A cloud kitchen is a restaurant that only accepts takeaway/delivery orders via an online ordering setup. These are mostly base kitchens, started in small setups that aim to provide food at customers’ doorstep.
Such cloud kitchens/online restaurants create websites, apps or get listed on food delivery apps to receive orders. Since your primary method of getting clients and orders are online, it becomes all the way more important to have a solid system set up to track, confirm, and process orders. A system that can record your orders, payments, and revenues you’re generating from your partnered apps for orders. An umbrella system of restaurant billing like this will save you from manually calculating revenues at the end of each day.
Along with this, today we will understand and learn about the key points that you must keep in mind before starting your own cloud kitchen. Mind you, a successful business like cloud kitchen, requires exactly the same amount of business mindset, as it requires the passion for cooking.
If you want to become the next food entrepreneur, then this blog is for you.
The key factor that separates a cloud kitchen from a restaurant is the investment in location. A cloud kitchen does not require massive space, decoration, and investment in infrastructure like a fancy dine-in restaurant.
A cloud kitchen can be easily set up in a 300-350 sq. ft room. You can use your garage, the front desk of your house or even your own kitchen can be converted into a cloud kitchen if you’re a startup with a tight budget.
Don’t think much about location, use the most feasible and accessible location to set up your kitchen. Be conscious about investing in a location, as it would not make much difference to your overall business.
License Requirements for Cloud Kitchens
A cloud kitchen is an easy setup but requires some crucial paperwork to be completed well in advance to not fall prey to another roadblock in bringing your business to life. Also, when a cloud kitchen operates, consumers do not have direct access to the place, but such licenses and certificates assure them that their trusted restaurant is worth their money. It acts as an agent to convince your consumers to buy from you. You can easily use these documents to promote yourself on the website and partner sites to inherit trust.
- Business License:
- It is a government issues license that is mandatory in the USA. Any restaurateur or cloud kitchen owner must seek this license in order to operate legally.
- It includes a registration fee of $50 and a license filing fee ranging from $25 to $500. It differs in different cities.
- To find out about your license department, Google and find out about the USA Small Business Administration (SBA)’s website for complete details.
- This license needs to be renewed annually.
- Food Handlers Permit
- It is another legal necessity that a cloud kitchen owner must fulfill. This permit is a guarantee of proper sanitization, protection, and storage of food.
- It requires your workers to complete a state-approved food handler’s course and buy it.
- The cost of employee health permits varies from $100 to $500.
- It expires in 3-5 years, depending on your state’s laws.
- Employee Identification Number
- It is issued for once and free of cost.
- Assigned by IRS, EIN is basically a tax ID number
- It is a compulsory requirement for all business owners.
- The IRS issues one EIN per day. You can apply online to get one issued to you.
Kitchen Equipment and Packaging Material
Your kitchen equipment and packaging material depending upon the kind of cuisine you serve and its handling. But, the basic requirements for any kitchen are an oven, stove, deep freezer/refrigerator, knives, utensils, trays, and more.
Packaging is another vital need when running a cloud kitchen. Just like restaurants when you decorate and serve food on plates, packaging makes your deliverable food look good. Along with this, other factors while considering packaging are high-quality food-grade containers along with space to not destroy the dishes. Plastic containers along with cutlery are most used to keep food from spillage and ensure efficient delivery.
Chefs and Help
Because you’re only opening up a cloud kitchen and not a full-fledged restaurant, you can easily suffice with 1 chef along with you and 2-3 help. They can multitask and deliver the food too. It is always advisable to be rational in spending whilst setting up a business. You can always add on slowly, later on.
Since you’re hiring employees, staying compliant with business rules is important. As a business owner, you must take care of all the relevant rules and laws such as tax registration, TDS PF, payroll, and wages measurement to meet your long-term goals and maintain long-lasting friendly relations at work.
Generating and Maintaining Online Orders
Once you’ve fully set up your cloud kitchen, it is now time to get to the actual business. Your orders rely on online ordering and phone calls. Thus, it becomes of utmost importance to keep these two always active and running. Other than this, maintaining a database of revenues, orders, sales, vendors, raw materials also becomes important to keep it flowing smoothly.
Here is what you will have to be more focused on after getting all your licenses and set up in place:
- Get listed on online food service apps
- Get yourself promoted through online aggregators
- Start social media branding & awareness about your new venture
- Set up for online invoicing
Cashflow and Database Management
As suggested above, invest in the online billing software. The online available software like Invoicera requires a signup to let you get started. They act as your complete books of record-keeping so that you do not have to spend hours managing vendors, orders, raw material, stocks, salaries, taxes, revenues, and so many other costs.
Here is how billing software works for you:
- Online invoicing for online orders
- Client database management
- Purchase orders for vendors and expense tracking
- Detailed reports for analysis
- Tax calculation
- Receipts and revenue management
- Vendors management
- Stock management
Cloud kitchens are low-risk and highly beneficial business ideas. They get set up so quickly and do not even require huge amounts of investment. It is because of this that they have become a highly acceptable business idea. Be it passionate chefs or a small household in need, food services have become the most common business idea for all. While businesses are supremely expensive ideas, cloud kitchens sort the need for you.
If you’re also a young mind looking for a new venture, this is the right time to jump in my friend!
Apply for licenses and meanwhile signup to Invoicera to manage your cash flow.