You’re thinking of starting your own cloud restaurant — now what?

🧑‍🍳 Cloud restaurants and bakeries have long been an enticing alternative to the traditional brick-and-mortar dine-in restaurant concepts for many aspiring F&B entrepreneurs looking for their big break — and they’re only getting more popular.

In Egypt, cloud restaurants and bakeries — which operate on a delivery-only basis — have been popping up left and right, with more making their presence known as the days go by. Yet, why are cloud restaurants surging in popularity? For Egyptian chef and F&B entrepreneur Wesam Masoud (LinkedIn), founder of former cloud kitchen provider The Food Lab, it’s all about cutting costs.

“The reason why we have cloud kitchens is a response to the pressures of the OPEX of running a classic restaurant,” Masoud tells EnterpriseAM. He notes that the rise of cloud restaurants in Egypt — and worldwide — was further accelerated by the Covid-19 pandemic, which saw many F&B industry workers lose their jobs and establishments lose footfall. “One day, people woke up and realized, ‘Wait a minute, I can still run a restaurant; I just don’t have to serve people.’ And so they did — they got rid of service and doubled down on operations.”

Cost-cutting is indeed a significant factor, and for many, cloud restaurants are a mere stepping stone toward a brick-and-mortar restaurant, as Egyptian F&B consultant Omnia Adel tells EnterpriseAM. “I see these as a step toward opening a physical restaurant with seating, and to me, it’s a matter of money — it’s less expensive to operate. Avoiding the dine-in experience allows you to expand faster and cover new locations at minimal cost,” Adel notes.

But costs are not the only driving force: “People want to get into cloud restaurants primarily because they don't have a lot of money to spend at the outset. They want to start quickly; they don't want to wait for a contractor to set up the place or a design consultant to come up with a plan. They want to be able to focus purely on the product and the menu, and launch — and start generating revenue much quicker,” Massoud tells us.

It’s not as easy as it sounds

Cloud restaurants can hit the ground running at a much faster pace than their physical counterparts. Egyptian cloud kitchen platform Kitchincoclaims it can take just weeks to get a cloud restaurant up and running, compared to the months or years it can take a traditional restaurant.

Yet it’s not a walk in the park to get them up and running. When contemplating opening a cloud restaurant in Egypt, you essentially find yourself at a fork in the road. The options are aplenty — do you go solo and run it independently? Or do you lean into the expertise of a professional cloud kitchen service provider?

Know your options

There are plenty of cloud kitchen service providers in Egypt: For years, Masoud’s The Food Lab catapulted myriad brands into culinary fame — restaurants that have since expanded into multi-branch chains. Their origin stories? In the cloud. Cloud kitchen service providers in Egypt such as Kitchinco, Food Nation, Chef’s House, and Kokens all exist to take the work off of aspiring F&B entrepreneurs.

Operating on a kitchen-as-a-service (KaaS) model, these central cloud kitchens can handle everything — from daily operations, delivery, and recipe development all the way to actually supplying the food themselves and marketing your brand. What you're left with is your brand, your concept, and your recipes — and then you just wait for your cut. These models prove ideal for aspiring entrepreneurs who may lack the necessary technical expertise to efficiently run a restaurant, and those who may just be in pursuit of gain — no shame there. Yet when it comes to taking control of your own concept, that’s where it gets tricky.

The starting point

Have a vision… and a story: Before getting lost in the clouds, you need to ask yourself some pivotal questions: Who are you? Why are you doing this? Your story will be the heart and soul of your brand, and later in the process, who you are and what your business represents will be integral to the literal branding of your restaurant. Knowing your story and integrating it into your business plan bears fruit in the long run. “People know the difference between what’s real and what’s fake — give them something to believe in,” chef Perihan Saleh, founder and head chef at Gracias, tells us.

Test the waters: How do you make sure it’ll all work out before making the leap? You conduct a feasibility study. Oftentimes, we might imagine our ideas as the greatest thing since sliced bread, but markets are volatile, and consumer behavior is unpredictable. Knowing your market, your competitors, and the industry’s demands is a pivotal stepping stone…and so is making sure your product is actually viable.

Testing the dough: F&B entrepreneur Hassan Sabry, founder of Weirdough Cookies — a cloud bakery that has recently expanded with physical locations across Saudi Arabia and Egypt — notes that his very first move was to test every single one of the cookies he thought of. “You need to make sure your product works,” Sabry says. “When I started, I would just go to different bazaars and events and have people try out my cookies. We’d see what works and what didn’t — feedback was pivotal at that stage.” Before taking the leap, Sabry would spend countless hours through the night testing out his recipes, sending them off to family and friends.

The objective here is not only to test the quality of your product but also whether it would fly with customers in the first place. Saleh notes how, in the early stages of her restaurant’s conception, she looked for gaps in the market: offerings that fit her concept that she couldn’t find elsewhere. She quickly realized that was a mistake. “Look at what people like — don’t look for market gaps, don’t fill out what’s missing. More often than not, there’s a reason why these things are missing; people don’t like them.” Saleh tells us.

With Gracias, Peri initially began exclusively serving authentic Mexican tacos, given their scarcity in the Egyptian market, and was surprised that no one came back for seconds — it turns out, authentic tacos were missing from the market for a reason. This, however, might not be a one-size-fits-all scenario — many businesses have found success in filling market gaps left unattended by others, and the key here is market research. The importance of hands-on personalized research cannot be overstated: know your audience, conduct taste test sessions, amend, and repeat.

Narrative, niche, and testing are just the start. Look for the next installment of this guide in Tuesday’s edition of EnterprisePM, where we’ll discuss marketing and logistics.