COVID-19 impacted the F&B industry in dramatic ways. Few countries were prepared for the pandemic, and although some industries thrived with the opportunity, many restaurants started to struggle. One third of restaurants in Hong Kong are on the verge of closing down.
Even as the negative effects of the pandemic on dine-in restaurants wane, F&B owners continue to face challenges like manpower shortages. This, coupled with the shift in consumer preference towards food delivery, makes the CloudKitchens™ model a better and more effective business model for F&B owners.
What, then, does the CloudKitchens™ model offer that traditional restaurants simply cannot?
Here are some ways CloudKitchens™ proves itself to be potentially better business model for food businesses:
- Lower upfront and operational expenditure
- Taking advantage of a growing food delivery industry
- All the data restaurateurs ever needed at their fingertips
- Launch within weeks
- Cost-effective expansion into new markets and areas in your city
- The magical combination of low risk – but high reward
- Piggy-back off the success of delivery platforms
1. Lower upfront and operational expenditure
Restaurants are complex businesses to run. Historically thin profit margins of just a few percent make running brick-and-mortar locations a challenging ordeal for many. On top of this, upfront costs that range from HK$1.5-2m make expanding and opening new restaurants near-unaffordable.
CloudKitchens™ offer an alternative to this, with opening costs as low as HK$150k, and operational costs a mere fraction of traditional restaurants. This is possible for many reasons, including the fact that the CloudKitchens™ provider takes care of construction, renovations, and facility maintenance. Plus, the lack of a dine-in space removes the need for large front-of-house teams.
2. Taking advantage of a growing food delivery industry
It’s no secret that the food delivery industry is expanding rapidly. Long before the pandemic, the market was growing year-on-year, signifying itself as a ripe opportunity for those willing to experiment with something new.
CloudKitchens™ set you up for success in this new industry landscape and allow food entrepreneurs to get a foot in the door before competition gets incredibly steep.
3. All the data restaurateurs ever needed at their fingertips
The CloudKitchens™ model does not simply mean remote kitchens. Operators like Freshlane offer a suite of high-tech benefits in each kitchen space designed to help streamline and grow your business. In our CloudKitchens™, all delivery apps and orders can be monitored and managed through a single tablet at the centre of the kitchen. Insightful data is also collected, allowing restaurants to see which are their most profitable dishes, find bottlenecks in their CloudKitchens™ operations, understand their most beneficial pricing models, and much more. This way, restaurants can stay organised and streamline their operations to maximise profits.
4. Launch within weeks
Our CloudKitchens™ spaces are turnkey solutions, meaning opening and expanding is a natural business progression – not a pipedream. Whereas a traditional dine-in restaurant can take up to a year to open, CloudKitchens™ take just weeks. This fact alone makes scaling up your business as it grows an easy and straightforward task.
5. Cost-effective expansion into new markets and areas in your city
The location of your restaurant plays a huge factor in whether it will be successful or not. Having a dine-in restaurant way out from the city centre might offer cheaper rent, but without foot traffic you’ll struggle to get enough customers. Delivery-focussed restaurants and CloudKitchens™ are very much the same – but with a different set of needs.
Most delivery customers are ordering from home in residential areas. This is where most delivery-focused restaurants try to set up shop, but there are numerous other factors that come into play when deciding the ideal location including the type of restaurant, like the demographic of the areas of interest.
At Freshlane, we’ve done the research necessary to identify key areas in Hong Kong which have all the ingredients for success, as well as the demographic and their tastes and preferences for different cuisines. This way, Freshlane’s CloudKitchens™ offer a more targeted and efficient way of expanding and dipping your toes in new markets.
6. The magical combination of low risk – but high reward
Working with a CloudKitchens™ operator like Freshlane, you’re able to do much more with far less money. Opening a traditional restaurant requires a huge investment – there’s no way around it. After committing to a location, you won’t want to pack up and go to a new neighbourhood if you’ve spent money on renovations, new equipment, and the lot. With CloudKitchens™, you don’t have to commit to long-term leases, instead you get to try out new areas at a fraction of the cost before deciding to put down roots.
7. Piggy-back off the success of delivery platforms
With the high penetration rate of third-party delivery platforms, F&B owners can rely on the existing network and customer base that they already have. Partnering with these thriving businesses allows you to capitalise on their success to make them your own. By cutting down on a brick-and-mortar location’s inefficiencies, CloudKitchens™ help restaurants jump aboard the delivery economy and get their food in front of more hungry customers with less effort.
Want to learn more about CloudKitchens™?
With the food delivery industry showing no signs of slowing down, are you up to seizing this opportunity for your F&B business?
Fill in the form below to get in touch with the team at Freshlane for a tailored consultation for how to go about adopting this business model today.