There has been a seismic shift in Australia’s F&B sector over the last few years, which has been spurred on by the COVID-19 pandemic. CloudKitchens™ delivery kitchens have become one of the major trends in the industry, with many restaurateurs keen to explore them as a cost-effective way to expand their business into new markets to keep their eateries going in these tough times.
Fuelled by the increase in demand for CloudKitchens™ delivery kitchens, there has been a drastic rise in the number of providers of such spaces, with Chef Collective having established itself as a market leader in Australia. With many business owners gravitating towards and embracing the concept of CloudKitchens™ delivery kitchens, we have put together an in-depth guide on the costs of opening one such kitchen in Australia.
What are the main costs associated with a CloudKitchens™ delivery kitchen?
Like any business, there are a number of factors that you have to consider when it comes to the cost of running a CloudKitchens™ delivery kitchen. You will need to know about all these when putting your business plan together as it will determine how much capital you will require to open your delivery kitchen.
- The size of your kitchen
- What equipment will you need?
- How many employees do you need?
- Your marketing requirements
- Food technology
- Your ingredients
- What insurance do you need?
- Licences and permits
1. The size of your kitchen
When looking for a kitchen space that adheres to the requirements of your business, you first have to decide whether you want to do this on your own or opt for a CloudKitchens™ delivery kitchen provider like Chef Collective. For businesses that are just starting out, it is recommended that they choose the latter option, especially considering that our locations are all in metropolitan cities where there already exists an established customer base and plenty of orders coming in at all times. However, before you decide which kitchen unit is best for you, it is always worth doing your research on the surrounding area and assessing whether your particular type of cuisine will be a hit with the locals.
It is also necessary to know the size of the CloudKitchens™ delivery kitchen you need and the cost that comes with renting that space. Our kitchens in Australia are 16 to 25 square metres on average and require a financial investment of AU$23,000. This is a whole lot less than brick-and-mortar restaurants as they are generally 200 square metres in size and require a cash injection of about AU$1 million.
2. What equipment will you need?
One of the biggest costs you will incur when launching your CloudKitchens™ delivery kitchen is all the equipment needed. Our units come equipped with the basic necessities, but it will be up to you to decide what else you might need to ensure your business runs like clockwork. Be sure to consider the basics, which include pots, pans, fridges and freezers, to specialist equipment that is required if you make a specific type of cuisine. When buying your kitchen equipment, it is useful to have a budget in mind so that you don’t overspend.
It is also important to consider how much you will pay for utilities, including gas, electricity, water, etc. Furthermore, you will need a tablet to keep track of all the delivery orders coming in. Our app enables you to conveniently view all the orders from the customers, even across different food delivery companies.
3. How many employees do you need?
Behind all delicious dishes are master chefs who are experts in their craft. You will certainly need to employ between 1 and 3 in your CloudKitchens™ delivery kitchen depending on the number of orders you fulfil daily. Even so, the staff cost will be nowhere near the amount restaurants will have to fork out as they usually need about 30 people. When starting in a CloudKitchens™ delivery kitchen, you need fewer employees, but as you grow, you can hire more people to cope with rising demand.
4. Your marketing requirements
Many restaurant owners may overlook this cost when they launch a CloudKitchens™ delivery kitchen business. However, marketing will be one of the key aspects of your establishment since you need to connect with people and grow your customer base. Since there are so many marketing techniques you can utilise, let’s break them down.
Logo – This can be done on your own or through a company or freelancer. The key is to ensure it accurately reflects your brand as it becomes something your business is known by.
Website – All F&B business needs to have a proper website that looks professional and provides a great user experience. When getting your website in order, make sure to include an online menu, a background story and a contact form so people can get to know your business better and reach out to you as well. WordPress and Wix are two great platforms for creating websites easily, but you can also have someone create one for you. One useful tip is to buy a domain name so that your URL exudes professionalism.
Social media accounts – You will need one across all the major platforms people use these days. While creating a social media account is free, you might need to spend some money boosting posts or creating ads so you can make your brand known to a larger audience.
Photography – There is more to photography than simply grabbing and camera and snapping away. Good photos require a photographer who knows what they are doing, so it’s best to get a professional to take mouth-watering shots of your food so that more people are enticed to them out.
Digital advertising – Regardless of whether you utilise Google or food delivery apps like Menulog, Deliveroo or Uber Eats, you will need to keep this cost in mind when preparing to open a CloudKitchens™ delivery kitchen.
5. Food technology
This will be one of your major costs as your CloudKitchens™ delivery kitchen will need a top-of-the-line POS system and food technology software. Simply put, this is an area where you really don’t want to cut corners. At Chef Collective, our facilities have top-notch food technology software that enables you to keep abreast of everything happening in your business. Whether it’s managing orders coming in or compiling reports of the best-selling items on your menu, our technology can deliver insightful data to you.
6. Your Ingredients
It goes without saying that your ingredients need to be as fresh as possible so that your food is of exquisite quality. It’s useful to have a budget so that you can make as much money as possible out of every item on your menu. It’s also wise to keep track of your order volume, so you don’t order more ingredients than you need.
7. What insurance do you need?
This is a cost that applies to every business, including CloudKitchens™ delivery kitchens and traditional restaurants. Two types of insurance you will need are employer insurance and public liability insurance, which will ensure you are protected in cases of employee accidents, mishaps that occur in the workplace, and customers that take legal action against you after eating your food and getting sick. Chef Collective knows the importance of being protected in unforeseen circumstances; therefore all our kitchen units come with insurance as part of the pricing. as part of the pricing.
8. Licences and permits
Any business in Australia will need a licence to operate in accordance with the law. As a result, you will have to bear the costs associated with the permits needed to run a CloudKitchens™ delivery kitchen. Be sure to thoroughly research this so that you aren’t in danger of being shut down in the future. Should you need more information about this, you can refer to our handy, all-encompassing blog.
Other costs that are necessary
- Developing a marketing plan
- Data analysis
1. Developing a marketing plan
When your restaurant starts to become famous, you will need to have a marketing strategy in place so that you can continue reaching a wider customer base. To do this, you will need to do the following:
- Create a social media plan
- Work with influencers
- Create a loyalty program
- Give customers rewards for referrals
- Promotions and discounts
- Targeted ads
2. Data analysis
This is crucial as it allows you to know your customers on a more personal level. Using data analysis, you will start to learn about their pain points and why they might opt for other restaurants instead of ordering from your CloudKitchens™ delivery kitchen. To do this properly, it is worth bearing the cost of hiring a freelancer or digital marketing agency. However, it is worth taking the time to think about whether this is a top priority.
Essentially, data analysis can provide you with a lot of useful information, such as:
- Your customers’ ordering habits
- What type of ad campaigns are best for your business
- Which dishes are proving to be a hit
Time to rent your own CloudKitchens™ delivery kitchen
The operating costs associated with a CloudKitchens™ delivery kitchen are much lower than brick-and-mortar restaurants. Plus, you can typically break even in 6 months, while normal eateries take about 5 years to get to that point. With all this in mind, it’s obvious to see why CloudKitchens™ delivery kitchens have become increasingly popular among restaurateurs in Australia.
Ready to launch your CloudKitchens™ delivery kitchen? Fill out the form below to get started today!