Businesses across diverse industries bravely endure the COVID-19 pandemic. If they’re looking to stay open, a Harvard Business School report reveals an area that offers hope and even growth: food deliveries. The demand for food delivery remains strong even as restaurants close. According to the report, many of these food deliveries originate from recently established “cloud kitchens.” Many restaurants that manage to stay open have transformed into virtual cloud kitchens themselves.
Cloud kitchen: The food mantra
Restaurants in the hospitality industry are perhaps the hardest hit by COVID-19, as social distancing makes eating out difficult. The low customer count further makes renting restaurant space unviable. A Forbes report, dated August 2020, discusses how the seating capacity at Chili’s and Maggiano’s Little Italy, both owned by Brinker International, capped at 50% in most states, closing entirely in others, in March 2020. By August 12, Brinker International reported a smaller loss than expected in Q2. They accomplished this by pivoting to curbside pickup and delivery, and also announced a new virtual concept, It’s Just Wings.
With the financial difficulties experienced during COVID-19, many restaurants set up cloud kitchens – spaces where food is created for delivery orders. This has saved the cost of space for in-premise dining. Cloud kitchens, sometimes referred to as dark kitchens, are less expensive than in-premise dining. The Harvard study reports an estimate that a brick-and-mortar restaurant in New York City costs $1 million to $1.5 million to set up while a cloud kitchen can get up and running for about $100,000. Other savings include fewer customer-facing positions, including wait staff and cashiers.
Cloud kitchens more easily comply with COVID-19 regulatory requirements. Whether it is improved sanitary methods or extending safety to customers who will eventually handle the food, compliance is of utmost importance. Given that staffing requirements in cloud kitchens is reduced, a bit of judicious planning can go a long way in establishing safety protocols when setting up operations.
Understanding the emerging trend
Cloud kitchens are an upcoming trend, not yet completely understood. Small and startup businesses considering becoming cloud kitchens should seek professional help. Experienced business partners can handle the software and automation aspects of order-taking, dispatch and delivery, to eventually ensure a perfect experience for the customer. Rather than manually relaying orders and completing delivery, which can be challenged by mistakes in order fulfillment, automation can ensure consistent service. Glitches in a manual process can result in loss of money because of misplaced and incorrectly delivered orders, dissatisfied customers unwilling to pay, and unrecorded transactions.
Focusing on customer loyalty and business building
Building a competitive edge is critical, even in time of crisis. This is essential to revenue-building and something most small businesses need as they recover or consider sustainability. However, there are challenges.
Consistently managing operations, financial records, and trouble-shooting can lead cloud kitchen owners away from the main goal of ensuring customer loyalty. It is important for business owners to focus on a creative menu and overcome the lack of the personal touch provided by a dining-in experience.
Harnessing a strategic and outsourcing partnership can be extremely valuable to restaurants considering cloud kitchen ventures. Outsourcing can help by providing restaurant software support and financial streamlining applications. This will offset the need for manual labor and manual tracking of deliveries and payment, freeing critical time to pursue customer communication.