How to start Cloud Kitchen and earn Rs 200,000 per month?
Nowadays most of us prefer to order our food online instead of going to a restaurant. This is mainly due to the fact that it saves a lot of time and also the money spent on reaching that restaurant (leave aside the pain of finding a parking spot :-/). Apps like “Swiggy” “Zomato” has made it damn easy to order your favorite food anytime. By all means, this is a major life style change and every such big change brings a lot of new opportunities. One such big opportunity is the business of “Cloud Kitchen”. But the good news is that anyone can do this business without any major investment. Let’s see how to start your own Cloud Kitchen and earn as good as Rs 200,000 per month or even more…
“The Indian cloud kitchen market is set to be a $2 billion (Rs 17,000 Cr) industry in India by 2024, up from about $400 million (Rs 3,400) in 2019“
What is Cloud Kitchen?
Cloud Kitchen is nothing but a restaurant kitchen having no dine-in facility and accepts orders only through online system.
Example of leading brands of cloud kitchen includes name like Rebel foods (Faasos), Box8, Biryani by Kilo.
Pros & Cons of Cloud kitchen
Pros of Cloud kitchen
- Minimum or no investment:
Typically, in order to start a restaurant any food joint, you need a huge investment restaurant space, dining tables & chairs, ambience, expensive cutlery, electricity, etc. depending on the size of restaurant and the location. In cloud kitchen, you can save all this cost and virtually start it from anywhere (even your home).
- Scalable business with huge demand and scope for expansion:
Once you have started the business and people like your taste, your food demand will increase and then you can rent out a bigger space and hire people. Furthermore, you can start catering to new locations as well. In future, you start an outlet near your area. That way, your customer base is already fixed and you know the taste of your customers.
- Technology driven
You can easily list your food items of Zomato, Swiggy and your customers can see & order it if they likes. When a customer places an order through an app, you will be able to view that on your mobile, laptop, or tablet. You can track your orders without a hitch using this technology. Isn’t that amazing!!
Cons of Cloud kitchen
- Lack of customer interaction:
The only major con of cloud kitchen is that there is no customer interaction. But I think you can touch their feelings through your delicious recipes 😉
- Dependence of food aggregators
Although these food aggregators like Swiggy, Zomato are helping create cloud kitchen, the problem is also that we will be dependent on them. They also charge high commission on your products.
Investment required, working capital, profit margin:
Investment required for starting cloud kitchen
Basically, the total amount required to start the cloud kitchen would be around Rs 500,000 maximum (including fixed one time cost and working capital for 3 months). But, you can avoid many of these costs by starting from home.
Although, the total fixed cost required is only Rs. 110,000, you can still save some money if have these items already or you can buy 2nd hand as well.
| Items required | Amount Rs. |
| Basic burner | 25,000 |
| Chimney | 20,000 |
| Tables/ racks | 15,000 |
| Oven | 15,000 |
| Utensils | 25,000 |
| Total | 1,00,000 |
| Legal registrations | 10,000 |
Working capital required for cloud kitchen
Basically, you would need some money for running the business (we call it Working capital). I would recommend to have 3 months working capital at least. so, it would come to around Rs 360,000. These expenses would differ based which city you live in. I have considered these expenses based on Tier I cities like Mumbai, Bangalore, Delhi, etc. Further, if you start from your home then rent will be excluded.
| Overheads | 1 month | 3 months |
| Rent | 25000 | 75000 |
| Vegetables | 20000 | 60000 |
| Staff (2 numbers) | 25000 | 75000 |
| Electricity | 10000 | 30000 |
| Gas | 10000 | 30000 |
| Packaging | 10000 | 30000 |
| Selling & marketing, POS software | 20000 | 60000 |
| Total | 120000 | 360000 |
Product economics (cost breakup of 1 sample product)
Margins in this business is very high so you can make a Gross margin of 70% and net margin of 45%.
| Item A (Pizza) | Amount Rs | % |
| Selling price | 250 | |
| Cost for making it | 75 | 30% |
| Gross profit | 175 | 70% |
| Commission | 25 | 10% |
| Overheads | 38 | 15% |
| Net profit | 113 | 45% |
Earn Rs 200,000 per month
In order to earn Rs 200,000 / month, you need to sell average 75 Quantity per day and 2250 quantity per month. Initially, this number looks big but believe me it is not so difficult to achieve. It also depends on you do you price your products.
| Net income per month | rate | items sold/day | items sold/month | Total sales |
| Item A | 250 | 25 | 750 | 1,87,500 |
| Item B | 200 | 25 | 750 | 1,50,000 |
| Item C | 150 | 25 | 750 | 1,12,500 |
| Total sales / month | 75 | 2250 | 4,50,000 | |
| net margin | 45% | |||
| Net income/ month | 2,02,500 |
Steps to start your own Cloud Kitchen
1. Decide the food menu of your Cloud Kitchen
Firstly you need to decide the recipes you are going to serve to your customers. But this depends a lot on your speciality, customer’s taste & preferences, current market trend and demand. Whatever you decide, certainly you need to practice and ensure that the taste is uniform for all of your serving. I would recommend to document the recipe specifying all the ingredients with exact quantity and sequence. Thereafter, prepare your Food menu along with the rates.
2. Create your brand name
Secondly, create your brand name which should be catchy & simple. Then you should also create your logo and tagline. You can easily create a logo for free using various websites for example, www.canva.com
3. Decide the place of business
The next step would be to decide the place where you want to start this business. You can either start from your home or rent out a commercial space. In case you decide to rent out, you may need around 150-200 sq. feet of area to start with. This is a crucial decision because there are many costs dependent on it. So, decide carefully. I would recommend to start from home initially.
4. Obtain required licenses
You need to obtain below basic licenses in order to start your business
- FSSAI (Food Safety and Standards Authority of India) https://www.fssai.gov.in/
- Udyam registration http://udyamregistration.gov.in/
- GST (Goods and Service Tax) registration https://reg.gst.gov.in/registration/
- Company registration like private limited company, partnership or proprietorship firm. I would recommend starting with a proprietorship firm first, then when your business grows you may get into a private limited company.
- PAN card (if it’s a private limited company or partnership, not required if you are starting as a proprietor).
Also open a separate current bank account if it’s a private limited company or partnership, not required if you are starting as a proprietor.
You can obtain these licenses directly if you have required knowledge. However, I would recommend taking help from a CA or lawyer.
5. Decide and implement the POS (Point of Sale) software
- Although it is not mandatory but it is recommended to implement a POS software.
- This software that allows you to track the customer orders from multiple platforms (swiggy/Zomato).
- You can also manage multiple brands. For example, Rebel foods has multiple brands like Faasos, Behrouz Biryani, Ovenstory, etc. All these brands can be managed in one software.
- Manage inventory centrally. Inventory management in this business is very crucial because the vegetables and other milk products has a very short shelf life.
- Analyse your data: this software will also provide you with many analyses and reports related to your customers, payments, discounts, online orders, delivery, etc. which will help you to improve your business.
Evidently, there are some good players who provide this POS software. To name a few, POSist.com, limetray.com, petpooja.com
At this instant, the cost of this software is around Rs 10,000 / outlet / year, which is nothing for what they provide. I would highly recommend to implement any of this software.
6. Buy kitchen equipment/utensils & packaging material
Next step would be to buy the required equipment/utensils as described in Investment required point. Further, please also pay special attention in choosing your packing material. This is the face of your product, so it should of attractive and good quality.
7. Staff requirement and hiring
Once you ready with all of the above, you may decide to hire the staff. Initially, you can manage alone or you can hire 1-2 staff who can help. If you have budget, you can also think of providing uniform with your brand name to your staff.
8. List your products/recipes on food aggregators platform
Now it’s time to register your business on food aggregators like Zomato and Swiggy. Its very easy to register. You may need the required licenses (step 4), your food menu (step 1) and some attractive images of your products.
https://www.zomato.com/partner-with-us
https://partner-with-us.swiggy.com/onboard#/
9. Marketing on social media
In order to increase your orders, you need to market your business and brand. So obviously, you need to create page on all social media websites like Instagram, Facebook, Twitter, etc. You may also consider to run Ad campaigns on these platforms for better reach.
Further, you should also register your business on Google business with the exact location. This will build trust with your customer.
Summing up, this is all you need to start your own Cloud kitchen and follow your passion. In the long run, this business model is here to stay for a very long time and will only evolve multiple folds from here. Cloud kitchen business is indeed one of the most profitable business with minimum risk and investment. However, I would still say it is not going to be easy and you need to work very hard at least in the initial phase.
I hope you enjoyed this post and have learnt something out of it that would help you in building your cloud kitchen. If you think I missed out any point and you have any confusion, feel free to share your comments.
