February 22, 2024

Ultimate Guide to Choosing The Right Cloud Kitchen Model

In the rapidly evolving restaurant industry, cloud kitchens have emerged as a revolutionary model for new and existing businesses alike. With this trend continuing, this comprehensive guide serves to guide you through the process of selecting the right model for your venture and highlighting how these modern solutions can streamline operations and reduce costs to provide a competitive edge for your business.

What Are Cloud Kitchens?

Operating on a delivery-focused business model, cloud kitchens are commercial cooking facilities that cater to food delivery businesses without traditional brick-and-mortar dine-in areas. They are designed to fulfil online orders and delivery services, allowing restaurants to operate with lower overhead costs and flexibility compared to traditional establishments.

Types of Cloud Kitchen Models

Prior to operating from a cloud kitchen, it’s crucial to learn the various model types and their differences so you can select the best one for your restaurant business. 

  • Commercial kitchens: This type of cloud kitchen model offers dedicated spaces for restaurants and catering businesses to fulfil large orders without the need to share equipment or commit to long-term leases.
  • Commissary kitchens: Providing rental options based on the specific needs of food and beverage businesses, commissary kitchens are ideal for those needing to prepare and distribute food to different locations without incurring additional costs for extra space.
  • Incubator kitchens: These are temporary pop-up units located near brick-and-mortar restaurants, offering shared spaces for eateries to prepare delivery orders and test out new food concepts efficiently.
  • Kitchen pods: Often in the form of shipping containers, kitchen pods are cost-effective spaces for preparing food for delivery orders, with minimal equipment and staff requirements, although additional lighting may be needed due to the lack of windows.
  • Cloud kitchens: Typically situated in central locations, cloud kitchens are delivery-focused spaces within larger commercial facilities; this type of model is perfect for F&B businesses looking to enter new markets with reduced financial risk and access to an existing customer base.

Market Trends of Cloud Kitchens

Cloud kitchens are gaining popularity in Australia as they offer cost-effective options for restaurant owners to expand or launch virtual brands without the need for physical dine-in spaces. The global cloud kitchen market was valued at $29.4 billion in 2020 and is projected to reach $112.7 billion by 2030, with a CAGR of 13.12%.The Australian market is also embracing this concept, with many business owners gravitating towards the cloud kitchen model.

Cost Considerations 

Opening a cloud kitchen in Australia comes with lower costs compared to traditional brick-and-mortar restaurant business models. The size of cloud kitchens in Australia ranges from 16 to 25 square metres on average, requiring a smaller financial investment compared to traditional restaurants, which are generally 200 square metres but need AU$ 1,000,000 for investment. However, ongoing operational costs should be considered, including fees charged by food delivery platforms, software expenses, maintenance, and insurance.

Operational Dynamics of Cloud Kitchens

Cloud kitchens prioritise technology investments to optimise their operations, with a focus on digital platforms for customer acquisition. A robust technology platform with seamless integration, including inventory management capabilities, is essential for streamlining the operations and enabling order management. Before establishing a cloud kitchen in Australia, thorough market analysis and research are crucial. Understanding ongoing operational costs and developing a well-defined plan based on your business model is essential for scaling and sustainable growth.

Location and Logistics

Cloud kitchens have become an increasingly popular restaurant business model in major Australian cities, such as Melbourne, Sydney, Brisbane and Perth, especially following the COVID-19 pandemic. To ensure a successful launch of a cloud kitchen model, prioritise areas that are convenient for delivery partners and have a high demand for food delivery services. Locations near densely populated areas, neighbourhoods with a strong demand for delivery, and transit hubs are ideal choices. Melbourne and Brisbane are cities highlighted for their market potential and accessibility to necessary equipment and infrastructure, making them favourable locations for setting up cloud kitchens operations and maximising their chances of success in the Australian market.

Licensing and Compliance

Starting or operating a cloud kitchen business is similar to running a traditional restaurant business model in Australia; several legal documents and requirements must be prepared and registered. These include registering the business name with the Australian Securities and Investments Commission (ASIC), obtaining food business registration and implementing a food safety program, acquiring a liquor licence if serving alcohol, and obtaining appropriate insurance coverage such as workers’ compensation and business insurance. Other essential steps involve securing council approvals, including building and planning permits, environmental health compliance, and a lease agreement if renting premises. Additionally, it is crucial to have health and safety policies and consider other essential licences you need to acquire. Compliance and licensing requirements can vary depending on the specific location in Australia, as certain states or cities may demand a particular licence for you to operate a cloud kitchen business legally.

Future-Proofing Your Cloud Kitchen

The future use of cloud kitchens in restaurant business models is promising. Cloud kitchen facilities are expected to play a significant role in shaping food businesses by transforming the operation model with a delivery-focused approach and heavy technology adoption. As the demand for online food delivery continues to grow, cloud kitchens are likely to remain a key component of the industry, offering opportunities for innovation and growth. 

If you have any questions about setting up a cloud kitchen to benefit your restaurant business and operational model, please seek assistance from Chef Collective. As a network of innovative chefs and restaurateurs in Australia, we specialise in utilising cloud kitchens to grow and scale our food delivery businesses.

By collaborating with Chef Collective, you gain access to our cloud kitchen facilities, online ordering platform and supportive community of experts and peers to help your restaurant business thrive. Embrace the future of cloud kitchens in Australia by joining us today and experiencing the positive impact it can have on your business.


What are the key legal documents and obligations for establishing a restaurant or café business in Australia?

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