February 01, 2024

Understanding the Expenses of Launching a Cloud Kitchen in the UK

In recent years, the food and beverage landscape in the United Kingdom has witnessed significant changes, catalysed by the Covid-19 pandemic. Cloud kitchens, a concept pioneered by CloudKitchens®, have emerged as a prominent trend, offering restaurateurs a cost-effective avenue to expand into new markets and sustain their businesses during challenging times.

To assist business owners in navigating the landscape of CloudKitchens® delivery kitchens, we present a comprehensive guide on the financial considerations associated with opening one in the UK.

Exploring the key expenses of a Cloudkitchens® delivery kitchen:

Understanding the financial intricacies of operating a CloudKitchens® delivery kitchen is crucial for formulating a successful business plan and determining the required capital for launching your venture effectively.

1. Kitchen space requirements

When considering a kitchen space for your business, you must decide between setting up independently or opting for a CloudKitchens® delivery kitchen provider like Foodstars. The latter option is often recommended for new businesses, particularly given our locations in metropolitan cities with established customer bases and consistent orders.

Before finalising your choice of a kitchen unit, conducting a thorough research of the surrounding area is advisable to assess the potential reception of your cuisine by locals.

Understanding the required size of the CloudKitchens® delivery kitchen and its associated rental costs is crucial. In the UK, our kitchens are 16 to 25 sqm, requiring an investment of approximately £20,000. This stands in stark contrast to traditional brick-and-mortar restaurants, which often span 200 square meters and necessitate an upfront investment of around £700,000+. 

2. What sort of equipment is needed?

Outfitting your CloudKitchens® delivery kitchen incurs substantial costs, extending beyond basic provisions. While our units come equipped with essential items, you’ll need to identify additional necessities for smooth functioning. These may include standard kitchenware such as pots, pans, fridges, and freezers, as well as specialised equipment specific to your culinary offerings. It’s prudent to establish a budget beforehand to avoid exceeding your expenditure on equipment procurement.

Moreover, factoring in utility costs such as gas, electricity, and water is crucial. Additionally, acquiring a tablet for efficient order management is essential. Our dedicated app technology facilitates the streamlined monitoring of delivery orders, consolidating information from diverse food delivery platforms for your convenience.

3. How many employees would you need?

In your CloudKitchens® delivery kitchen, staffing needs will vary based on your daily order volume. Typically, employing between 1 and 3 individuals suffices initially, a stark contrast to the approximately 30 staff members required by traditional restaurants. 

4. Your marketing requirements

Launching a CloudKitchens® delivery kitchen requires strong marketing strategies to connect with your audience and expand your customer base, making marketing investment essential for success. Key marketing considerations include:

Logo – Designing your CloudKitchens® delivery kitchen logo can be done independently or with professional assistance, ensuring it reflects your brand identity accurately, as it may become iconic for your business. 

Website – Every F&B business requires a professional website with an online menu, engaging backstory, and contact form to boost customer interaction, achievable through platforms like WordPress and Wix, including a domain name to showcase professionalism.

Social media accounts – Establishing a presence on all major social media platforms is essential today. Since creating accounts is free, allocating funds for boosting posts or creating ads can increase visibility among a wider audience.

Digital advertising – Regardless of whether you utilise Google or food delivery apps like Deliveroo or Uber Eats, it’s crucial to factor in this expense when preparing to open a CloudKitchens® delivery kitchen in the UK.

5. Culinary technology

In the UK, integrating advanced culinary technology is a pivotal investment for your CloudKitchens® delivery kitchen. This includes acquiring state-of-the-art POS systems and food technology software. At Foodstars, we prioritise top-tier food technology solutions, empowering you to manage orders effectively, compile reports, and track menu performance, ensuring operational excellence.

6. Ingredient management

Ensuring the freshness of your ingredients is paramount for maintaining the exquisite quality of your food in the UK. Establishing a budget helps maximise profitability from each menu item while understanding your customers’ preferences prevents over-ordering of ingredients. 

7. Essential insurance coverage

In the UK, insurance is vital for all businesses. Employer insurance and public liability insurance are essential for safeguarding against accidents and claims. At Foodstars, insurance coverage is included in the pricing of all our kitchen units.

8. Licensing and permits

Operating a business in the UK requires obtaining licenses to meet legal requirements and incurring costs for necessary permits to run a CloudKitchens® delivery kitchen. Thorough research ensures compliance and prevents potential shutdowns. For further guidance, read our comprehensive blog. 

Additional essential expenses

1. Crafting a marketing plan

As your restaurant grows, a strong marketing strategy is crucial to broaden your customer base. Key steps include:

  • Developing a comprehensive social media plan
  • Collaborating with influencers
  • Establishing a loyalty program
  • Incentivising customers for referrals
  • Offering promotions and discounts
  • Implementing targeted advertising campaigns

2. Data analysis

In-depth data analysis is indispensable for understanding your customers on a personal level. Through data analysis, you gain insights into their preferences and why they may choose other restaurants over your CloudKitchens® delivery kitchen. While hiring a freelancer or digital marketing agency incurs costs, it’s essential to evaluate its priority. Data analysis yields valuable information, including:

  • Customer ordering habits
  • Optimal ad campaign strategies for your business
  • Popular dishes that resonate with your clientele

Secure your own CloudKitchens® delivery kitchen

Operating expenses for a CloudKitchens® delivery kitchen are considerably lower compared to traditional brick-and-mortar restaurants. Moreover, you can typically reach breakeven within 6 months, a stark contrast to the 5-year timeline for conventional eateries. Given these advantages, it’s evident why CloudKitchens® delivery kitchens have become increasingly favoured among restaurateurs in the UK.

Are you ready to kickstart your CloudKitchens® delivery kitchen? Get in touch with us today.

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