WHY DO CLOUD KITCHENS FAIL?
Do you remember the trend of fidget spinners? That toy got the attention for a whole year. But what about now? People barely buy that spinner. Trends are always like that. They come for the hype and then vanish as nothing happened. Many ideas swarm around the market. Many get the hype they wanted and many ideas just disappear without a trace. So is the recent trend of cloud kitchens aka ghost restaurants and also sometimes called dark kitchens. Too much for a single idea but it became popular in no time. There are many reasons why it became a highly popular idea for upcoming start-ups. The idea aimed at opening kitchens that completely focuses on the online customers and delivering them the services. These are not like walk-ins or dine in restaurants where customers visit the restaurant themselves. The customers here don’t visit the cloud kitchens themselves, rather they can sit on their couch and order their favourite food and these kitchens will provide it through delivering services like Zomato and Swiggy and not the walk-in customers.
Less expensive land rents, low staff maintenance, no need for receptionists, the requirement of less space and a lot of such factors are the reasons why cloud kitchens got popular. The grass is greener on the other side, every new idea gets more attention in the market but everyone gets the taste when they experience the hardships in it. From the outside cloud, kitchens are just perfect in every way. You get less expensive rents, easy staff management as more staff members are not necessary, saves money than a normal restaurant and you require no extra space for parking slots for the customers as they won’t be coming anyway. But the real struggle of opening one is where everyone is blind about. The reason why cloud kitchens fail is a point worth considering when you are planning to open one. The rosy ideas are all fine but taking a note of the hardships and demerits is a must because one must think before they act.
Why do cloud kitchens fail? The most common struggle is competition. No matter the kind of new idea anyone brings, it has to face the overwhelming competition of the market. Why so? Because you are not the only one who thought of this idea. Many cloud kitchens exist way back; it’s just that this concept took time to become a trend. Hence they are more successful as compared to the new ones. Plus, there is an aggregator tax you need to pay for delivery platforms like Zomato and Swiggy. What’s this tax? To understand it better, an aggregator is a person who owns an application or web-based software and allows customers by providing certain services. And these aggregators are none other than Zomato and Swiggy who give the platform to the cloud kitchens to sell their food items. Now, these kitchens have to give a part of their revenue. While most walk-in restaurants do provide delivery services but that’s not their core income. But so is the case with cloud kitchens delivering to online customers is the only source. Though they save a lot in infrastructure and management, they end up losing too much on these platforms. Also, there’s an issue with feedback. In walk-in restaurants, the customers can directly interact with the staff and chef but so is not the case in cloud kitchens. Lack of interactions makes them anonymous in the market. It is only the brand name that will revolve around and no one knows who’s behind it. It just happens that there might be some negative reviews, low ratings and lesser orders. It creates a bad impact but everyone has to deal with it. It is always important to win the trust of the customer who’s using your services and that is the problem with these kinds. A delivery-only service leaves no choice but to speed up the process and no time to fine touch things or make them better. The waiter can’t talk with the customer and ask how it was or what they would like to have next. And such interactions are needed to be online but the internet is a bad ally. Internet ads or digital marketing is hard and keeping consistent interaction with online customers is necessary. This leads to the hiring of several more staff like a content writer, assistant manager, consultants etc. It’s true that in the near future food delivery will rise but keeping up with the competition will just become more and more difficult. Delivering being the only source of income makes it even tougher to carry on. The whole cooking process has to be in sync with time otherwise customers don’t take much longer to write a bad review and give fewer stars.
To understand it even better imagine how normal auto drivers were stressed out when Ola and Uber came. Similarly, Swiggy and Zomato just became a medium for the exchange of service which cuts the direct interaction between the actual service provider and the customer. Apparently, these kinds of companies are the recent and most successful start-ups. There’s no other way to stop it. It’s the game of who crushes whom. And to win it a company like a cloud kitchen that remains anonymous in the background needs full control over the media. There can be many more minor and major reasons why cloud kitchens fail but it is important to consider that daily thousands of start-ups start and thousands of them fail. The ones who remain in the arena are most likely to succeed.