Hey, guys.
My name is Wilson.
Today we're going to be talking about what is the new phenomenon cloud kitchen, AKA known
as ghost kitchen, virtual kitchen, delivery-only restaurants.
Also, we're going to be talking about the pros, the cons, who is it for, and how you
can take advantage of this movement so then that way you can be in the forefront of this
movement and have the first mover advantage.
If you guys like this video or if you guys want to show some support, make sure you smash
the like button because that's going to show me that this is the type of content you like,
and I'm going to make much more of it specifically for you.
Nonetheless, let's dive right in.
So what is cloud kitchen?
Cloud kitchen is a restaurant with no physical storefront.
And what does that mean?
That means that people are operating in a commercial, centralized kitchen and in turn
they partner up with third-party delivery service apps, such as Uber Eats, Grubhub,
Postmates, in order for them to distribute their food offering to the public.
So how do you visit these cloud kitchens?
You can't.
These are restaurants without storefronts and the only way you can consume their product
is by ordering through these different apps that I mentioned before.
Their focus specifically are on mass production.
They just want to produce a ton of items and service through all these delivery apps.
Now, you might be thinking, is this something you want to invest your time, energy into?
100% yes.
By 2022, this food delivery service industry is going to be more than seven, zero billion
dollars.
$70 billion is what we're talking about.
So yes, this is definitely just in the infancy, the very, very beginning of the trend, the
movement that we're talking about.
Which is the reason why if you pay attention right now, you can actually take advantage
and be in the forefront of this crazy movement that we're talking about.
We're talking about the ex CEO of Uber has raised more than $400 million just this last
year into his own cloud kitchen.
We're talking about tons of people jumping into this industry.
So without further ado, we're going to dive into the pros and the cons of this business
model for you.
The reason why this model is so, so popular right now and is super promising is because
of the pros, the pros of not needing a physical storefront, not needing to own your equipment,
not needing to go through all the business license infrastructure and the months and
months of getting locked down into a space, and renovating this space, and talking to
licenses, talking to regulators to get your license just so you can operate.
No.
We don't skip all those.
You don't need any of those because you can just go into a cloud kitchen facility, sign
a lease contract for a year to two years, and you are ready for a business, okay?
It is that easy, which is the reason why so many people are jumping into this model, and
this is why it is super, super beneficial, and it's definitely something that a lot of
people are enjoying right now because you're not being locked down physically to one location
only, okay?
This is a huge benefit for people who are in the food and beverage game.
Now, another benefit is that you don't mean you're full front of the house staff.
You skip all of those.
You don't have to worry about whether it's going to be raining, or sunny, or whether
it's going to be a typhoon.
You don't need to worry about all those because you don't need to worry about walk-in traffic.
You don't need to spend thousands of dollars on a premium location because you're relying
specifically on food delivery apps.
On the contrary, when it's raining, when there's typhoon, your business will probably spike,
okay?
So you're going to skip all the training.
You don't need to worry about customer service because all this food delivery apps are going
to worry about that for you.
All you have to do is focus on your craft, focus on your delivery, focus on producing
good quality food for your customers.
And that's the benefit, the pros, of running a delivery-only restaurant.
Oh, totally forgot to tell you.
Another major pro is the investment.
Investment is substantially lower than opening a full scale brick and mortar store.
Because, once again, I touched up on the fact that you don't need your equipment, you don't
need to go through all the licenses, you don't need to run in capital, you don't need any
of those.
All you need is to be able to go into a lease in these cloud-based kitchen so then that
way your investment becomes substantially lower to begin with.
You have a recipe in mind, and you can already go into business.
It is that easy, which is the reason why this is such a beautiful model that I can't wait
to share it with you.
But nonetheless, it does come with its cons.
Now, what is the cons of running a delivery-only restaurant?
It is because you have no visibility.
You have no way of doing promotion or marketing with walk-in traffic.
And now for some of you, you don't really care about that.
You don't want the walk-in traffic, so which is okay.
But a major, major con is the fact that you're relying your whole lifeline, the bloodline,
you're being hold by the neck by these food delivery apps.
What that means is that if they do decide to favor a certain restaurant, then most likely
you're going to be out of business.
If they do decide to charge you a premium, to charge you 5% more, you don't have any
leverage or bargaining power with these food delivery service apps.
Big, big detriment to any business if you rely solely on one point of distribution,
which is the reason why I highly recommend any of the people that I talk to that if they
are in this business and that they're leveraging this model, that they're leveraging this model
for only a short period of time, let's say a year to two years until they're able to
build a substantial base, until they're able to build their own brand name, until they
can prove their own concept, and then they should move out and rent their own brick and
mortar to invest in this model that has worked for them.
Then that way, you're not being putting all your eggs in one basket.
You're diversifying.
So then even if the food delivery services decide to kick you out or they do decide to
raise the rates and you can now have much more bargaining power.
You can tell them, "Hey, you know what?
I have a restaurant down the street.
I don't really need you guys.
You know what?
See you later."
You can still have the opportunity to do that.
That's called leverage, right?
Now, another cons of going through these delivery-only restaurant and using these cloud-based kitchen
is the fact that you don't own your customers.
The delivery apps own your customer.
And why would you want to own your customer?
It is because at the end of the day, in a food-based business, it's all about the community.
It's all about getting your loyal customers to come back again and again to have and enjoy
your offering.
So many times we go to that special place or special restaurant to celebrate a milestone
maybe because we have that emotional connection with the owner there, or with the feeling,
or the vibe there, which is the reason why we are lifelong customers to these restaurants.
And in the food and beverage industry, this is super important for you to be able to build
your own customer profile.
And this is exactly what is lacking in this business model.
So once again, I highly recommend that you leverage off this model, build it for a year
to two years, and build your own only after you've proven that you have a successful recipe
and a successful model.
Now that you understand the pros and cons of cloud kitchens, we're going to be talking
about the three different types of cloud kitchen available for you and then how you can choose
which one you want to pursue.
The number one type of cloud kitchen are the ones that are specialized exclusive to delivery
apps such as Uber, Deliveroo.
They have their own kitchen.
They have their own cloud kitchen that they created.
And if you're operating inside these cloud kitchens, you can only service their delivery
apps, such as Uber Eats or Deliveroo.
Now, the advantage of doing something like that is that you get premium, premium spot
because they want you to be successful.
These delivery apps want you to be successful so then that way you can drive them much more
value and in turn their customers are happier because they have a better experience.
Now, the disadvantage of going through these different kitchens that are super exclusive
to their own delivery apps is the fact that you're missing out on a big chunk of pie.
You're only servicing the people that use Deliveroo.
You're only servicing people who use Uber Eats.
You're missing out on people who use Grubhub.
You're missing out on people who are using Postmates, or like SkipTheDishes, or any other
food delivery apps out there.
There are the pros.
There are the cons.
You get to choose which one you like.
The second type of cloud kitchen are the ones that are non-exclusive.
Non-exclusive one's that we're talking about are like Cloud Kitchen or Kitchen United.
These places just operate as a huge commercial kitchen and you can operate within their own
facility.
And in turn, you can partner up with any food delivery apps out there as you wish, like
I said.
But the cons of doing that, now that you have some more flexibility and you're exposed to
much more people and customers, is that you don't get that special feature.
You don't get that special treatment from Uber Eats.
You don't get that special feature from these delivery apps because you're not exclusive
with them.
Once again, it's your choice.
At the end of the day, I'm really suspecting and speculating the fact that you can actually
pay premium to be listed as a higher and to run ads in these different platforms.
Once again, that would be able to counteract the non-exclusivity, okay?
The third type of cloud kitchen we're talking about, mobile cloud kitchen.
We're talking about these giant food trucks that go around the neighborhood, like Zoomies
Cloud Kitchen.
These guys are basically food trucks, but then they rent out their kitchen in closer
proximity to your neighborhood or whatsoever.
That itself is an added bonus because the convenience and also the delivery time.
Now, the disadvantage of that is that this type of model is not super popular because
you're not servicing a huge, wide range of people and you're always operating within
a food truck, the space is not as clean, the space is much more cramped.
But the cost is substantially lower than if you were to rent a commercial kitchen like
cloud kitchen and and so on, so forth.
These are the three types of cloud kitchen.
So at the end of the day, there's no pros or cons or whatever the case may be.
It's all up to your profile, what you enjoy, what you like in order to find what's best
suited for you.
As a bonus, we're going to give you bonus number four.
It is pick-up-only delivery service.
And what does that mean?
It's contradicting itself.
Pick-up-only delivery doesn't make sense.
But nonetheless, this is a model that Starbucks is actually trying out.
They have tried this model out in New York where you just order online and you go there
and pick up.
I don't know whether this is effective, or whether this would become a model, or whether
this is something that would work because people that order online want that convenience.
They want the instant gratification.
They don't want to go and pick up something, which is a reason why you would go through
food delivery service apps.
So it's a little bit counterintuitive.
But nonetheless, this is a bonus one out there for you.
Let's see, in the next few years how this model plays out.
So who is this for?
This model is specifically for the people who has a passion for delivering their grandma's
recipe to the world, yet they don't have that much funding.
They don't have the money to spend on the equipments.
They don't have the money to sign a 5-year, 10-year lease and do all the renovations.
They don't have the expertise to run a full-scale restaurant.
This model is specifically for that type of people that want to start off, has a really,
really amazing, delicious recipe that they want to bring to the world, and yet they don't
have the resources to do so, which is the reason why this is such a great opportunity
for you if you fall into this profile, if you don't mind being held by the neck by these
food delivery service apps.
If you fall within this demographic, then this is a really, really promising model which
I highly recommend you to do.
I really, really hope that you have enjoyed this video because I sure did when I'm making
it.
I've learned tons of things.
If you guys liked this video, smash the like button.
And if you guys have any questions, if you guys want me to make more of this video, or
how do you negotiate a rate, or how do you create your menu, leave it in the question
and comment section below.
Otherwise, I'll see you guys in the next video.