Virtual restaurants and ghost kitchens are soon growing to become the prime business choice for several food entrepreneurs. With the demand for delivery-based dining increasing over the years, and the COVID-19 pandemic only pushing this further, it might just be the right time for you to set up a virtual restaurant. Operating a brick-and-mortar restaurant not only incurs accessory costs but also requires dedicated upkeep and maintenance to remain competitive in the market. On the other hand, virtual restaurants require lower investment and can provide high returns if you know the market you’re serving. To help you set up a successful virtual restaurant, we have put together a list of 9 essential factors you should consider before you begin the process.
9 Factors to Consider Before Opening Your Virtual Restaurant for Business
Conduct a Market Analysis
Indulging in research to understand the market you’re planning to serve and the competitors in the area will allow you to approach your business with precise information. Pay close attention to your competitors’ pricing and the corresponding offerings. Understand the demographics of the area and what people are more likely to order. Also, take into account accessibility in case you have a location in mind.
Determine Your Ideal Customer
Identifying your ideal customer is one of the most important exercises you will undertake as a virtual kitchen owner. Understand what people expect, how they rely on virtual restaurants & food delivery, and their preferences by comparing them with demand patterns. It’s also important that you determine other factors such as age groups, income levels, and their corresponding preferences by conducting surveys in the areas you intend on targeting. This will give you a precise roadmap to determine your ideal customer and what they expect from a virtual kitchen.
Find a Location to Set Up & Store Commercial Kitchen Equipment
Virtual kitchens can be located in low-cost commercial spaces, in shared kitchens, or as an accessory to an existing brick and mortar restaurant. Low-rent spaces are great for storing commercial kitchen equipment and operating out of since foot traffic is not something you would rely on. Shared kitchens offer an option that’s more affordable as you would be sharing the kitchen with other virtual restaurants. Lastly, when you’re operating a ghost kitchen to supplement customers that do not want to dine in at your physical location, you can always use existing space to operate out of, provided you have the requisite licenses to do so.
Procure Permits & Licenses
It’s important to acquire all the applicable licenses and permits before you open up for business. Make sure you indulge in thorough research to fill out application forms for all the permissions and licenses that your virtual kitchen will need. You can also speak to a legal advisor to help you understand the different statutes that apply to your business. Operating without these documents can lead to hefty penalties.
Buy the Right Restaurant Equipment
Commercial kitchen equipment determines not only the quality of the food you serve but also how quickly you can prepare the food and get it out for delivery – one of the most crucial factors that determine a virtual kitchen’s impression. As the owner, you must know to choose the right restaurant equipment for your business so it can flourish and become profitable. Rely on equipment from trusted manufacturers and models that have several favorable reviews to verify their effectiveness in the kitchen.
Create Your Virtual Restaurant’s Website
Since you won’t be directly interacting with your customers, your website needs to be attractive, usable, and easy to operate. Customers will visit your website to understand what you’re offering, and your website should encourage them to explore further and place orders for the dishes on the e-menu. Add e-commerce features to promote ease of access and seamless ordering across your platform. Also, endow your website with features like delivery options and delivery timers to help customers track their orders in real-time.
Design a Menu & Assign Appropriate Prices
Creating a menu is not merely a random exercise where you add dishes liked by the common populace, but a meticulous undertaking that requires you to understand what your customers really want. Add items to the menu based on demand, and after understanding what sells in the area you cater to. It’s also important to have delivery-friendly dishes on the menu so that your customers aren’t disappointed. Research pricing models for the dishes you plan on serving and assign prices that are profitable to your business and not too exorbitant for your customers.
Set Up a Delivery System
As a virtual kitchen, you can either choose to offer your own delivery service or rely on a third party to carry out the deliveries for you. Third-party delivery services often charge high commission rates and do not allow you to access customer preferences. On the other hand, setting up your own delivery service with a local provider can help you cut costs as well as take responsibility for the customer right from start to end, along with access to customer data.
Track Your Expenses
Ensure you keep a track of all your expenses while setting up your virtual restaurant and after you start operations. This will help you keep a track of sales, revenue, and how much you will need to sell to break even. Consistent reassessment of your expenses and pricing will also help you manage other factors such as inflation and market fluctuations.
Why Should You Start A Virtual Kitchen?
Whether you’re a professional looking toward alternate avenues to increase your reach in the market, or someone that wants to turn their passion into a successful venture, a virtual kitchen can help you realize your goals. With low overhead costs coupled with straightforward marketing and sales strategies, running a virtual kitchen can be a business that offers high returns against modest investment margins. It allows you to cover larger ground when compared to conventional dine-in establishments, enhancing your prospects of building a brand for yourself.
Virtual kitchens provide a great opportunity to veterans and beginners alike. With the reduced risk it offers, it has certainly become an important business model for several aspiring restaurateurs. Keeping in mind the above-mentioned 9 essential factors will allow you to set up and operate a virtual kitchen that’s a hit among your customer base.