The mainstream acceptance of food delivery services has created a number of opportunities for food businesses. No longer does a food business have to buy or rent a kitchen and dining room to be able to offer quality food to its customers. With the help of a good order management system and a few delivery partners, a food business can operate from a corner of another restaurant's kitchen, from a catering facility or from anywhere with a health-department-approved kitchen.
The virtual kitchen trend is growing. Sales from virtual kitchens around the world were more than $43 billion last year. That number is expected to increase to around $71 billion by 2027.
Host kitchens are bricks are mortar locations that rent space to one or more virtual kitchen. These might be traditional restaurants, hotels with kitchen space or catering facilities. Some of these locations have larger kitchens than they need or are using. Others, such as caterers, only uses their kitchens part of the month.
In most cases, the host kitchen rents the space to the virtual restaurant, which uses an order management system and third-party delivery services to connect with their customers. In some cases, the host kitchen uses their staff to process the food orders using the virtual restaurant's recipe and food supplies and then uses a third-party service for delivery. Obviously, the host kitchen will charge more for the full staff option.
In most cases, the host kitchen provides the cooking equipment, except for personal items like knives. They also provide the utilities, dishwashing service and refrigerators. The virtual kitchen is only responsible for the food preparation staff, the ordering system and the cost of the food ingredients.
The trend towards ordering food from restaurants to be delivered at home isn't new. After all, pizza restaurants have been delivering for decades. However, the advent of companies like Uber Eats and Grubhub have brought delivery service to even the smallest restaurants. It's estimated that 70 percent of restaurant food sales are now via delivery services...and that number is growing.
With so much of a typical restaurants sales coming from online orders, it doesn't make sense in many cases to spend a lot of money on elegant dining rooms or front-of-the-house staff. Even the building can seem like a luxury. That's why you see an increasing number of host kitchens. A restaurant can rent out an unused portion of their kitchen to a non-competing food business and instantly diversify their business. As a host kitchen, a traditional restaurant can make money, even on a slow night, without increasing their overhead.
For the virtual kitchen, renting a space in a traditional kitchen means they don't have to invest in or rent a building. Nor do they have to hire a large staff. Functions like dish washing are handled by the host kitchen staff. A virtual kitchen can also get up an running a lot more quickly than a traditional restaurant. That's because they don't have to build out a space, order equipment, hire a large staff and train that staff. A virtual kitchen can open in around four weeks. That compares to an average of 12 weeks for a traditional restaurant.
Virtual kitchens are also less expensive to open. The average virtual operation costs about $30,000 to open, compared with between $200,000 and $500,000 for a traditional restaurant. Virtual kitchens can also pivot more quickly if market conditions change, something a traditional restaurant with hundreds of thousands of dollars invested in a concept is less likely to do.
Being able to connect well and quickly with customers is essential for a virtual kitchen. That's where a good order management system comes in. A good order management systems can help the virtual restaurant present their food offering to their customers in a way that's easy to understand, since a waiter isn't present to explain the different ingredients and daily specials. Such a system will also make it easy for customers to place their orders, pay for their orders and schedule a delivery time.
You don't need a huge budget or a big technology investment to be able to reap the benefits of a good order management system. At Cuboh, we can integrate all the apps for delivery partners that the virtual kitchen uses, so that they are available on a single dashboard. This helps to eliminate the human error of transferring information from one system to another. We can also give you quality reports, so you can see where your online business is coming from and find opportunities for your marketing.
To learn more about how Cuboh can help your virtual kitchen make the most of the opportunities presented by online food delivery and to book a demo, contact us at cuboh.com. We've helped dozens of food businesses like yours harness the power of restaurant tech.