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Restaurant Model – Cloud Kitchens vs Dine-In Restaurants, Know Which is Better For You

In deciding which Restaurant Model to use, there’s always a high demand for different concepts. Customers’ tastes are constantly evolving and this gives the aspiring restaurateurs to take their time to build their own brand. 

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That’s why it is no surprise that there’s a new type of Restaurant model being introduced, Cloud Kitchens. Now, for better restaurant management and to help you decide on which type of restaurant model to build, we feature this article that compares Cloud Kitchen and Dine-In Restaurant.

Restaurant Model : Cloud Kitchen

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Cloud Kitchen, or also known as Dark Kitchen, Virtual Kitchen and Ghost Kitchen, is a delivery-only type of restaurant business. These are kitchens or spaces that’re being rented out to aspiring restaurateurs and gives them a workplace in which they prepare their food. This type of restaurant model allows you to maximize your orders and production as you’re being guided by 3rd party apps with delivery and marketing.

Restaurant Model : Cloud Kitchen Pros

  1. Low Capital
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This type of restaurant model will not require you to pay for the labor of a whole team, pay for renovations, pay for equipment, and extra costs such as permits. Cloud Kitchens provides you all the necessary equipment and space that allows you to operate. There are also that provides free mentorship with management and operations. Do a good research for Cloud Kitchens that are available in your area that would meet the necessities of your concept.

  1. Easy Set Up

As this type of restaurant model is already built out, it would be easier and faster for every restaurateur to set up their restaurant business. You’ll be provided a reasonable working place for you to prepare your food and all the equipment will be available inside a Cloud Kitchen. You need not to worry about the health and safety permits as these are usually taken care of already.

  1. Opportunity to Focus

There are less headaches to check. This restaurant model gives you more opportunity and time to focus with your craft. You don’t need to worry about the interior, exterior, and management of your restaurant as these factors are managed by the Cloud Kitchen itself. From there, you can focus with your operation and production.

  1. Freedom for Concept
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Since you’re not tied to a specific brand and location, thus providing you more space and freedom to try multiple ideas and brands. Cloud Kitchen is a type of restaurant model that gives you enough freedom to experiment with different concepts until you capture the perfect market fit for the community you’re catering.

  1. Easier Profit

It is easier to drive in profits with this type of restaurant model because it saves you from other costs that you have to pay monthly if you’re running a traditional restaurant. Cloud Kitchen lets you cut the labor to maintenance costs, meaning you don’t have to divide your profit to such costs and almost all your income will be yours.

Restaurant Model : Cloud Kitchen Cons

  1. Lack of Visibility
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Keep in mind that this restaurant model is usually located in industrial spaces, thus giving you less chance for walk-in and drive-by traffic. If you decide to operate with Cloud Kitchen, it’ll be a challenge for you to capture and grow a bigger market for your brand.

2. Reliant to 3rd Party Apps

These 3rd Party Apps could be your best friend and nightmare if you’re operating with a Cloud Kitchen. This type of restaurant model is usually completely reliant on these apps thus giving them the control of your restaurant business. You have limited creative input for your marketing leading you to fail to deliver the customer experience you want to offer. 

They are also starting to promote exclusive partnerships with brands that limits you to operate with other apps. This type of management hinders your chance to expand and to grow in a larger market. 

Now, these 3rd Party Apps can actually help you with your business if they decide to put your brand on the front page and market your brand much stronger. But this type of premium treatment is only given to those who pay more. 

  1. No Customer Data

Even though you’ve captured a large market, this will be no use as you can’t reach them and market to them directly. This restaurant model allows the 3rd party apps to actually own the data of the customers and leaving the restaurateurs no opportunity to reach their customers.

Restaurant Model : Dine-in Restaurant

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Dine-in Restaurants are the traditional and conventional restaurants operating in a specific location. This type of restaurant model gives you the chance to operate the whole space, and unlike Cloud Kitchen, you have to deal and manage everything on your own.

Restaurant Model : Dine-in Restaurant Pros

  1. Good Visibility 

Since you’re buying or leasing your own space to operate, this restaurant model gives you better visibility to market. Dine-in Restaurants allows you to convert all types of traffic into your own customers. They could easily locate and identify your restaurant business. This is a huge advantage as you have the shot to grow and attract more customer base.

  1. Build a Community
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Since you’re not relying on 3rd party apps, you have the freedom creative and marketing wise. You can see what’s working with your customers and what needs to be improved or stopped. This restaurant model grants you a chance to build customer relationships. You can see how they’re responding with your service and food, thus giving you more input to work on about your restaurant. 

  1. Ownership of Information

With this type of restaurant model, you can communicate directly with your customers. Dine-in restaurants can help restaurateurs to reach directly to their customers because they own their own data. This gives them the opportunity to build customer trust and loyalty to their brand.

Restaurant Model : Dine-in Restaurant Cons

  1. Huge Capital Requirement
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All the costs starting from the monthly rental lease, equipment, renovation, permits, and labor costs would be managed by you if you decided to operate your restaurant under this restaurant model. Dine-in Restaurant requires a high start up cost because you’re basically building an establishment from scratch.

  1. Slow Set Up

For Dine-in Restaurants, as mentioned above, you’re building your restaurant business from scratch. Should you opt to operate this restaurant model it’ll take  you months or years, depending how things will work for you, to establish your brand and your concept.

  1. Complicated Management
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Management itself is complicated, but with this restaurant model, you have to do everything on your own. Starting from your own hiring process, training, and building a good team to maintenance in your restaurant, you’ll be the one responsible. You’ll work with everything if you own a Dine-in Restaurant leading you to have less focus with your goal – to create and deliver a certain customer experience for your market.

  1. Challenge to Expand

Expansion and experimenting for new ideas is a huge task for Dine-in Restaurant owners. You may have all the freedom you need for creative, production, marketing, and operation input but with this restaurant model, you’re tied with a specific brand and location. If you build a customer base and brand with a specific type of cuisine, it’ll be hard for you to introduce another cuisine without breaking your branding and possibly, your relationship with your existing market.

  1. Harder to drive profit

One advantage of Dine-in Restaurant is that you can gain more traffic thus converting them to your sales, but with all the upfront costs, labor, maintenance, and management requirements, it’ll be hard for you to reach a certain profit. These costs would be shouldered by your restaurant and this restaurant model cuts your profit margin with a great number.

Now that you see both the advantages and disadvantages of the two well-known restaurant models, you can have a better understanding on which restaurant model would work best for you and your concept.

If you’re a starting restaurateur and just want to test your concept without having to invest a large capital, it is advisable for you to check out Cloud Kitchen. And once you gained a product market fit and enough capital, you can consider building your own Dine-in Restaurant that will give you more control with your restaurant business. 

Both restaurant models are really great and can offer you huge risks and benefits for your restaurant business. It is crucial for you, as a restaurateur, to understand what’ll work for your concept and what you’re really capable for.