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Cloud Kitchen Vs Dine-In Restaurants: What is The Future of The Retail F&B sector?

There has been quite some buzz about the future of the restaurant industry, especially in the current scenario. The pandemic has changed F&B retail’s approach towards business and is influencing them to revamp their traditional models to adapt to the new normal.

Speaking of trends that became the silver lining during the pandemic, Cloud Kitchen or Ghost Kitchen or Dark Kitchen has been the roaring highlight. It is pretty hard to ignore the revolutionary impact that this new restaurant model has made on the industry.

But while this hybrid restaurant model is growing at a breakneck speed and is expected to be valued at USD 2.5 Billion by 2028, the real question is whether it can compete with the conventional Dine-in experience?

But before diving into that let’s understand what are Cloud Kitchens & Dine-in Restaurants and how are they different from one another?

Customers are habitual of the dine-in restaurants and their formal form of the dining experience. And despite the boost that third-party food delivery platforms are giving to the cloud kitchen, customers still are hesitant about ordering from unknown or visually absent restaurants.

Cloud kitchen v/s dine-in restaurant what is the difference?

Cloud Kitchen Vs Dine-In Restaurants: What is the Difference?

Cloud Kitchens work on a delivery-only restaurant business model. They do not offer a dine-in option and cater to their customers solely through online delivery. Cloud Kitchens infrastructure basically includes a kitchen set-up and tie-up with food delivery applications.

On the other hand, Dine-In Restaurants are traditional brick-and-mortar outlets which allow customers to visit the establishment and enjoy their food by leveraging aesthetic ambience, prompt service and the option to explore new cuisines & food outlets.

Now, coming to the heat of the battle, the Difference Between Cloud Kitchens and Dine-In Restaurants

1. Role of the Business Location

Location is one of the prime differentiating factors between these two models. For a dine-in restaurant, the location serves as an integral part of the success of the restaurant. A restaurant owner needs to make sure that he has set up his restaurant at a strategic location which is easily accessible to its dine-in customers and online food delivery customers too.

Whereas, for a cloud kitchen the location hardly matters since this model is concerned only with the quality of food and its quality delivery.

2. Investment Needed

Another differentiating factor between the two is their investment cost. As a whole, the investment required for setting up a cloud kitchen is comparatively lower. The cloud kitchen can be set up anywhere as it only requires a cooking space, essential kitchen equipment and a tie-up with food delivery services.

Whereas, the dine-in restaurant requires a great interior, furniture set-up, kitchen staff and set up, service staff, dining space, cleaning and sanitary facilities.

How to run a cloud kitchen?

3. The Space and Interior Needed

Dine-in restaurants are required to create a whole customer experience. They need to provide a wholistic experience by setting up a decent seating space with at least 10-15 tables along with a fully equipped kitchen with sufficient floor space and ventilation.

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On the other hand, cloud kitchens do not need to focus on the interiors at all. They don’t need to invest in every and many kitchen equipment as most cloud kitchens work on niche menus or cuisines and unlike fine dining restaurants, are not expected to serve everything.

4. Staff Expenditure

Next, is the cost of hiring front-of-the-house and back-of-the-house staff. Even in case of staff management, cloud kitchens are quite profitable as they do not require any waiting staff.

With dine-in restaurants, the cost of hiring, training and retaining staff can be heavy on the pockets. Additionally, you might also be required to give them increments and bonuses.

5. Set-Up Time

Building and designing a dine-in restaurant could take you several months, even years. The owner has to make sure that the ambience is aesthetically pleasing, the restaurant is spacious and well-lit, the seating arrangement is comfortable and easy to manoeuvre for the waiter. These and many more tedious but essential decisions are to be taken before the dine-in space is ready for the customers.

For cloud kitchens, all that is needed are the appropriate licenses and just a quick kitchen set-up. There is barely any time spent in choosing a location or designing the interiors. All you have to do is to focus on the quality of the food, acquiring and setting up the equipment and cleanliness of the kitchen.

Did you know, cloud kitchen don’t even have to buy a kitchen space? If you are planning to open one, you can rent a commercial kitchen? Click here to know more about it!

Know all about the recent restaurant trend: cloud kitchens

6. Marketing Costs

For cloud kitchens, a strong Restaurant marketing strategy is essential. Since they operate only virtually, it is imperative that owners of cloud kitchens resort to social media marketing to reach out to a wider audience and create a positive customer experience.

Given today’s scenario, marketing costs for a dine in restaurant are also considerably high. But a distinguished advantage that the dine-ins have over their counterpart is the outdoor branding in their neighbourhood as well as the word-of mouth marketing by their diners.

So, back to the question,

WHICH IS BETTER?

CategoryCloud KitchenDine-In Restaurant
Importance of Location✔️
Lower Investment Cost✔️
Lower Set Up Costs✔️
Lower Staff Expenditure✔️
Lesser Set UpTime✔️
Above points highlight how and why Cloud Kitchens are gaining immense popularity for their added benefits as well as profitability.

With the help of the right assistance and seamless integrations provided by an efficient POS system, Cloud Kitchens are proving to be one of the most beneficial F&B business models. It is safe to say that Cloud Kitchens are vital to success in the post-COVID restaurant industry and are at par with the experience offered by dine-in restaurants, in terms of food quality and services.

Shaival Desai
Shaival Desaihttp://blogpetpooja.wordpress.com
Shaival is the Chief of Growth at Petpooja. Apart from jumping from one corridor conversation to another, you will always find curiously wandering about SaaS products, technology & food trends. Reach him at shaival.desai@petpooja.com.

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2 COMMENTS

  1. Considering the swiggy/zomato commission, Discounts on platforms, Ad cost on platforms.. Cloud kitchen turned out to be a bad option now a days. If we can deliver food then we save the commission /discount/adcosts from platforms.
    Also Margins are high when dine-in is also available (apart from one time investment on interiors/cutlery/tables etc).

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