The food business is changing fast. With online food orders growing by 25% every year, many restaurants are rethinking their operations.
Some stick to the old way—dine-in service. Others are choosing cloud kitchens, which save on rent and staff. But which model is right for you? Let us guess; many of you must be unaware of the term “cloud kitchen.”
In this article, we’ll look at what cloud kitchens and dine-in restaurants are and how they’re different, and which model is the best for you.
What is a Cloud Kitchen?
A cloud kitchen is a restaurant that only makes food for delivery or takeaway. There are no tables, no waiters, and no dine-in service. It focuses only on preparing food. Cloud kitchens can run with fewer staff and need smaller spaces.
What is a Dine-In Restaurant?
A dine-in restaurant is what most of us are used to. It has tables, chairs, staff, and a place where customers come to eat. People visit for food, service, and the overall experience.
Cloud Kitchen vs. Dine-In Restaurant: What’s the Difference?
Let’s Understand
Running a cloud kitchen is very different from managing a dine-in restaurant. The differences show up clearly in costs—like location, logistics, staffing, licenses, and more. Let’s break down the main areas where the two models differ.
i) Location
Dine-In Restaurant
- An ideal dine-in restaurant is situated in a busy area where lots of people can see it.
- It is easy to reach and has plenty of parking.
- Dine-in restaurants follow all the local rules and often spend more on rent.
- It involves making the restaurant interior design look elegant. Additionally, it requires passing safety checks.
Cloud Kitchen
- In contrast, a cloud kitchen doesn’t need to worry about footfall or parking.
- This model depends entirely on online orders and delivery.
- These kitchens are usually set up in residential areas.
- They can operate efficiently without high rent.
ii) Property Cost
Cloud Kitchen
- The cost of setting up a cloud kitchen largely depends on the location and size of the space.
- Generally, having a kitchen area between 600 and 700 square feet is sufficient for efficient operations.
- The monthly rent for this type of space typically ranges from INR 25,000 to 40,000.
Dine-In Restaurant
- Dine-in restaurants need much more space to accommodate seating and dining areas.
- This makes rent one of the biggest ongoing costs.
- The average rent for a dine-in space is about INR 50,000 per month.
- Rent can go up to INR 1.5 lakh, depending on the location and size of the space.
iii) Staff Cost
Cloud Kitchen
- In a cloud kitchen, managing staffing costs is simpler. Mostly, you require a small team that focuses mainly on kitchen tasks.
- You just need six people to start:
○ A head chef
○ Two junior chefs
○ Two helpers
○ A housekeeper - Employees in a cloud kitchen usually earn between INR 14,000 and 15,000 per month.
- Housekeepers typically receive INR 8,000 to 9,000 monthly.
Dine-In Restaurant
- In a dine-in restaurant, the expenses for hiring staff are much higher.
- You need to pay at least one month’s salary upfront to all employees.
- Sometimes, head chefs might require three months’ salary in advance, which could range from INR 60,000 to 1 lakh.
- Besides paying salaries, there are other costs like:
○ Training staff
○ Ensuring they look presentable
○ Providing uniforms - These extra costs mean running a dine-in restaurant is more expensive from a staffing
perspective.
iv) Operational Costs
Cloud Kitchen
- Running a cloud kitchen involves various expenses, such as:
○ Buying groceries
○ Dairy products
○ Packaging materials - These are essential items needed to operate.
- Since cloud kitchens often offer different types of cuisines, the amount spent can differ greatly.
- Cloud kitchens need to have a strong online presence to attract customers.
- A strong online presence is vital for success in the digital marketplace.
Dine-In Restaurant
- Dine-in restaurants have regular costs like:
○ Rent
○ Staff wages
○ Utilities - They don’t need a website, but being online can help more people find them and build trust.
- Since these places mainly rely on customers walking in and enjoying the atmosphere:
○ Online tools are just an extra
○ They are not the main focus
v) Profit Margins
Cloud Kitchen
- Cloud kitchens can be more profitable than traditional restaurants.
- They save money by not needing:
○ A dining area
○ Staff to serve people in person - This cost-saving means they can make more than 15% profit, depending on:
○ The food they offer
○ How they run their business - By not investing in big buildings:
○ They have more opportunities to earn better
○ They can start making profits faster
Dine-In Restaurant
- Once a dine-in restaurant covers expenses for:
○ Rent
○ Wages for staff
○ Utility bills
○ Advertising
○ Repairs
○ Maintenance - It usually sees an average profit of just 3% to 5%.
- These fixed and variable costs are quite high.
- It often takes some time for the restaurant to reach a point where it’s making a profit rather than just covering its expenses.
vi) Marketing
Cloud Kitchen
- Marketing is very important for cloud kitchens because they operate only online.
- To succeed, it’s crucial to:
○ Have a good website
○ Be active on social media
○ Partnering with food delivery platforms like Swiggy and Zomato is essential as they help bring in many of the first customers. - Offering 50% discounts to new buyers or giving special gifts to loyal customers can:
○ Keep people interested
○ Encourage repeat business - The main aim is to stay visible and remain important in a busy online market.
Dine-In Restaurant
- Dine-in restaurants might not depend heavily on digital marketing, but it can still be useful.
- Offers like:
○ Free meals for couples or seniors
○ Loyalty points
○ Can draw in new customers and keep regulars coming back - Effective physical promotions and good word-of-mouth can lessen the need for an online presence.
- Mixing both offline and online strategies can help:
○ Reach more people
○ Boost brand awareness
Conclusion: Which Model Is Better?
The decision to open a cloud kitchen or a dine-in restaurant relies on the customer experience you want to deliver, your business goals, and your budget.
Most importantly, a cloud kitchen is best for you if you want to keep startup costs low, enjoy high profit margins, and grow your business quickly. It permits multi-location operation with low running costs, which is always a win.
Those who want to focus on the food quality, delivery algorithms, and online marketing rather than the hassle of managing a physical location prefer the cloud over the dine-in model.
However, a dine-in restaurant shifts the focus to building a brand around exceptional customer service and a warm, welcoming atmosphere.
So, if you are looking to make lasting connections with personalised service along with a memorable dining environment, then this is the option for you.