (Italian, Mexican, Indian, pizza, etc.)
- If you already have a traditional restaurant, Consider day parting - if your restaurant focuses primarily on lunch, they should potentially consider dayparts like breakfast, dinner, or even late night.
- Set realistic goals and growth milestones - New virtual brands with no brand recognition have shown some signs of struggling against more established brands that have had more signs of success.
- If you are already a restaurant operator, take your primary brand online first and then slowly expand to new virtual brands to try out new themes, menus, or hours. Using this path many restaurant operators are able to slowly grow multiple successful virtual brands in addition to their primary restaurant brand.
- Use familiar ingredients in a new way - If your primary restaurant is already pretty busy, try creating new concepts that use an overlap of the same ingredients your staff is already accustomed to, but in a new way to lower the likelihood of distribution to your existing in-house guests and diminish potential resistance to the new menu items by your chefs.
- Do a S.W.O.T Analysis
A restaurant S.W.O.T analysis is a method to understand the strengths, weaknesses, opportunities, and threats to your business. Check this comprehensive guide that can assist you in understanding this business principle in further detail.
- Check The Competition: Check out the competition and see which local brands are offering similar cuisines as your intended concept. What are their price points, how are they promoting their brand, what are the dishes on their menu, and what is their scale of operations?
- In your research, check out their social media pages and listings on third-party delivery apps like Grubhub, DoorDash, and Uber Eats. Comparing their menu options and pricing to your goal can be a great way to determine if the local market will be favorable to your concept.
- Cost of Food Production: Before making a final decision, understand what will be the cost of production and how affordable will it be to run the kitchen for your ghost restaurant.
- Visit the local market with your chef to get to know the prices of ingredients which will help you understand your overall cost of food production.
From making the perfect logo to promoting your business on social media, your branding is critical to your cloud kitchen's success. Some longtime restaurant operators may opt to create their brand without outside help, but may seek assistance from brand professionals. A great place to start is by posting your requirements on freelance websites such as Fiverr or Upwork to find a brand development expert who will likely charge anywhere between $25/hr to $63/hr depending on their level of experience.
These brand managers can offer various aspects of brand creation services such as logo designing, website creation, SEO, setting up your social media accounts, direct mail campaigns, local advertising options, and online media promotions. Online marketing such as social media ads, press ads, or other similar kinds of promotion one intends to undertake to enhance the brand visibility. Find out some out-of-the-box cloud kitchen marketing ideas to hit the bull’s eye.
Always remember to keep the customers in mind when creating your brand. For instance, if you plan to open a Chinese cuisine cloud kitchen, do your research as to what different colors signify in Chinese culture. Use colors, shapes, fonts, and more that matches the desired brand ethos. If you are making reels on Instagram, then consider using Asian music that will go hand-in-hand with the visuals developed.
Create and optimize your menu to drive sales
Your online menu must be easy to read with all the necessary information about the dishes that can encourage potential customers to continue and complete their order. It is also smart to put a one to two-line description of the dishes mentioning the ingredients and flavors.
Here few things you may consider incorporating into your online menus:
- Optimize your food delivery menu for better sales by highlighting the chef’s special or bestselling dishes.
- Add a chef hat or a similar icon beside the dish to denote the same.
- Make different combo options to upsell and promote larger orders.
- Ex. These could include common customer combinations like packaging a burger with fries and a soft drink or adding a free desert option when two or more entrees are ordered. You may apply various permutations and combinations of combo choices keeping in mind your target market.
- Use high-resolution professionally shot images to make the dishes more appealing on the third-party delivery apps.
- Check out this article for more restaurant photography tips.
- Make menu navigation easier with dedicated sections for appetizers, entrées, sides, and desserts to name a few
- Do not clutter the menu with too many choices. Ensure every category should be limited to fewer than 10 unique options.
Utilize a food delivery management solution
One of the obstacles faced by cloud kitchen operators is the ability to effectively manage the orders coming in from the various third-party delivery apps. Hence, it is crucial to automate and streamline this process to reduce order errors, improve delivery times, and optimize your brand for high rankings in the delivery platforms themselves.
Restaurant operators often find it unrealistic to dedicate a staff member to only handling the transcription of online orders from delivery tablets into their POS system and managing their various menus. Thankfully, there are tools like ItsaCheckmate to manage this for restaurants by automating the processing of accepting online orders and injecting them accurately into the POS system, as well as providing enhanced menu management options.
ItsaCheckmate allows a restaurant's existing POS system to automatically accept & route orders from 100+ ordering platforms directly into their kitchen. ItsaCheckmate provides POS integration, simplifies digital menu management, and makes accounting reconciliation with your delivery apps easy. We eliminate the need for delivery tablets and our solution is proven to help restaurant operators improve their operations, eliminate manual order entry errors, and grow revenue from online orders (takeout/delivery).