Emran Hosen

CLOUD KITCHEN POTENTIALITY IN BANGLADESH

Thesis
CENTRIA UNIVERSITY OF APPLIED SCIENCES
International Business

June 2023
ABSTRACT

Centria University Date Author

of Applied Sciences June 2023 Emran Hosen

Degree programme
International Business, Bachelor of Business Administration
Name of thesis
Cloud Kitchen Potentiality in Bangladesh
Centria supervisor Pages
Eija Kärkinen 28+3
Instructor representing commissioning institution or company

Bangladesh has more than 160 million people to feed. So, the potential of a cloud kitchen business is
massive. The pandemic has made this country discover that even without any dine-in service a food
business can be run successfully. Cloud kitchens, also known as virtual restaurants, dark kitchens,
ghost kitchens, and restaurant-as-a-service, are created specifically for online ordering and delivery.
No high-end location and decorum is needed.

This thesis identified the current market of food business in Bangladesh, the potentiality of cloud-
based business, customer preferences, points of view about cloud kitchens, and customers’ buying be-
haviour. Cloud kitchen history, cloud kitchen business in Bangladesh, benefits, dissimilarity of tradi-
tional and cloud-based restaurants, and finally a business plan for cloud kitchen were discussed in the
theoretical part along with previous researcher's theory. A quantitative online survey was analysed
with a sample of 30 people from Bangladesh.

The result shows that the age group 20 to 40 is willing to order from Cloud-based businesses as it is
convenient and time-saving. Most consumers are getting used to being comfortable at home with their
most delicious favourite meal something that cannot be compromised as it created a different sector of
low-maintenance cloud kitchen business for many. It is recommended to create more awareness about
the cloud kitchen business. The fundamental is to find a suitable marketing strategy and adapt to the
market trends. A differentiable marketing strategy can be eco-friendly packaging and an alluring
menu.

Key words
Bangladesh, Business Plan, Customer Preferences, Cloud Kitchen, Delivery Only, Food Business,
Low Maintenance, Non-negotiable, Potential, Profitably
ABSTRACT
CONTENTS

1 INTRODUCTION ................................................................................................................................1

2 THEORETICAL FRAMEWORK .....................................................................................................3

2.1 Cloud kitchen .................................................................................................................................3
2.2 History of Cloud Kitchen ..............................................................................................................4
2.3 Cloud Kitchen Business in Bangladesh........................................................................................5
2.4 Cloud Kitchen Models ...................................................................................................................6
2.5 Traditional restaurant versus cloud kitchen ...............................................................................7
2.6 Benefits of Cloud Kitchen .............................................................................................................8
2.7 Cloud Based Business Plan ...........................................................................................................9
2.7.1 Executive Summary ............................................................................................................10
2.7.2 Market Analysis ..................................................................................................................10
2.7.3 Menu.....................................................................................................................................11
2.7.4 License ..................................................................................................................................12
2.7.5 Segmentation .......................................................................................................................12
2.7.6 Cost Considerations ............................................................................................................13
2.7.7 Online Order Generation ...................................................................................................13
2.8 Cloud Kitchen: A Profitable Venture ........................................................................................14
2.9 A Research on Cloud Kitchen Prerequisites and Branding Strategies ..................................14

3 RESEARCH METHOD AND RESULTS .......................................................................................16

3.1 Data Analysis ................................................................................................................................16
3.2 Recommendation ..........................................................................................................................18

4 DISCUSSION AND CONCLUSIONS .............................................................................................20

REFERENCES ......................................................................................................................................22

APPENDICES
 1

1 INTRODUCTION

Bangladesh has always been considered a booming economy for business. The reasons are very funda-
mental yet significant. The enormous growth of population, rate of hourly wage, economic conditions,
and scopes have made Bangladesh an ideal place to start any business. Bangladesh has the capability
to be the 28th largest economy within 2030 from 31st in 2016, according to PricewaterhouseCoopers.
(Chowdhury, 2017).
In the past few years, it was just a dream that this developing Asian country called Bangladesh and its
people would buy anything online. Nonetheless, during the pandemic, they have adapted to the modern
lifestyle and have accepted the future market like no other. Surprisingly many businesses grew and
ended in a short span of life. But it cannot be unnoticed that the food business is skyrocketing. In the
place of dine-in people order food online. And as the opportunity shows cloud kitchen surely made its
way through it. (Mehnaz & Baskar, 2021, 17325).

Cloud kitchens, also known as ghost or virtual kitchens, are a relatively new addition to the food and
beverage industry, which is expanding quickly. The idea of cloud kitchens, which is based on the para-
digm of no dine-in and takeaway services, has experienced tremendous growth and success in recent
years, with an astounding predicted market size of USD 1.05 billion by 2023. The industry's recent
150% growth rate in meal delivery is another factor supporting these projections. Cloud kitchens oper-
ate on an internet-based delivery system, bringing the brand to the customers instead of the people go-
ing to the brand, unlike typical restaurants with a brick-and-mortar shop setup. (Cloud Kitchen: The
Next Big Thing in Future, 2020).

Going through all these articles and journals the author has decided to open a cloud kitchen in the
home country after completing graduation. So, the author thought of choosing this topic for the thesis.
This will help the author to know thoroughly about the current market. It will clearly the vision for fur-
ther plans. This will be a great help for the author and the fellows who would like to open a cloud
kitchen.

The main purpose of this thesis is to undertake a thorough analysis of the possibilities and prospects of
cloud kitchens in Bangladesh, a market for food that is quickly developing. This study attempts to of-
fer a thorough knowledge of the viability and practicality of cloud kitchens as a business model within
the local environment by diving into the unique economic, social, and cultural aspects of Bangladesh.
 2

The thesis looks at urbanization, shifting lifestyles, rising disposable incomes, and changing customer
tastes in order to pinpoint the precise target markets and narrow niche groups that cloud kitchens can
successfully serve. This thesis looks at the technological developments, operational efficacy, and cost-
effectiveness that cloud kitchens offer in an effort to present insightful information about how they can
change Bangladesh's food business.

In addition to adding to the body of knowledge already available on cloud kitchens, the study's conclu-
sions and recommendations will also directly address Bangladesh's particular market conditions and
distinctive traits. The findings of this study can be used by business owners, financiers, and regulators
to make educated choices about the creation and support of cloud kitchens, promoting innovation, en-
trepreneurship, and economic expansion in the nation's food service industry. This project aims to con-
tribute to a comprehensive understanding of cloud kitchen potentiality, paving the way for a new age
in the Bangladeshi food sector.

The fundamental result of this thesis is that it can offer a thorough evaluation of the viability of cloud
kitchens in Bangladesh, taking into account elements like market demand, customer behavior, legal
frameworks, and infrastructure needs. The results can illuminate the feasibility and potential difficul-
ties of setting up and running cloud kitchens throughout the nation. This thesis can offer important in-
sights into the changing demands and expectations of customers by examining consumer preferences,
dining patterns, and the variables influencing food choices in Bangladesh. This knowledge can help
cloud kitchens design their menus, brand identities, and marketing plans so they can successfully serve
the regional market. This thesis can provide businesses wishing to set up and run cloud kitchens in
Bangladesh with useful instructions and advice. Specifically for cloud kitchen operations, this could
involve knowledge of operational strategies, supply chain management, technology adoption, quality
control standards, and customer engagement techniques. The possible social and economic effects of
cloud kitchens in Bangladesh might be investigated by this study.
 3

2 THEORETICAL FRAMEWORK

This chapter will contain theories related to the thesis. The main target here is to give the reader a more
precise portrayal of the entire concept of the cloud kitchen, its history, benefits, dissimilarities of tradi-
tional restaurants and cloud kitchen, and lastly essentials of the cloud kitchen business plan. The business
will help the reader to understand before starting a cloud kitchen what they should think and what things
need essential is a part that to be included while doing a stretch plan for their business.

2.1 Cloud kitchen

Unlike regular restaurants, a cloud kitchen delivers food without having a physical location where clients
can eat. Customers can place orders by calling, using websites, or using mobile apps. Thus, cloud kitchen
can be thought of as a virtual kitchen. With the cloud kitchen structure, it is possible to prepare a variety
of dishes in one space. The same kitchen facility can also be used by multi-brand cloud kitchens to
operate various brands. Cloud Kitchens do not need a lot of areas; therefore, they may be constructed
anyplace. Customers can order food using a mobile app, website, or phone call, and it will be delivered
to them within the allotted time by either the restaurant's own delivery service or a third party. LONDON
— UBS assumes that the online food delivery market could grow by 10 times in the next 12 years as
meal kits and takeout apps like UberEATS and Deliveroo become more ubiquitous. This statistically
means it will be a market of potentiality from $35 billion globally today to $365 billion by 2030. (UBS
Stocks That Will Win and Lose from the Growth of Online Food Delivery, 2018).

Figure 01: Adapted from (Cloud Kitchen Market Share Analysis Report, 2021-2028, 2021)
 4

The figure has showed the cloud kitchen market share over the years from 2017 to 2026. This bar chart
has grown drastically over the year as per the researcher’s analysis. People who are interested in cloud
kitchen business can chose the independent cloud kitchen model as per the report it has more potentiality
than commissary/shared kitchen and kitchen pods. (Cloud Kitchen Market Share Analysis Report, 2021-
2028, 2021)

Numerous restaurants were consequently compelled to halt operations. Due to their ease of setup and
growing popularity at the time, food delivery trucks. Renting a food truck was also quite simple and
affordable. These food trucks are affordable and have many serving options. Additionally, these food
trucks helped popularize the idea of on-demand meal delivery, in which customers' phone or text orders
were filled via the gig economy. Key characteristics of cloud kitchens: Absence of a storefront, focusing
on delivering meals through platforms for food delivery, operating several brands from a single kitchen,
reduced costs for overhead. (Patawari et al., 2022, 54).

2.2 History of Cloud Kitchen

The cloud kitchen idea is not as new as it may seem. For decades, pizza delivery services have oper-
ated using comparable business strategies. More specifically, since the 1950s, there has been a pizza
delivery system. The current cloud kitchen model has been in use since the start of the previous dec-
ade. India's largest cloud kitchen chain, Rebel Foods, on the subcontinent is where it all began. In the
years following the 2008 financial crisis, the concept of cloud kitchen first came to be. After the reces-
sion, pricey high-end restaurants were unable to continue operating as usual. In the meantime, the cost
of renting space has skyrocketed in cities like New York. Owners must also keep up with several
safety regulation certificates, which adds to the cost of running a restaurant in addition to the rent for
the facility. It has a higher overhead cost for the restaurant because it can be extremely expensive to
maintain. When the economy deteriorated, so did the number of patrons at upscale, pricey restaurants.
(Nedumaran & Ritha, 2023, 257).

Many restaurants were consequently compelled to temporarily suspend operations. Particularly be-
cause of their ease of setup food delivery trucks had growing popularity at the time. Renting a food
truck was also quite simple and affordable. These food trucks are affordable and have many serving
options. In addition, these food trucks contributed to promoting the idea of on-demand meal delivery,
in which customers' phone or text orders were filled via the gig economy. The idea of a food truck was
 5

adapted and gradually adopted the form of a mobile kitchen as the golden age of smartphone apps be-
gan in 2010. Restaurants no longer rent enormous spaces; instead, they simply need the area required
for the kitchen. They also accepted orders via social media platforms like Facebook and Twitter. In
2011, Rebel Foods launched and using Twitter they started a new innovative marketing. Their brand
Fassos in India, used Twitter to take orders order from their customers. Then, following the foot step
of Rebel Foods, online or app-based cloud kitchens began to be established in different nations across
the world. (Patawari et al., 2022, 56).

2.3 Cloud Kitchen Business in Bangladesh

It was unusual to see how the cloud kitchen industry started in Bangladesh. The first competitors in the
sector were makers of homemade cuisine. The rising popularity of online meal review groups in social
media groups piqued their curiosity in starting similar businesses. These review groups gave the inde-
pendent cloud kitchens their initial boost of popularity. To promote such handmade cuisine, a variety
of other homemade foodstuffs delivery services, such as Cookups, have been established. Several
online meal delivery firms, such as Foodpanda, have also introduced their own homemade food deliv-
ery choices. At one point, these kitchens offered catering services in addition to home-cooked cuisine.
Bangladeshi offices choose independent cloud kitchens for food catering services. (Khan et al., 2022,
46-52.)

The official cloud kitchen in the nation was launched in 2019 by food-tech firm Kludio. The first Full-
stacked cloud kitchen in the nation, Kludio has already introduced four distinct brands. Dough on the
Go, Hero Burger, Frybox, and Deshio are the brands. The firm is concentrating on better storage sys-
tems, usage of artificial intelligence technologies for temperature regulation, as well as a quicker deliv-
ery, in addition to providing food quality. Ghost Kitchens, an Indian provider of cloud kitchens, has
also partnered with Kludio in a joint venture to lower various operational expenses by sharing infra-
structure and knowledge. (Khan et al., 2022) According to a report, Kludio has raised a total of $680K
in funding over 3 rounds. Their latest funding was raised on Aug 8, 2021, from a Seed round. (Kludio -
Funding, Financials, Valuation & Investors, 2021).
 6

2.4 Cloud Kitchen Models

For a better understanding, it is necessary to know how a cloud kitchen works. Mainly it is categorized
into six different models, which are discussed in here.

The Independent Kitchen concept, referred to as the original cloud kitchen model, essentially runs one
brand in one kitchen and lacks a storefront. The kitchen is only used for Back of the House (BOH)
tasks, keeping its size between 500 and 600 square feet. These kitchens can be used anywhere, includ-
ing from home, because they are run by a single food brand. With the growing popularity of online or-
dering and delivery, the Independent cloud kitchen business model has flourished. Customers can
place orders through a hotline number for ordering through such cloud kitchens, a social media-based
online ordering system, or a straightforward website. In Bangladesh, most kitchens that are Facebook
groups or pages mostly function as Independent Cloud Kitchens. (Nedumaran & Ritha, 2023, 57).

The multi-brand cloud kitchen approach allows for the operation of multiple cuisines or brands from a
single kitchen. These kitchen models have numerous outlets instead of a storefront. The multi-brand
kitchen concept is primarily data-driven, with operations based on studies of client demographics, lo-
cal food supply, and demand dynamics, and trends in popular cuisine. (Nedumaran & Ritha, 2023, 57)
As a result, these kitchen designs have a chance to take off soon, and their strategic placement is solid.
In accordance with this concept, Faaso began managing Rebel Foods as the name of its on-demand
food service business in 2011. (Patawari et al., 2022, 56).

Hybrid cloud kitchen runs its business from a single kitchen to a single cuisine brand via several out-
lets and a physical location. The kitchens in this model benefit from all the features of a cloud kitchen
as well as the practicality of having a storefront and going to takeout restaurants. (Nedumaran & Ritha,
2023, 57) But in this instance, the hybrid cloud kitchen is a little bit bigger than the standard cloud
kitchen. The hybrid kitchen design is used by the food technology start-up "Fresh Menu" in India. (Pa-
tawari et al., 2022, 57).

The Cloud cooking's shell concept is mainly a cooking area with only the barest amount of plumbing,
drainage, and ventilation. This kind of cooking area is rented by well-known food businesses or food
distributors. (Nedumaran & Ritha, 2023) This is the model used by Swiggy, the largest online food or-
dering and delivery service in India. (Patawari et al., 2022, 58).
 7

Fully Stacked Cloud Kitchens function similarly to the Shell cloud kitchen model; the only distinction
between the two is that the Fully Stacked Cloud Kitchens contain a storefront. There is a huge kitchen
with a little space for rent and cooperation with several businesses, like the Shell model. (Nedumaran
& Ritha, 2023) An Indian startup called Zomato follows this model. (Patawari et al., 2022, 58).

A third-party provider manages both the cooking and delivery in a fully outsourced arrangement. In
this instance, a call center is used for order administration. Food that has been prepared at several loca-
tions is transported to the main kitchen for a last touch before being served to the diner. This type of
cloud kitchen approach is used by the Dubai-based Kitopi, which handles inventory management and
food storage. After the food is prepared, it is transferred to Central Kitchen. After that, Central Kitchen
delivers food to the consumer. (Patawari et al., 2022, 57).

2.5 Traditional restaurant versus cloud kitchen

The primary distinction between a regular restaurant and a cloud restaurant is that the former often has
a real storefront and offers dine-in service, while the latter solely offers delivery services online and
does not have a physical eating room. A cloud kitchen's dynamics are drastically altered by the ab-
sence of a storefront. The managing team will need to put a stronger emphasis on areas like delivery
and marketing. (Patawari et al., 2022, 62). The following are some significant dissimilarities between
the two categories of food businesses.

From the physical point of view, a cloud kitchen lacks a dining space, and a traditional restaurant has
comprehensive front and back-of-the-house capabilities. A classic restaurant should logically have a
larger building to accommodate a dining area and even parking for patrons. And a cloud kitchen will
need room for preparing the order, which just requires an average of 600–700 sq. ft. of interaction with
customers. Most cloud restaurants rely on online ordering and delivery services, which provide little
opportunity for patron engagement. On the other hand, traditional restaurants can draw patrons through
on-site interactions, particularly in areas with heavy foot traffic. (Patawari et al., 2022, 62). Restaurants
in the cloud frequently rely on online ordering and delivery services, which provide little opportunity
for patron interaction. Contrarily, traditional restaurants can draw patrons through in-person encoun-
ters, particularly in areas with heavy foot traffic. (Choudhary, 2019, 185-186.)
 8

Traditional restaurants have more costs for a physical site, furnishings, personnel, and other storefront
maintenance costs. The most notable benefit of cloud kitchens is- instead of having physical store-
fronts, cloud restaurants offer lower overhead costs, which means fewer servers are needed for front-
of-house operations. Traditional restaurants often offer a wider selection of alternatives for dine-in,
takeout, and delivery on their menus. Cloud eateries, in contrast, offer prepared meals that can be de-
livered. (Sherkar et al., 2021, 238).

While cloud restaurants can only conduct business online and rely on delivery services for revenue,
traditional restaurants can use a combination of dine-in, takeout, and delivery services. Traditional res-
taurants can employ both online and in-store marketing methods, cloud kitchens typically focus on so-
cial media and other online promotions for marketing. (Sherkar et al., 2021, 238).

Cloud kitchens are expected to generate profit margins of at least 15% to 20% without the additional
overhead costs associated with a dining area. Traditional eateries, on the other hand, often earn profit
margins of 3-5% on average. (Patawari et al., 2022, 62).

For a cloud kitchen, the rules and requirements for food safety are mainly concerned with back-of-the-
house activities. In comparison to a conventional restaurant, cloud kitchens will require a great deal
less supervision of hygiene checks for dining areas. (Sherkar et al., 2021, 237).

2.6 Benefits of Cloud Kitchen

There are several aspects to consider when managing a restaurant business. Comparing cloud kitchen
business concepts with regular restaurants has several advantages. Some notable advantages to think
about are discussed next. One of the biggest advantages of running a cloud kitchen is more affordable
operating expenses. Owners of restaurants can save money on rent, utilities, and other costs by operat-
ing without the requirement for a physical storefront. Additionally, businesses can cut costs on furnish-
ings and decoration as a virtual restaurant does not need them. A cloud kitchen has an easy way to
change the menu which increases its versatility. They can just change the menu using minimum efforts
and time on their website or aggregator app. It is just a click away. With this strategy, business owners
may experiment with various menu options, change up their brands, and make quick adjustments to
their operations. In contrast, it can be costly and time-consuming to make changes in the conventional
restaurant business model. By utilizing delivery applications, restaurants that use the cloud kitchen
 9

business model can expand the market range they serve outside their immediate neighbourhood. It is so
convenient and gives an extra advantage to the cloud kitchen owner. (Fernandes, 2021, 353).

With a traditional physical shop's restaurant, it is impossible to serve the customer base from all
around the city. Cloud kitchens may improve their efficiency and give consumers a smoother meal de-
livery experience. In contrast, operations in traditional restaurants can be challenging due to the re-
quirement to strike a balance between dine-in service and other elements. Unlike traditional restau-
rants, cloud kitchens do not need a commercial kitchen. This might result in significant rent, utility,
equipment, and supply cost savings for restaurant owners. Because a cloud kitchen runs more effi-
ciently, restaurant operators can cut labour costs because they need fewer employees. Furthermore, the
usage of delivery applications replaces the necessity for waiters and other in-house labour. In a physi-
cal restaurant the owner needs to spend a great deal of time and energy maintaining, where owners of
cloud kitchens can devote more time to experimenting with new recipes and flavours and coming up
with original products that will appeal to their consumers. This enables businesses to remain competi-
tive and differentiate themselves from other restaurants in the neighbourhood. (Sherkar et al., 2021,
62).

In the end, cloud kitchens offer owners of restaurants a cutting-edge way of managing their operations
that is more cost-effective and effective than traditional approaches. Cloud kitchens are an ideal way to
minimize costs and enhance profits since they have more flexibility, a bigger audience, and more time
for creativity. They also have reduced administrative costs. Restaurant owners can maximize the ad-
vantages of this business model by utilizing delivery applications and concentrating solely on the de-
livery of food. (Mehnaz & Baskar, 2021, 17326).

2.7 Cloud Based Business Plan

To run any successful business an insightful and well-planned business plan is a must. Starting a busi-
ness seems easy with adequate investment or backup by funds or self-sufficiency, however when the
actual reality strikes many appear to shut down the business within a few months. A business plan is a
written record of the main objective which does not consist of only where, when, or why what might
happen but also the ambition of future achievement. But the main purpose remains to attain the out-
come. (O'Hara, January 2, 1995). An organized business plan is like a financial and managerial blue-
print of the business. This is a process that is essential for the feasibility of the business which helps to
 10

determine where this business is going to reach the break-even point and generate profit. (Barrow et
al., 2021).

Various key components together help an entrepreneur establish his/her business with a suitable imple-
mentation roadmap. Here, the discussion will not be in-depth rather the general overview of establish-
ing a cloud kitchen will be discussed.

2.7.1 Executive Summary

The very first step of scheming for any business is the Executive Summary. It includes all the unre-
stricted information of the company which includes the details of the CEO, the mission, vision, why
the company is established, what would be the product or service, and last but not the least why the
company is exceptional from all other existing companies of the market. An executive summary is
mostly important for a start-up to raise funds as going through this the investors can easily understand
the purpose the company will fulfil. So, an executive summary should be like a pitch to the audience
and should be made short and easy to understand to all the general people as well. (Parsons, 2023).

Although it may appear to be the initial phase of the enterprise, it entails the comprehensive projection
of financial aspects and long-term vision for a duration of 5 to 10 years. So, it is recommended to write
executive summary as the last of all other essential parts like financial break even, the big idea, im-
portance, and strength of the company. All need to be determined first before writing the executive
summary as it summarizes all the high and low pitches in one harmony. (Parsons, 2023).

2.7.2 Market Analysis

Knowing the market where the business will start is the core of understanding what to do and how to
do it. To stretch financial stability by knowing the current and future scenario is the foremost duty of
the entrepreneur. Market Analysis is segmented into three different categories. In order to identify the
target market, it is necessary to conduct an industry analysis and it also helps to make the investor
comprehend why this target market is set. While analysing the competitor helps to find out what the
 11

company should do to differentiate to stand out in the market. And finally, the Market Analysis en-
sures the investors that this company can make a difference in the current market and can secure its
position. (Alnasur, 2023).

Now what needs to be done is to find out a suitable location to run the business. Whereas traditional
restaurants have grand locations where the parking lot space is important; in a cloud kitchen the loca-
tion does not impact that much. Proper cleanliness and affordable water supply are of utmost im-
portance in this situation, along with demographic aspects like the possible customers and the food se-
lection suited to the consumer's appetite. For instance, if a businessperson wants to launch a cloud
kitchen in Dhaka, he or she should preferably think about places like Gulshan, Banani, Dhanmondi,
and Bashundhara R/A, where the quantity of online orders appears to be significantly higher than in
other areas. (Chowdhury, 2022).

2.7.3 Menu

In any cloud kitchen business's success, menu design plays a key role. One of the reasons behind this
is that without an ambiance the main factor of attracting customers shift to a classified menu. In short a
well-thought-out menu may increase sales, draw in consumers, and set the company apart from the
competition. So, a well-organized menu plays an unreplaceable role in cloud kitchen business. A
poorly constructed menu, on the other hand, can mislead clients, harm the business's reputation and
lead to business failure. A could kitchen without a food menu will not make an impact in the market.
(Mishra, 2021).

The food menu has to be very polished and there are many costs that are reduced in cloud kitchen. So,
the price should be striking the market. An established R&D guideline is needed so that it reflects the
perfect food every single time. And the guideline should be manually printed like a one-pager guide.
So, that even if a chef forgets anything they can easily recall this by going through the pager. (Mishra,
2021). In the research part of this thesis a survey has been done to understand what kind of menu is
popular among the Bangladeshi who frequently order food online.
 12

2.7.4 License

Every nations has some rules and regulation for each business. Each of these regulations changes ac-
cordingly, and is separated by industry, business type and location. There are some must-have licenses
for food business as well. And acquiring the required licenses to run a food business is essential. The
company CEO must think of getting the right licenses if he/she wants to run a legal and hassle-free
business. (Patel, 2020).

If the company owner wants to establish a private limited company to run the cloud kitchen business,
the first step should be to obtain a Name Clearance for the organization, draft the Memorandum of As-
sociation and Articles of Association, and register the business with the RJSC (The Registrar of Joint
Stock Companies & Firms). Then a trade license, TIN, and VAT certification will need to be obtained.
(Nedumaran & Ritha, 2023, P- 258) Also, they are require to have a Fire License and Certification to
operate a cloud kitchen, specifically. Hiring a professional will be a beneficial choice because doing
this personally might take a lot of time. Before beginning operations, make sure to print all necessary
documents and shares with the Bangladesh Food Safety Authority's recommendations. (Chowdhury,
2022).

2.7.5 Segmentation

Business approaches that place the client and their pleasure at the center of everything are known as
marketing principles. a good company plan requires a marketing strategy, which is mandatory. An effi-
cient market strategy must include market segmentation. A company cannot please every single cus-
tomer. Rarely does a product please everybody who purchases it. Everyone has a distinct taste. The
phrase "market segmentation" is being used in business for this specific reason. In to determine a mar-
keting strategy, it is defined as "the identification of individuals or organizations with similar charac-
teristics. (Jobber & Fahy, 2019). To achieve the best possible outcome, market managers focus on the
sector that is the most lucrative among all other segments. Consequently, it is a customer-focused strat-
egy. The development of goods or services for the target markets is a requirement of the strategy. (Job-
ber & Fahy, 2019). Since there are no actual shops in a cloud kitchen business, online marketing is
fundamental. One must give all to ensure the success of digital marketing and advertising. At the early
stages of this company as marketing and branding are more necessary accordingly additional funding
or investments are needed. Register the company on websites that list and rate restaurants as well. The
 13

company should encourage regular customers to share good ratings. Promote business on social media
platforms like Facebook, Instagram, etc. (Sanny et al., 2022).

Entrepreneurs can better understand consumer wants by segmenting their markets. Marketers can more
precisely their corporate initiatives to the preferences and indifference of each unique customer. Mar-
keters can meet or even surpass their customer's expectations through the segmentation process. By
looking for business possibilities and analyzing the advantages and disadvantages of the competition,
they can close the gap. To have a better perspective and make better plans, marketers need segmenta-
tion. They can have a systemic approach to their business objective in this way. They are better able to
manage market resources and create a business plan that is well-balanced. For instance, since focused
advertising and promotional efforts may be made to reach a certain consumer group, business commu-
nication between customers and marketers can be well-organized. (Jobber & Fahy, 2019).

2.7.6 Cost Considerations

A business plan's financial section will contain key information regarding its estimated costs, sales,
profits, and losses. The financial prediction section used to include one-, three-, and ten-year projec-
tions that were founded on educated guesses (i.e., assumptions). Several pages filled with expenses
were considered, frequently including unimportant details. These had little practical use because, along
with the business environment's increasing unpredictability with the financial estimates. Even though
the numbers themselves are meaningless in today's business world, creating well-thought-out financial
forecasts is still a useful exercise for entrepreneurs. (Gumpert, 2002).

Depending on the cuisine a cloud kitchen will serve, the cost of putting up the kitchen may vary. Con-
sider opening a cloud kitchen that will provide foods like sandwiches, pizza, spaghetti, and burgers for
little more than BDT. 10 Lacs. (Patawari et al., 2022, 59); (Chowdhury, 2022).

2.7.7 Online Order Generation

Finding a suitable online order is another important step that needs to be done thoroughly. It can be
building a website or food app and delivering food to the consumer directly. It is suggested to make
 14

the website as user-friendly as possible. To make it professional, going through an international web-
site can help and must hire a professional. The business owner must be clear about the website's sur-
face and guide the website builder according to the owner's preference. (Chowdhury, 2022).

Another effortless option can be joining existing services that have already established food delivery
apps for instance HungryNaki, Pathao, Munchies, or Foodpanda (Popular in Bangladesh). This easy-
going option comes with a price which is the commission percentage as they charge a 20% to 30 %
commission per order. It may vary from brand to brand. Mainly it depends on the agreement they have
with every company. Though the negation power is not in the business owner’s hand but it is recom-
mended to bargain and make a good deal out of it. (Chowdhury, 2022).

2.8 Cloud Kitchen: A Profitable Venture

This study evaluates whether operating a cloud kitchen is more profitable than operating a conven-
tional restaurant when both ventures are pursued with the same amount of ambition. With its many ad-
vantages over a typical restaurant setup, a cloud kitchen has often proven to be a more profitable deci-
sion. Cloud kitchens are simply another option for customers to order food; they are not intended to
take the place of restaurants. Restaurants are only visited by those who desire to have enjoyable con-
versations with friends, coworkers, and family members. On the contrary, cloud kitchens are accessi-
ble to customers who want to party and enjoy themselves at home. Each of these venues is distinct
from the other, and none of them is meant to take the place of another. With aggregators as their im-
mediate rivals, new competitors are growing the market as a whole. Even more affordable traditional
dining restaurants may eventually adopt new standards and procedures, it would appear. Due to its im-
proved efficiency in terms of client reach, costs, time, ease, and control operations, a cloud kitchen ap-
pears to be a feasible option. The researchers also show the market growth over the years which has
increased by 12% from 2018 to 2023. (Beniwal & Mathur, 2021).

2.9 A Research on Cloud Kitchen Prerequisites and Branding Strategies

This study's objective is to examine the demand for and specifications for cloud kitchens. Secondly, it
focuses on the marketing approach that a cloud kitchen must implement. And the writer found that the
 15

fundamental of finding a right marketing strategy is related to pursuing more and more customers. Also,
in the writer’s data the results show that low price, customer reviews, and a variety of food choices take
the cloud kitchen ahead of the market of potentiality more than a traditional restaurant. Which means
comparing to the traditional restaurants the cloud kitchen has a number of advantages that helps to attract
the customers. (Moyeenudin et al., 2020).

ANOVA results show that in comparison with different restaurants a cloud kitchen has a mixture of
foods to choose from. It is one of the core reasons that customer prefer to order food online observing
reviews of other consumers. And in the writer’s density graph it is visible that online reviews have an
impact on customers buying behavior which create a great opportunity for cloud kitchens. (Moyeenudin
et al., 2020).
 16

3 RESEARCH METHOD AND RESULTS

In quantitative research, quantifiable data are systematically gathered by a researcher using statistical
and mathematical techniques. It is frequently utilized in many academic fields, including the humani-
ties, social sciences, and the natural sciences in general. Through the use of numerical and analytical
techniques, quantitative research aims to concentrate on its study objectives. (Zikmund et al., March
12, 2012).

Surveys are a typical quantitative tool used to gather data from a variety of areas. They are an effective
option if one wants to discover more about the characteristics, interests, perspectives, or views of a
particular group of people. Surveys are frequently employed in social, business, health, political, and
psychological research. Before conducting any survey, a clear concept of the research question is the
first step that is needed. Based on the questionnaire participants are chosen. Data can be collected by
interviewing respondents in person or sending emails or using social media groups or field questions.
Among these using social media groups is very useful and the collector has control over the region. In-
person interviews are less effective because in many cases sometimes peoples are in a hurry or feel
ashamed to share pieces of information. (McCombes, 2019).

Here, quantitative research has been surveyed by collecting responses using a Google form. The ques-
tions were prepared in English and the audience was Bangladeshi students (undergraduates, graduates),
and job holders (part time, full time) from social media (Facebook) food groups. The audience has
been selected by the age group of under 20 to above 40. The reason for choosing this age group is this
is the target audience who frequently order online food. Later in this chapter the collection of samples
will be analysed and discussed.

3.1 Data Analysis

A total number of 30 people have participated in the survey. There were 10 questions in English, and it
was conducted using Google Forms where the primary location was Bangladesh. It took 15 to 20 days
to collect all the survey data. The results from the participants are discussed below using percentages.
 17

Question 1 was about the participant's age group. To see which group of people are more prone to or-
der online the researcher wanted to find out the age group that should be kept in mind while creating
the business plan. Here the results show that 83.3% of the respondents were from the age group of 20-
30. Only 6.7% of them belong to those under the 20-age group and the ratio of the 30-40 age group in-
dividuals is 10%.

Question 2 was added to know which gender is dominant among the participants. And this shows that
the percentage of female participants is lower than males. The result says the male respondents are
83.3 % whereas females are 16.7%. The reason for asking this question is to find out which type of
marketing the author should do to engage with the customers and keep them interested.

Question 3 was asked to analyse the frequency of their online food order. It shows that the majority
(44.8%) of them order food online once or twice a week, and 10.3% of them are dependent on online
food order more than 5 days a week. 27.6% of them order food online several times in a month and
17.3% choose to order online food 2 to 3 times a week. This result helps the author to figure out the
order ratio might have during a week.

Question 4 shows the reason why the respondents like to order food online. The indicator of the result
shows that 55.2% of respondents like to order food online to save time. 17.2% of them think that there
is a wide range of food to choose from. And some of the respondents do not like to cook and that is
why they order food online. Some of them order on special occasions and the percentage of them who
do not like to cook and special occasion is the same. It is 13.8%. This was asked to understand the core
reason for online food business survival and where to keep the focus.

Question 5 shows how much money the respondents are willing to pay in a week while ordering food
online. 41.4% of respondents are willing to pay from 20 to 30 euros in a week. 24.1% of the respond-
ents are willing to pay more than 60 Euros in a week where 13.8% of them have shown interest to pay
30 to 40 Euros. And 20.7% of respondents are willing to pay between 40 to 50 Euros. So, it can be said
that they are ready to pay quite a good amount as per the economic exchange rate. So, here the author
has understood that there is a huge potential for success in the could kitchen business.

Question 6 indicates the satisfaction rate of the respondents about the food delivery system of the capi-
tal city of Dhaka, Bangladesh. The highest rating is 14 out of 15 by 3% of the respondents. Then 4%
 18

rated 11, accordingly 2% of them rated 3, and 1% rated 1 which is the lowest score. This rating clearly
shows that most of the delivery system is satisfactory and reliable. But there is still scope to improve it.

Question 7 was about the food preference of the participants which shows that the respondents of the
survey of Dhaka people like to order Asian food. Its percentage is the highest at 50%. Indian cuisine
has been chosen by 35.7% of respondents. 10.7% like to order Mexican and 3.6% like European food.

In Question 8 the respondents had been asked if they know about a cloud kitchen that only delivers
food and has no physical restaurant or dine-in facility. 65.5% of the respondents are well aware of the
cloud kitchen. On the contrary, 34.5% of the respondents do not know about this. Here, the author has
understood to create an image will be a hard job.

In Question 9 the respondents were asked when it comes to ordering food online what is the most im-
portant thing that matters to them and 41.4% of them responded that they rely on the online reviews
and ratings of the food brand. Some look for hygienic food and 24.1% is their percentage. Surpris-
ingly, the lowest percentage is 13.8% which is to mention that previous experience is less important
for the respondents. 20.7% want a variety of food. The author has included this question to find out
customers' psychology behind ordering from the same food brand.

In the last question, the respondents were asked if Covid-19 had an impact on ordering online food.
55.2% agreed with the statement whereas 34.5% of them are not sure and responded maybe. 10.3%
seem to disagree with the statement. This question was asked to find out the reason why the popularity
of cloud kitchens has increased suddenly, and the author has found out that covid-19 has a positive im-
pact on the cloud kitchen business.

3.2 Recommendation

This part of the writing is solely based on the survey result that has been collected via participants' re-
sponses. After going through the final result some valuable, insightful, and interesting findings have
come out and are going to be extremely beneficial in the time of planning for the business plan for the
author, or anyone who wants to make a scheme for a new cloud kitchen in Bangladesh. Among all the
questions there was a question about the customer's choice of food type (for example- Asian, Mexican,
 19

or any other). It seems that Bangladeshi audiences prefer Asian food and they are more into their own-
culture than exploring new types. So, when the author will decide on the menu, Asian food needs to be
included to attract those customers and it will be also the safe choice. It is also suggested to add a new
menu now and then. As the same menu will be monotonous. In the survey, it seems that the age group
of 20 to 30 is more prone to ordering online. So, it is also recommended to target the age group of 20
to 30 while planning for business segmentation and target market. Before deciding on the marketing
strategy and menu another market survey only focusing on this group will be a great idea. As could
kitchen business is online based, on-time delivery is a crucial factor. It is a must to collaborate with a
well-known food delivery app. Because ensuring a speedy last-mile delivery can be the game changer
as on the survey results it shows that most of the customers order online to save time. The core of a
business is to create awareness and need for the product or service. If any service exists but the cus-
tomers or the target market are not aware of the product or service then the business will fail. In the
survey results, it is disappointing to see that many customers are still in darkness about Cloud Kitch-
ens’ existence in the market. It is recommended that new entrepreneurs come up with an exceptional
marketing strategy to make people aware the cloud kitchen existence.
 20

4 DISCUSSION AND CONCLUSIONS

In this study it can be safely argued that the epidemic has sped up the transformation and the adoption
of technology in the hospitality and restaurant sector. According to the study's findings, despite gener-
ally providing Value Added Tax (VAT) benefits, Cloud Kitchen Model (CKM) offers a limited sales
opportunity for the Dhaka restaurant industry during the next three years. Even though they are inter-
ested in starting CKM, current restaurant owners believe that the immediate additional capital require-
ments, in addition to the capital they currently have on hand to operate their current restaurants, will
prevent them from entering the cloud kitchen industry and, as a result, prevent the adoption of CKM in
the next three years. It is advised that people who want to launch a CKM business do so with a strong
business plan and look for venture capitalists or angel investors in order to raise money and bring in
specialists while setting priorities for their marketing efforts. Social media platforms should be used by
restaurants based in CKM to develop a positive brand image. CKM-based restaurants should prioritize
employee retention through appropriate employee training and additional benefits while focusing on
customer demands through unique platforms (such as their own delivery channels and websites).
(Khan et al., 2022).

Due to this change, the industry will become more resilient than ever before, and new, better-eating
concepts, brands, and service standards will appear. After all the data and available information, it is
significantly noticed that a few notable obstacles that new cloud kitchen owners may experience are
the difficulty in ensuring consistency in food quality, consumers' confusion about the brand, and the
lack of opportunity to differentiate as a cloud kitchen. As a result, any company considering opening a
cloud-cooking restaurant should properly manage these risks. To find funding in the beginning, restau-
rants can look for angel investors or venture capitalists. However, they will require a strong business
plan for that. To guarantee a constant level of food and service quality, they need to engage qualified
professionals. Once more, it is a difficult effort to establish a distinctive position in the sector. Conse-
quently, the company must be cautious, prompt, and savvy enough to overcome any sudden situations.

Other considerable factors that are discovered by the survey results are that marketing a cloud kitchen
can be a critical task for the entrepreneur as many of the customers do not perceive the concept of a
cloud kitchen as it is. There are so many dissimilarities between a traditional restaurant and a cloud
kitchen that has been discussed in chapter 3, the theoretical part. According to Audrey Hamada, Adol-
ophine Parameswara, and others, brand knowledge has a direct impact on a customer's intention to buy
 21

a product. (Sanny et al., 2022). So, it is recommended to maintain a great social media presence more
potent than any other in the market. Also, it is suggested to come up with unique marketing strategies.
For instance, a study in Egypt shows that green packaging has increased the customers buying and
trusting tendency toward cloud kitchens. Here, green packaging means packaging that is biodegradable
and eco-friendly and aid in sustainable development. (EmamA et al., 2022).

Additionally, a cloud kitchen owner can introduce additional surprises for regular customers by track-
ing their purchase behaviour. It can be a loyalty bonus for purchasing over a certain amount they will
get a 10% to 35% discount on the next order they made. In the survey, it is found that the most im-
portant factor that influences their buying behaviour is the review and ratings of the customers who
have ordered from Cloud Kitchen. So, the owners of a cloud kitchen can come up with a scheme in
which the best reviewers will get a coupon or free food. It will do the marketing as well the sales will
increase. The people of Dhaka who have participated in the survey have rated the delivery service as
satisfactory. There is still room to be better in this sector. If a newly establish cloud kitchen introduces
a speedy delivery service with good food, it will increase its presence in the market. However, the traf-
fic jam in Dhaka city is a big concern while delivering the food on time. To avoid this is quite impossi-
ble but if the food can be prepared as fast it can give a bonus to deliver it quickly. Most of the partici-
pants were into ordering Asian food. As the sample number was small it is recommended to do a mas-
sive market survey before introducing the food menu as per the market segment. Because in the cloud
kitchen business, the main factor to shine and grow is to serve according to customers' demands and
always engage in bringing new food to customers. However, cloud kitchen services must constantly
evaluate their competitive edge and change to market advances with creative strategies due to the stra-
tegic uncertainties, particularly the level of rivalry. (Choudhary, 2019).
 22

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Appendix 1: Customers Survey APPENDIX 1/1

APPENDIX 2/1
APPENDIX 3/1
APPENDIX 4/1