The Biggest Challenge Faced by Cloud Kitchens - On Food Delivery

Post-Covid, many customers prefer home delivery over dine-in facilities; online food delivery is becoming the new normal, and so is the concept of cloud kitchens. The idea of a delivery-only restaurant, which requires no physical space and operates solely on an online ordering-enabled application or website, seems like a gold bullet to food entrepreneurs.

You might be engulfed with the benefits of cloud kitchens which depict the most beautiful picture, saying low investment to high profits per order. Moreover, the idea of menu flexibility with the same kitchen infrastructure might have awed you. Yet, it is important to pay heed to the challenges faced by entrepreneurs in running a cloud kitchen.

On-demand: the real evil

The delivery process is the central concern for food entrepreneurs running cloud kitchens. A smooth delivery process is needed for customer retention and satisfaction. However, the constraint while monitoring the delivery agent and securing the food quality during delivery can lead to a shutdown.

Although we have different methods available to monitor the delivery process, they are expensive. Moreover, these delivery challenges satisfy the customer's on-demand needs, so they sign out of the process quite soon.

Maintenance costs can eat your profits

Even though cloud kitchen operators can defeat the real-estate costs to run their business successfully, the technological costs can spot a hole in their pockets. For example, real-time tracking devices are needed to deliver food on time to the customers, logistic support, maintenance of the customer application, and failure to properly manage the staff can add immensely to the cost structure of the cloud kitchens.

Set-backs due to rider unavailability

You are generating high customer demand for the food menu provided by your cloud kitchen, yet you still need to generate profits. It might seem easy to keep up with demand and supply; however, meeting the supply might become challenging when demand speeds up. Cloud kitchens run on the wheels of their riders; they need the agent right on time. Hiring many riders will become daunting because the demand for food delivery needs to be more specific.

High commissions overriding the profits

In the cloud kitchen industry, the initial investment required to set up the kitchen needs to be drawn from an investor. Advertisement, delivery services, staff requirements, and website management require huge commissions to be paid to the dealers.

Scenario analysis

Looking forward, business is a challenging task. Proper planning, efficient management, great ideas, practical strategies, real-time tracking of industry updates, and substantive business knowledge are required to succeed in any business. And cloud kitchens are no exceptions!