MBA PROGRAMME

SCHOOL OF BUSINESS AND MANAGEMENT

CHRIST (DEEMED TO BE UNIVERSITY), BANGALORE

CIA IV

TITLE: CLOUD KITCHEN – BUSINESS PLAN

Submission date 31st January 2022

Assignment submitted in partial fulfilment of the requirements for the degree of

Master of Business Administration

Under the Guidance of

PROF. SUBHASHINI KRISHNA

Submitted By

RESHMA MENON

2027153
Contents
Introduction .............................................................................................................................................................. 4

Description Of Venture ............................................................................................................................................ 4

Executive Summary ................................................................................................................................................. 5

Sources Or Trends For Cloud Kitchen ................................................................................................................... 6

Challenges For Cloud Kitchen................................................................................................................................. 7

Comparison With Traditional Business Models ................................................................................................... 9

Industry Analysis ..................................................................................................................................................... 9

PESTLE Analysis ................................................................................................................................................. 9

Porter's Five Forces Model ................................................................................................................................ 10

Business Canvas Model .......................................................................................................................................... 12

Financial Plan ......................................................................................................................................................... 13

Financing ............................................................................................................................................................ 13

Cost Structure..................................................................................................................................................... 14

Forecasted Financial Statements....................................................................................................................... 15

Break-Even Analysis .......................................................................................................................................... 17

Technical Analysis .................................................................................................................................................. 18

Value Chain Analysis Of Home Bistro ............................................................................................................. 18

Mckinsey 7s Framework .................................................................................................................................... 19

Soft Elements ..................................................................................................................................................... 19

Hard Elements .................................................................................................................................................... 19

Key Performance Indicators Of Cloud Kitchen .............................................................................................. 20

Legal Analysis ......................................................................................................................................................... 20

Selection Of A Business Structure .................................................................................................................... 20

License From The Food Safety And Standards Authority (FSSAI).............................................................. 21

Eating House License/Health Or Trade License ............................................................................................. 21

Fire And Safety License..................................................................................................................................... 21

Income Tax PAN (Permanent Account Number) ........................................................................................... 21

 GST (Goods And Services Tax) Registration .................................................................................................. 21

Shops And Establishments License .................................................................................................................. 21

Legal Formalities For Listing ........................................................................................................................... 22

Benefits ................................................................................................................................................................ 22

Production And Operational Plan ........................................................................................................................ 23

Kitchen Operations ............................................................................................................................................ 23

Suppliers ............................................................................................................................................................. 24

Management Controls ....................................................................................................................................... 24

Administrative Systems ..................................................................................................................................... 24

Marketing Plan ....................................................................................................................................................... 25

Positioning .......................................................................................................................................................... 25

Pricing ................................................................................................................................................................. 25

Promotions .......................................................................................................................................................... 26

Sales Forecast ..................................................................................................................................................... 26

Sales Programmes .............................................................................................................................................. 26

Organisational Plan................................................................................................................................................ 26

Organisational Structure................................................................................................................................... 26

Management Team ............................................................................................................................................ 27

Management Team Gaps .................................................................................................................................. 27

Roles And Responsibilities Of Members .......................................................................................................... 27

Appendix ................................................................................................................................................................. 28
INTRODUCTION

Among the many things that the Covid-19 pandemic hit last year is India's food industry. With people
locked up indoors and dine-out options ruled out, food delivery became the nation's go-to option.
Cloud kitchen businesses find themselves at an acute advantage in the current scenario. This market
has been growing in India for the past five years at a rate of 5%.
A cloud kitchen is primarily a restaurant kitchen that accepts incoming orders only through
online ordering systems and offers no dine-in facility. Cloud kitchens are also known as dark
kitchens, ghost kitchens, virtual restaurants, and satellite kitchens. Cloud kitchens can have their
online ordering website and online ordering app, or they can accept orders through the various food
delivery platform. Since the primary source of revenue for these internet restaurants is through the
different food ordering platforms, such as Swiggy, Zomato, etc., the rapid development in food
delivery services has been driving the growth in this market. Faasos by Rebel Foods, Hoi Foods and
Biryani by Kilo are some of the famous examples of Cloud Kitchens.
Increasing development in junk food and eating outside habits within the Indian demographic feeds
into the rise in profits of such businesses, making it a desirable business model.
In this pandemic situation, nobody knew that it would badly hit on the Food & Beverage, which led
to the growing concept of cloud kitchen that helped end consumers to enjoy restaurant-like food at
home and made generate earning foodpreneurs.

DESCRIPTION OF VENTURE

The cloud kitchen is called "Home Bistro", and the

proposition is to provide gourmet style food to consumers at
the comfort of their homes. The Kitchen will be placed in
Indiranagar, Bangalore, as it is the prime location in the city
and is at delivering distance of Domlur and Koramangala –
populated areas of the city.

The food will be prepared at the owner's personal Kitchen; however, the preparation will be done by a
Chef with a staff of 3 additional helpers. The consumers can make the purchase online via Zomato
and Swiggy, who will deliver the order to the doorstep.
Furthermore, consumers can place the order for takeaway via phone or Zomato and can pick up the
order personally from the Kitchen.
Address: 2984, 12th Main Rd, HAL 2nd Stage, Indiranagar, Bengaluru, Karnataka 560038
Principals: Reshma Menon and Vineeth Krishnan
Vineeth is a professional Chef with a degree from the prestigious Cordon Bleu Institute in Paris and
has 5 years of experience in the food industry and has partnered in two other similar ventures.
Reshma Menon is a first generation entrepreneur with a Masters in Business Administration and has
2 years of experience in finance and investment management.
Nature of Business: This is a Partnership firm which is wholly owned and operated by Reshma
Menon and Vineeth Krishnan.
EXECUTIVE SUMMARY

HOME BISTRO is a Food Company founded in 2020 by Reshma Menon and Vineeth Krishnan – two
individuals passionate about Food and making Sustainable F&B Business.
Based in Bangalore, the company has its network of F&B business across India and aims at providing
Gourmet-style food to the consumer’s door step.
Cloud Kitchens are a COVID-proof concept which is designed to operate a full-fledged kitchen
without owing a Restaurant or a Dining Space. The concept basically comprises of a kitchen which
caters to customers through Food Delivery through third party delivery platforms such as Zomato and
Swiggy.
Cloud Kitchens are a 1000 Crore business market in India today – with over 50 Lakh Cloud Kitchens
operating across India. In the Covid affected world – Restaurants are considered to be the highest risk
spreader for the virus to infect people. Across India, more than 85% of customers now believe in
ordering Safe, Hot Food from Good Delivery Joints which gives them the same food experience of a
restaurant, without stepping out of their houses.
The business will be conducted at the home premises of the owner where the kitchen will be
remodeled and equipped with additional burners and sanitary facilities to accommodate increase in
consumer orders.
The promotional activities were initially performed through social media platforms such as Instagram,
Facebook and Snapchat. However, post the procurement of the required funding, the marketing
strategies will include online advertisements via Google Adwords, Youtube and business website.
The financial plan involves a capital structure mix of owner’s capital and loan procured through
Government sanctioned entrepreneurship schemes. The company forecasts an average monthly sales
of Rs. 50,000 resulting in a profit of Rs. 1,26,400 for the first year of business in 2023.
SOURCES OR TRENDS FOR CLOUD KITCHEN

1) Stiff Competition:
Stiff competition in the industry, along with decreasing margins, has resulted in the closing
down of many restaurants. The food-tech start-ups - from the big houses to the mid-sized and
small ventures are moving to cloud kitchens to beat the competition and survive. Mast
Kalandar has shut down restaurants in two of its four cities to cut down the cost. Ammi's
Biryani has closed down some outlets and converted to a cloud kitchen.

2) Changing Customer Preferences:

With increasing time crunch, customers are increasingly opting for home delivery options. As
the number of delivery orders increases, restaurants are now moving towards cloud kitchen
operations. Zomato's operation is slightly different in this aspect. Instead of using its own food
in the Kitchen, it is giving other restaurants its kitchen space to cook and get the food
delivered.

3) Operational Cost Reduction:

The restaurant industry is known for having very high operational costs. Real estate costs are
burgeoning across every city. This is severely impacting the bottom line of restaurants
especially in terms of infrastructure cost. Also, the culture of going to restaurants is slowly
fading away.
Cloud kitchen restaurants try to reduce production and packaging costs and maximise the
number of orders per day. With the increase in customer base, the cost of production can be
reduced. With every 150 orders per day from one Kitchen with a $6 Average Order Value
(AOV), Cloud Kitchen business model promises a margin of upwards of 25%.
4) Food Quality:
Traditional restaurants face a lot of overhead expenses, due to which they have very little
money left to incorporate good quality food items in their dishes. This is the sole reason why
restaurant food has traditionally been considered to be unhealthy. However, due to the advent
of cloud kitchens, more value is being added to the customers.

5) Increase in Personal Disposal Income:

In India, the personal disposable income is at a decent figure of 11%. The millennial
generation is now health-conscious and investing a lot in a healthy lifestyle. Indians are
spending more on organic food, chocolates, desserts etc.

6) India's demographics
With a large youth population, India is an opportune consumer market. Away from their
homes for education or employment, the millennials are highly dependent on online food
ordering.
The changing lifestyle patterns of urban India – high disposable incomes and busy
schedules – further add to the demand. Smartphone users in India have grown past 500
million boosting the popularity of online food ordering.

7) Economically more profitable than dine-outs

Cloud kitchens save big on real estate costs like rents and interiors, unlike dine-in restaurants,
which need a prime location and comfortable interiors for seating to attract customers. Cloud
kitchens can also operate multiple brands utilising the same Kitchen and resources. This means
more market share and revenue at minimal added costs.
 8) Highly fragmented and unorganised restaurant market in India
India only has three restaurant chains with 500+ locations, while China and the US have 25+
and 75+ respectively. About two-thirds of India's restaurant industry is still unorganised. Thisis
a huge opportunity for organised chains to scale over the next decade, more so for cloud
kitchens operating at a fraction of dine-in restaurants' cost.

9) Pandemic accelerated shift in market

The concept of cloud kitchens is still very nascent. The pandemic has accelerated the shift
towards a delivery-only model for small and large scale restaurants in India.
Nearly 90 per cent of restaurants under the National Restaurant Association of India (NRAI)'s
ambit downed shutters after India instituted a nationwide lockdown on March 25, 2020,
allowing only essential services to operate.
This paves the way for the growing popularity of cloud kitchens as a business model, drifting
away from retail-driven quick-service restaurants (QSR) brands.

10) Emerging market in tier 2/3 cities

With urbanisation spreading beyond the metros, the underserved tier 2 and tier 3 cities have a
great potential for cloud kitchen businesses. The ball is already rolling; India's top 100 cities
contribute a good share to the food delivery business, and the proportion is only set to increase
in the coming times.

CHALLENGES FOR CLOUD KITCHEN

1) Consistency in quality of food and service

The food delivered by cloud kitchens has to be prepared and packed, keeping in mind that it
will be in transit for another 15-30 minutes.
The food packaging is carefully designed to avoid spillage and food going cold. Regardless of
difficult delivery locations, peak hours, late nights, weather challenges, or festive rush, the food
orders have to be delivered on time for the best customer experience.

2) Logistics costs
While saving on the real estate costs, the model has an additional logistics cost. The cost of
last-mile delivery has to be carefully managed. It becomes further challenging since the
demand tends to peak during lunch and dinner hours only, thus further increasing delivery
costs.
The key to solving this challenge is to have a good menu/brand selection, so that order
distribution is uniform throughout the day, using technology extensively to make logistics
efficient and to look at ways to club orders together. It is also important to reach a high
number of orders per Kitchen so that logistics become efficient.

3) People-driven operations
The cloud kitchen business is operationally intensive and highly dependent on humans, both on
the kitchen side and the last mile delivery side. This makes processes dependent on human
decision-making, prone to errors and inconsistency.
The attrition levels are also very high, leading to further investments in training a large new
workforce over and over again. In order to scale successfully, cloud kitchens have to put
immense effort into building proprietary technology platforms that substitute human
judgement.
 With high-end equipment and Ml-driven technology models, cloud kitchens can ensure
seamless operations across functions: food preparation, inventory forecast, last-mile logistics
and more.

4) Winning customer loyalty in a discount-driven market

The Indian audience is spoilt for discounts provided by deep-pocketed players in almost every
industry. Customer loyalty and business economics cannot be sustained with it.
As newer brands enter the food delivery space every day, one needs to identify the unique
value proposition and live up to it to win loyal customers. Solving a real customer pain point
results in much better loyalty than discounts.

Running a cloud kitchen business, thus, has both its opportunities and pitfalls and any brand in this domain is
bound to face both in equal measure. The key is to simply navigate through them with clearbusiness goals, unique
value proposition, prudent use of capital and technology, and unmatched customer experience.
COMPARISON WITH TRADITIONAL BUSINESS MODELS

S.No. Parameters Advantages

Savings on infrastructure investment
Infrastructure and Reductions in service time through kitchen automation
1 Better quality control of food cooked
grocery
Easy expansion

Minimum staff required

2 Chef and staff Higher consistency in food taste

Lower delivery times due to distributed cooking

3 Delivery Emergence of Logistics providers
New Trends in the Delivery Sector

Customer Acquisition Higher customer retention due to better control of quality and taste
4 More contextual customer data in terms of food preferences
Cost (CAC)

Average Order Value Expanding Variety of Cuisines

5 Competitive pricing strategy due to higher margins
(AOV)
6 Commissions No commission revenue

INDUSTRY ANALYSIS

PESTLE Analysis

Political
Current trends affect the online food industry. As public health policies are focusing on fresh food
ingredients with lower sugar and sodium, the food sector is adding healthier options to its menus.
Political regulations such as food quality, hygiene, packaging, food safety, and wages require cloud
kitchens to adhere to standards.

Economic
The rate of unemployment, which is currently at the rate of 6.1%, affect the online food delivery
system. Healthier food options are pricier compared to fast food or instant food. But the convenience
of readily available food outweighs cooking food from scratch. The discounts and promotions offered
by cloud kitchen as well the convenience are promoting the greater expansion of the food business.

Moreover, interest rates, taxation, and consumer expenditure explore the opportunities prevailing in
the online food industry.
Social-cultural
Consumer's wants and healthier options affect the trends of the food industry. Consumers have
become conscious in terms of hygiene, safety, calories and nutritional value of food offered. Demands
for organic and whole food, vegan and pescetarian diet is becoming the lifestyle of the younger
generation. Also, with the increase in the migrant population, there is a surge in demand for 'Regional
food'. To attract more customers, cloud kitchens are implementing their own branding makeovers.
Social media and health Gurus have also made consumers aware of a healthy diet.

Technological

Technological advancement in terms of packaging, food labels, food brands and food production can
give a competitive edge. Technology has helped cloud kitchens to roll multiple brands from the same
Kitchen. E.g. Faasos is using brands Behrouz for Biryani and Firangi Bake. The online food delivery
segment has transformed from a local to an inventory-led business model. Cloud kitchen are using
their websites to provide information on calorie intake, allergy, nutritional value and promotions.

Legal
The food industry in any country is affected by laws. Food norms and laws have affected food quality
and nutritional standards. The food items should be produced in a safe, clean and healthy
environment. In India, consumers will be provided with all the necessary information, as per the Food
Safety and Standards (FSS) Act, and only fresh food to be delivered to consumers. Also, food
products offered for sale are subjected to sampling at any point in the supply chain. Packaging, Waste
management and Marketing & Sales laws create new demands in the online food industry.

Environmental
Changing government laws and norms have made the online food industry adopt a greener approach.
The food-related regulations and quality standards have turned stricter in every country. With
stringent quality and safety standards, the food brands are pressed to adopt strategies towards waste
management, environmental movements, energy-saving initiatives, and children food. Adopting a
greener approach has helped to enjoy improved customer loyalty and sustainable development

Porter's Five Forces Model

The Threat of New Entrants

The five competitive forces of Porter enable the companies to develop efficient strategies which help
to reach a competitive advantage over their rivals and then dominate the market. Since the setup of
cloud kitchen is cost-effective, it is easy for a new rival to enter the market. Thus, the firms in this
sector have to gain a competitive advantage over others by competitive pricing strategy, differentiated
products, cost reduction, creative distribution channels, menu expansion, promotions and discounts
and improved CRM.
Bargaining Power of Suppliers
The online food industry gets raw materials from numerous suppliers. Suppliers in a cloud kitchen can
vary from a single firm supplying for all the brands in the cloud kitchen to different suppliers for each
brand or a combination of both. The suppliers in the dominant position can negotiate well to extract a
higher price from the firms, thereby lowering the profit margins. Therefore, cloud kitchens have to
build efficient supply chains with multiple suppliers and develop loyal suppliers whose business
depends on them. Cloud kitchens should always experiment with food ingredients so that if any
ingredient becomes expensive in future, they can shift to another one.

Bargaining Power of Buyers

The consumer is always a king and a determinant of price. Consumers are demanding lots who want
to buy the best available by paying the least. Hence the bargaining power of buyers is high. The firms
can reduce the bargaining power of customers by broadening the customer base and introducing
innovative products on a continuous basis.

Threat from Substitute Products

The threat of a substitute product is high if it offers a value proposition that is uniquely different from
what the present industry is offering. This threat arises when the demand for an existing product is
affected by the change in the price of the substitute product. This threat can be reduced by focusing on
consumers' needs and preferences, by increasing the switching cost of the customers and by extending
to being service-oriented from just product oriented.

Rivalry
The rivalry or competition among the Cloud kitchen is the next big thing in the foodservice industry
as several well-known brands are entering the space. Since the entry barrier is less, it is easy for a
start-up to enter the existing players market. There are several cloud kitchens operating in different
micro-markets of cities.
Mast Kalandar restaurants operated by Spring Leaf Retail was one of the earlier known brands to get
into cloud kitchen. They shut stores in some of the cities and started operating centralised kitchens.
FreshMenu, Box8, Biryani by Kilo, Faasos, Bhukkad and Ammi's Biriyani are other brands that are
operating in this space. These brands are existing in the market for more than eight years and have
strong control over the online food ordering sector. New entries in this area are Kabuliwala (Kolkata),
Goila Butter Chichen (Mumbai).
 Designed for: Designed by: Date: Version:
The Business Model Canvas
Key Partners Key Activities Value Propositions Customer Relationships Customer Segments

Innovative Dishes and Menu Automated Service - Chatbot

Hassle-free and Timely Retail Customers
App Developer/Platforms Delivery
Maintain Quality on Website
Corporate Customers
Payment Provider Develop Software End-to-End Handling
Personal Assistance
Not-for-Profit Organisations
Gourmet Chef Support Customer Customisation of Order
Vendor relations management
Government
Helper Staff Provide Discounts/Offers Design/Usability of App
Client Retention
Advertisement Partner Maintain Vendor relations
Competitive Price

Vendors and Suppliers Robust Supplier Network

Key Resources Channels
Swiggy/Zomato Safety Dept
Internet and Software Algorithms Swiggy/Zomato
Government Health Dept
Swiggy/Zomato Logistics Promotion

Built in Infrastructure Referral Programme

Marketing Offers/Discounts TV Commercials

Innovative Menu and Dishes Website

Customer Reviews Billboards

Cost Structure Revenue Streams

Raw Materials Staff Remuneration Online Sale Corporate Contracts

Infrastructure IT - software - ERP Catering In-store Take away Sales
Licenses Support Donation

This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit:
http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.

Designed by: Strategyzer AG

The makers of Business Model Generation and Strategyzer strategyzer.com
FINANCIAL PLAN
The cloud kitchen is to be operated from the owner’s home where the food would be prepared and
sent to the customers via Swiggy or Zomato Hence, the rent to be considered is the accommodation or
house rent paid by the business owner.

Home Bistro is a partnership business between Reshma (Administrative Head) and Vineeth (Gourmet
Chef) wherein the initial capital and profits would be divided equally amongst the two partners.

FIXED COSTS

• Rent

• Kitchen Equipment

• Exhaust & Fresh Air System

• Licenses

• Staff Remuneration

• IT System

VARIABLE COSTS

• Utensils

• Utilities (like Electricity and Gas)

• Food Packaging

• Raw Materials

• Miscellaneous Expenses

FINANCING
• Equity

o Partner 1 – Reshma – 1.5 Lakhs

o Partner 2 – Vineeth – 1.5 Lakhs

• Liabilities

o Loan of 4.5 Lakhs from Pradhan Mantri Mudra Yojana (PMMY) - Under SHISHU
Category (Application Checklist attached in Appendix for reference)

o 30 days Trade Credit from Suppliers and Vendors

COST STRUCTURE

Type of
Item Additional Details Per Month Per Annum
Cost
Kitchen Rent 150 sq ft 2500 30,000.00
Modular
25,000.00
equipment
Exhaust & Fresh
10,000.00
Air system Fixed
FSSAI/GSTIN/
Licenses 12,000.00
Health
Staff 2 staff members 16000 1,92,000.00

IT System ERP 8,000.00

Kitchen Utensils 35,000.00

Electricity/Gas/
Utilities 2000 24,000.00
Telephone
Food Packaging 2 months stock 3500 21,000.00 Variable

Raw Material 1 month stock 10000 1,20,000.00

Miscellaneous
10,000.00
Expenses

Year I Investment 4,87,000.00

FORECASTED FINANCIAL STATEMENTS

Income Statement as of June 30, 2023

Income Statement Rs. Rs

Revenue

Revenue from services 6,00,000

Cost of Goods Sold

Opening Stock 1,20,000

Purchases 13,500

1,33,500

Closing Stock 60,000

Cost of Goods Sold 73,500

Gross Profit 5,26,500

Operative Expenses

Store Rent 30,000

Supplies consumed 1,20,000

Salaries 1,92,000

Utilities 24,000

Depreciation 2,500 3,68,500

Profit Before Tax (PBT) 1,58,000

(-) GST 5% 7,900

(-) Income Tax (15%) 23,700

Retained earnings 1,26,400

 Balance sheet as of June 30, 2023

Balance Sheet Rs. Rs

Assets

Non-Current Assets

Modular equipment 22,500

Licenses 12,000

Exhaust & Fresh Air system 10,000

IT System 8,000 52,500

Current Assets

Inventory 60,000

Utensils 35,000

Cash at Register 2,41,400

Cash at Bank 5,00,000 8,36,400

TOTAL 8,88,900

Shareholder's Funds

Capital 3,00,000

Net profit 1,26,400 4,26,400

Non-Current Liabilities

Loan Payable 4,50,000

Current Liabilities

Trade Payables 12,500 4,62,500

TOTAL 8,88,900
 For every order
placed with Home
Bistro, a 24% Gross
Commission will be
charged on bill
amount including the
taxes.

This commission goes to Swiggy and Zomato for the use of the food ordering platform as the business
avails the service from the companies to reach out to consumers.

BREAK-EVEN ANALYSIS

Break-Even Analysis

Month Sales Cumulative Sales

January 50,000

February 50,000 1,00,000

March 50,000 1,50,000

April 50,000 2,00,000

May 50,000 2,50,000

June 50,000 3,00,000

July 50,000 3,50,000

August 50,000 4,00,000

September 50,000 4,50,000

October 50,000 5,00,000

November 50,000 5,50,000

December 50,000 6,00,000

Based on the total investment of Rs.4,87,000 and the forecasted sales of Rs.6,00,000 for the first year,
we calculate the monthly average sales as Rs.50,000.

Given the above data, we expect the business to break-even within 10 months of operations, that is, by
October 2023, the business will have compensated for the initial investment made by the owners and
will be able to pay off its debt obligations.
TECHNICAL ANALYSIS

Value Chain Analysis of Home Bistro

Inbound Logistics
Cloud kitchens will purchase raw materials from fixed, well defined and numerous suppliers. Most of
the suppliers are local grocery shops or farmers, supplying directly to the cloud kitchen.

Operations
Based on Hub and Spoke model, the cloud kitchen will have a central kitchen with several delivery
hubs. Some of its operations are –

• A large kitchen space with several chefs and staff members preparing food items.

• Focus on lesser delivery time due to distributed cooking.

• Reduction in processing time by automating the preliminary activities of the Kitchen.

• Focusing on sustainable packaging options by discarding the use of non-biodegradable materials.

• To increase the efficiency of the supply chain in terms of technology, capacity and purchase options.

Outbound Logistics
Cloud kitchens work on the principle of providing the best quality food and service at a great value in
a clean and hygienic environment. We will focus on innovation, energy conservation, waste
management and sustainable packaging to build an environmentally friendly and sustainable business.
We will also focus on higher customer retention by controlling the taste, quality and price.

Marketing and Sales

Since Cloud Kitchens have no physical presence, the marketing strategies of a cloud kitchen are very
different from those of a regular hotel. Cloud kitchen will make an online presence with our own
website and different social media pages, which are continuously upgraded and made highly
interactive.
We will aim for the launching of its own app and website and continuous upgrade of its menu, brand
and customer experience.
Cloud kitchens will also be linked to numerous third parties like Zomato, Swiggy, FoodPanda etc., to
enjoy large-scale discoverability. We can also make use of e-mail marketing, SMS and distribute
pamphlets for wider reach. We will use a competitive marketing strategy due to higher margins,
promotional strategies like occasional discounts, coupons, reward points etc.

Services
Cloud kitchens are meant for just delivery of food under various brands to consumers upon orders
taken. The focus is on reducing the delivery time with distributed cooking.
McKinsey 7s framework

Soft Elements

Staff
Due to the lack of a dine-in or takeaway facility, cloud kitchen does not require any wait staff but only
requires a highly skilled kitchen staff. In a cloud kitchen, the same chef may prepare the food of
different brands, or there may be different chefs assigned for each brand. In addition, there may be a
requirement for delivery boys, accountants and kitchen helpers.

Skills
In cloud kitchens, the kitchen staff should possess good culinary skills to cater to the taste needs of
different brands. In addition to this one accountant, cum receptionist should have good interpersonal
and communication skills.

Shared values
The core values of cloud kitchens that enhance leadership are customised offers, minimum tap
processing, reliable and speedy delivery, impressive packaging, and consistency in quality.

Style
The styles that help in the growth of cloud kitchens and in achieving organisations' goals are user-
friendly apps, very clear positioning in terms of cuisines, especially healthy food, top-notch packaging
and delivery service, quicker than average delivery services and budget meal options.

Hard elements

Structure
Cloud kitchen is a restaurant without a physical outlet, in which the food is prepared for all sorts of
deliveries. It worked on the hub and spoke model. The business model runs around virtual
websites/apps, via which they take orders. Slowly the business is expanded by opening more units in
different locations.

Systems
Cloud kitchen uses processes and procedures which influences day–to–day activities like product
development, customer relationship management, quality improvement, cost leadership. It also adopts
a range of systems like recruitment and selection, training, performance appraisal, quality control etc.

Strategy
Cloud kitchens are focusing on a myriad of strategies to keep the business lucrative. The strategies
used are reusable packaging, consistency in quality and taste, shortening the delivery time, offering
customised products, minimum tap processing, extensive feedback system, regular follow up and
improvement.
Key Performance Indicators of Cloud Kitchen

The key performance indicators of cloud kitchen are as follows-

1) Customer Loyalty:
As per market research, the most successful small businesses earn 70% of their revenue from
repeat and loyal customers. Hence businesses should keep a record of orders of repeat
customers.

2) Powerful Promotions:
Cloud kitchens should monitor the effectiveness of promotions offered and check whether
they are redeemed through delivery. This data will also help them to calculate the ROI of
marketing campaigns.

3) Accuracy:
Cloud kitchens have to monitor in terms of orders remade, and orders sent back, or how many
complaints received from customers. The staff should be trained accurately to accommodate a
customer's special requests or food allergy requirements in order to avoid waste from orders.
Also the modified orders should be accurately priced to make sure the bottom line is not
affected.

4) Competition:
Many businesses grow well in a competitive environment. Cloud businesses can track the
number of promotions other pizzerias launch, their menus, their delivery reach, etc.

5) Employees:
Metrics related to the employees is an indicator of how well the delivery part of the business
is working. There is a need to track metrics, including sick days or call-offs, labour turnover,
and length of employment, to assess how delivery is working from the employee's point of
view.

6) Labour Costs:
Labour is considered as one of a restaurant's top expenses, so cloud kitchens are expected to
keep these costs under control. There is a need to monitor total labour costs and labour hours
to make sure delivery activities are profitable and not strenuous for the business.

7) Promised Time:
Hungry people are impatient, especially if their scheduled delivery is late. There is a need to
track delivery POS system, to check how many orders arrived late. Cloud kitchens need to
watch how many coupons are distributed for free, make-good attempts n respond to late
deliveries and what the impact is on profits

LEGAL ANALYSIS

Selection of a business structure

The structure best suited to a cloud kitchen would be either a sole proprietorship or a partnership
since the investment is low and is often managed by the entrepreneur themselves or with a small
number of employees. As this is a partnership business, a partnership agreement is to be executed
between the partners, which can then be registered. In which case, no separate filing or submission is
required.
License from the Food Safety and Standards Authority (FSSAI)
The governmental body regulating the food industry is the FSSAI, which prescribes guidelines and
standards regarding the preparation, packaging, quality, and more importantly, the safety of food for
consumption. A license from the FSSAI is mandatory to start a food business. A license is a 14-digit
number that is valid for a period of 1 to 5 years, after which it has to be renewed.

As the cloud kitchen is operating on a small scale, Registration with the FSSAI would suffice.
However, the type of license depends on the services provided and the scale of operations. Some
documents required in this regard are valid ID and address proof, email address, phone number,
affidavit, declaration of food safety management plan, food category, kitchen layout plan, etc.

Eating house license/health or trade license

This license is issued by the state municipal corporation or the health department. The rules vary
depending on the state in which the cloud kitchen is proposed to be located. Some documents
required in this regard are sanction and completion (proof of ownership or rent agreement),
letter/NOC from the concerned police station, indemnity bond, property tax receipt, receipt of
payment of electricity and water bills, etc. This is a mandatory license.

Fire and safety license

This is not mandatory; however, it is preferred to get the same from the concerned fire department as
it can come in handy in case there are any future mishaps.

Income tax PAN (Permanent Account Number)

This is mandatory for all businesses. The details required for obtaining PAN are proof of address and
identity.

GST (Goods and Services Tax) Registration

GST Registration is mandatory for all businesses in India. Since it includes the entire supply chain
from the vendor up to the customer end, having a GST registration will ensure that the processes are
seamless and helps in the timely claim of input credits. The documents required for registration are
ownership documents like a property tax receipt, electricity or water bills, rent agreement, signatory
details, etc.

Shops and establishments license

The owner also has to get registration under the Shops and Establishments Act from the respective
state government. The registration being state-wise; the requirements vary from state to state.
Broadly, the documents required are photographs of the shop/establishment, signatory details, PAN
Card, address proof, etc.

1. Other labour law registrations like Employees Provident Fund (EPF), Employees State
Insurance (ESI), Contract labour registrations, etc. will apply in case the number of employees
crosses the thresholds prescribed under the respective legislations.

2. Trademarks may also be registered in order to protect and grow the brand.
Once the dark kitchen owner has all the licenses in place, listing the same on Zomato or Swiggy is a
fairly simple process. The kitchen owner drops in a query with Zomato or Swiggy and a
representative would then get in touch with them to understand their business and requirements. Upon
submission of the necessary documents, menu, logo, etc. the request is processed and the kitchen goes
live on the Zomato or Swiggy app.

Legal formalities for listing

Listing on Zomato or Swiggy involves a one-time on boarding fee of Rs.1500. The owner can
maintain their kitchen page and also reply to customer reviews. The documents required for listing on
Zomato or Swiggy are:

1. FSSAI License or application number,

2. PAN Card,

3. GST Registration,

4. Cancelled cheque,

5. ID and address proof,

6. Execution of business collaboration/ service agreements.

As far as setting up kitchens with Zomato or Swiggy is concerned, the owner is required to enter into
an agreement with the Service Provider for the establishment and development of the kitchen as per
specifications and also invest in the kitchen space.

Benefits
Partnering with a brand like Zomato or Swiggy is a sure shot to success for any small entrepreneur.
Some of the key advantages of listing are:

• Advertising and outreach to a large customer base,

• Hassle-free delivery,

• Customer feedback,

• Customer and market insights,

• Assurance of quality products.

While listing on Zomato or Swiggy offers several benefits, there are a few disadvantages as well;
some of them are:

• High rate of commission – 24% of gross commission levied on every order placed with the
restaurant

• Reduced profit margins.

• High competition despite being listed on the platform.

Potential Legal Issues
As seen above, the aggregators play a prominent role in the food industry, and with a rapidly growing
industry such as Food and Beverages (F&B), their role is only bound to increase. However, there are
certain deeper issues that are being discussed and debated off-late. The Report by the Competition
Commission of India on E-commerce highlights a few legal issues arising through partnerships with
the platforms; these are explained below:

1. Conflict of interests – The issue of conflict of interest between the restaurants/ cloud kitchens
listed on the platform versus the platform’s own cloud kitchen brands. Given that the
competition in this segment is extremely severe, it is but natural for the platforms to market
their own products preferentially and this dual role played by the platform both as a
marketplace and competition disrupts the level playing field between the players as it
inherently puts the platform on a higher footing. It becomes all the more important since all the
platforms run on the basis of algorithms that are under the control of the platform.

2. Unilateral and unfair terms of contracts – The report also states that the platforms, by virtue
of their market share, customize the contracts in their own favour and provide barely any scope
for negotiation with the cloud owners/ restaurants. Some of the terms that are often imposed
upon restaurant partners are:

o Deep discounting – Though the restaurant owners can participate in these deep
discount offerings at their will, they did agree that non-participation reduced their
visibility on the platform. Such discounting practices steeply affect their revenues,
sometimes, to the point of unviability of the business.

o Bundling of delivery services – Delivery services are often thrust upon the restaurant
owners along with listing services. This has a dual impact, first, the restaurant owner
may not be in need of delivery services, and second, the choice of first delivery
between the various restaurants’ vests with the platform; thus, there could be
preferential treatment towards some restaurants over others.

PRODUCTION AND OPERATIONAL PLAN

Home Bistro will be open 7 days a week for lunch and dinner requiring multiple shifts. Vineeth will
write the schedules. The schedules will be written in a manner that will allow the ability to increase or
decrease hourly labour according to sales volume in order to maintain a consistent labour cost control.

Proper labelling and rotation techniques, accompanied by ample storage facilities will ensure that
high quality prepared product will be sufficiently available to meet the demands during peak business
hours. Replenishment and ongoing preparation will continue during off peak business hours.

Kitchen Operations
Vineeth will be responsible for ordering, receiving and maintaining sufficient inventory to meet
production demands. Ordering schedules will be staggered with perishable products being ordered
multiple times per week to preserve freshness. Standard grocery and supply orders will be ordered
less often, according to a predetermined schedule and storage capacity.

Reshma will rely on operational checklists to verify that each work shift has been properly prepared
for and to insure the operational standards are followed before, during and after work shifts.
The restaurant layout, including the kitchen and packaging line, has been designed for efficiency and
flexibility to accommodate the fluctuation in customer traffic and peak meal periods.

Once the customer’s order is confirmed on Zomato or Swiggy, the order will automatically be printed
to a requisition printer located in the grill area. Vineeth will use the printed ticket to keep track of
orders and place the meal under the heating lamps until the order is complete. The kitchen preparation
line has been designed to be operated by a minimum staff of 1 line cook and a maximum of 2 helpers.
This design allows line staffing to be adjusted to the business volume. Shift changes for all staff will
involve clean-up, restocking and preparation. All orders will be settled at the end of each shift. The
closing shift will involve designated closing duties that will leave the restaurant clean and fully
prepared for the next day.

Suppliers
With Vineeth’s 5 years of experience combined with his existing catering business, he has been able
to establish relationships with qualified suppliers. These suppliers can provide reasonably priced
products, delivered according to the schedule.

Management Controls
The owners will practice sound management procedures in order to control costs, insure quality of
product and provide friendly customer service. The following systems will be used by management:

Order Guide: The restaurant will use an item specific order guide to track order history and maintain
designated levels of product in inventory.

Weekly Inventory: Management will conduct a weekly inventory to determine valuation for use in
the preparation of weekly profit and loss reports.

Daily Inventory Tracking: Daily inventory will be taken on specific items. Movement will be
compared to sales data to ensure designated products have been properly accounted for.

Administrative Systems
With a limited staff, it is crucial that the owners remain current with daily cash outlay. The purchase
of an ERP that includes a POS system will immensely help them with these daily administrative
reports:

Daily Cash Control: Sales and receipts recorded by the POS system will be compared to actual cash
and credit card deposits on a daily basis. Acceptable over/short amounts will be limited to Rs.50.00
per day. Discrepancies greater than Rs.50.00 will prompt management to conduct an immediate audit
to account for the difference. Monthly totals will be compared to actual P&L statements for accuracy.
Cash, debit card and credit card receipts will be deposited in a deposit.

Weekly Prime Cost Report: Reshma will prepare a weekly report that shows the gross profit margin
after cost of goods sold and labour cost has been deducted from the sales revenue. The prime cost for
this type of restaurant is expected to range from 60% to 65%. Proper control of the prime cost is the
single most effective measure of management’s ability to operate the restaurant.

Purchasing Records/Payables: A part time bookkeeper will process and record invoices and credits
daily. Reports detailing cash expenditures, payments by check, and accounts payable transactions will
be readily available. Cheque disbursements will be prepared by the Reshma. Cheque signing authority
for the general operating account will be given to the accountant (Reshma).
Payroll Processing: Payroll checks will be issued bi-monthly. Reshma will run reports from the time
& attendance system, make necessary adjustments, and prepare for transfer to the payroll system.
Payroll will be processed by a payroll processing module in Odoo ERP.

POS Sample

MARKETING PLAN
The owners have selected the subject area for its restaurant primarily because of its location to the
very busy intersection in Indiranagar as it is the prime location in the city and is at delivering distance
of Domlur and Koramangala – populated areas of the city.

Positioning
Consumers believe that meals at home are healthier and higher quality than eating at restaurants. At
HOME BISTRO, we will position ourselves as the premier home-style restaurant by preparing quality
home cooked meals with simple wholesome ingredients. The business will also provide home cooked
fare that appeals to the current trends of healthier food and offer menu selections which will appeal to
this group. HOME BISTRO will be positioned as the premier traditional home-style yet Gourmet
restaurant.

Pricing
Our customers will enjoy our standard menu fare, along with seasonal menus so that we can better
take advantage of cost savings and stay current with some of the food industry trends. The pricing
will be such that the restaurant earns a profit margin ranging from 10% to 15%
At Home Bistro, cost accounting is important, since the profitability of individual dishes can vary
significantly and will initially determine the cost of the menu items. We will take advantage of our
excellent credit terms with our suppliers and will also update our menu to take advantage of
seasonality for example in local produce items.

We will also closely monitor the Prime Cost Report which focuses on the controllable expenses of
Cost of Goods Sold and Labour. As a new start-up we can currently control employee cost by hiring
family members or part-time employees who will work for low and reduced wages.

Promotions
In addition to a website with our menu, map and driving directions, we will also have a Facebook and
Instagram page and utilise other social media such as Twitter, Google Adwords and Youtube. We will
team up with Groupon and Paytm. We will offer a loyalty club which recent reports indicate increases
earnings as much as 15%.

Word of Mouth – We already have a database of existing catering customers and will rely heavily on
this method to attract and grow new business.

Direct Mail – Bulk mailing either directly to potential customers or by including a postcard in a
value-pack-type mailing.

Event Marketing -We plan on joining our local chamber of commerce and utilizing their networking
services for our grand opening. Also, catering for various events in Bangalore will help us gain the
necessary business contacts

Sales Forecast
We are expecting a conservative 5% increase in sales revenues annually over the next 3 years. The
growth is adjusted for inflation. With the addition of catering revenues, sales will increase by 12.93%
in Year 2 and 6.02% in Year 3.

Sales Programmes
We will encourage our employees to grow our customer base and provide incentives and regular
bonuses to employees for referrals and repeat customers. These initiatives are still in the planning
stages as we gear up to hire and staff. They will play an active role in our employee culture.

It is also anticipated that as we grow our catering business, along with our lunch business group, we
will hire a sales director to facilitate this portion of the business.

ORGANISATIONAL PLAN

Organisational Structure
The HOME BISTRO expects to hire 2 employees in the initial years. Vineeth will personally select
each candidate. They’ve adopted an effective interview process designed to staff the restaurant with
highly qualified people for each position. Each applicant will be rated and evaluated according to a
pre-defined set of standards designed for each position. Background checks will be utilized for
designated positions. Any future recruiting efforts will always center on referrals.
Management Team
The HOME BISTRO will be owned and managed by Reshma Menon and Vineeth Krishnan.
Vineeth is a professional Chef with a degree from the prestigious Cordon Bleu Institute in Paris and
has 5 years of experience in the food industry and has partnered in two other similar ventures.
Reshma Menon is a first generation entrepreneur with a Masters in Business Administration and has
2 years of experience in finance and investment management.

Management Team Gaps

Initially Reshma and Vineeth will fill in many of the management gaps. Over time, they have plans
to hire a sales director, a general manager, and a kitchen manager.

To meet the gaps associated in payroll, inventory management, and cost accounting, the owners will
purchase an ERP which will include POS (point of sale system) and other modules to simplifiy
communications between the kitchen and the packaging staff.

Orders go through the computer, directly to the kitchen printer. Another benefit of a restaurant POS
programs is that it can track everything from food usage, to the most popular menu items.

Because the POS system acts as a time clock, it can also help prepare payroll – which will save some
money in the bookkeeping department. Along with the daily operations of running a restaurant, a
POS system can organize profit and loss statement and sales tax.

Roles and Responsibilities of Members

Reshma is responsible for the below duties:

Cost management

Review of Prime cost and Daily cash reports

Disbursement of remuneration

Payment to suppliers, vendors, Swiggy/Zomato and other stakeholders

Regular interest payments and bill collections

Supervision of POS and operations schedule

Vineeth is responsible for the below duties:

Inventory management

Review Inventory reports and Order statistics

Preparation of Menu

Creating the Kichen and operations schedule

Supplier and Vendor relations management

Staff training and instruction

APPENDIX
 Application No: Date

Name of Bank

Application Form for Loan under Pradhan Mantri Mudra Yojana (PMMY)
(For Loan upto Rs. 5,00,000/- under Shishu)

Name of Bank & Branch from where Loan is required

I hereby apply for Cash Credit / Over draft / Term Loan of
Rs. For
Name of Father’s/Husband’s
Applicant(s) Name
Constitution Individual Joint Proprietory Partnership Other
Residential Address

Business Address Rented/owned

Rented/owned
Data of Birth Sex Male Female

Education Qualification Illiterate Upto 10th Upto 12th Graduat Professional Others
e
KYC Documents Voter ID No. Aadhar No. License NO, Any others
ID Proof
Address Proof
Telephone no. Mobile No Email
Line of Business Elisning
Activity(Purpose) Proposed
Annual Sales IRE. in lakh Proposed

Skill Certified (1) Self Skilled (2) Unskilled (3)

Experience
Social Category --- General SC ST OBC Minority Community
Minority Buddhists Muslims Chrishtians Sikh* Jains Zoroastrians Others
—
CC/OD- Rs Term
Loan Amount Required Loan
Detail of Existing Accounts Type (pls. tick ) Name of Bank
If any Branch
A/c no. If Loan A/c, amount of Ioan taken Rs.
Declaration:

I/We hereby certify that all information furnished by me/us is true, correct and complete. I/We have
no borrowing arrangements for the unit except as indicated in the application form. There is/are no
overdue / statutory due owed by me/us. I/We shall furnish all other information that may be required
by Bank in connection with my/our application. The information may also be exchanged by you with
any agency you may deem fit. You, your representatives or Reserve Bank of India or Mudra Ltd., or any
other agency as authorised by you, may at any time, inspect/ verify my/our assets, books of accounts
etc. in our factory/business premises as given above. You may take appropriate safeguards/action for
recovery of bank’s dues.

Date:___________________

Place:___________________ Thumb impression/Signature of Applicant(s)

(for office use only)

Acknowledgement slip No.…………………….. Loan Application No……………… Dated………………………

Received by________________

Place and Date Authorized Signatory (Branch Seal and sign)

…………………………………………………………..Cut Here…………………………………………………………….
Acknowledgement slip No.…………………..for loan application under PMMY (Applicants copy)

Received with thanks from Sh./Smt______________loan application dated______for Rs_____

Place and Date Authorized Signatory (Branch Seal and sign)