 Cloud kitchen is all the craves but before you dive right in there are some critical components that make it work so then that way you don't lose a bunch of money. In today's video we're going to be covering the top three critical elements that makes your cloud kitchen operation profitable so then that way you can make more money so make sure you guys keep watching. Hello friends my name is Wilson your friend in helping you build a thriving small business and a profitable food business if this is the type of content you enjoy make sure you guys show some support all you have to do smash the like button so I know this is the type of content you're looking for so in that way we can make more of this for you so go ahead and smash the like button. Many people talk about how great and is raving about ghost kitchens because it's way less investment in comparison to building your own restaurant lower rent lower maintenance costs and on top of that you get to leverage third-party apps but very little people talk about it's actually not that easy and a lot of people actually fail and like a lot of different food business or for that matter any type of business out there that requires very little investment guess what competition is furious and at the end of the day if you don't know what you're doing you're going to be losing a lot of money the truth is majority of the brands out there that are successful they know how to manage their food costs their labor costs and their operational costs in order for them to be profitable the big brands out there like these ones they know this is the key for success and that's the reason why they're all jumping in to cash out on this movement so if that is you wanting to build a profitable cloud kitchen operation then make sure you guys keep watching and get out a piece of paper and pen so what makes a cloud kitchen operation profitable number one right menu pricing strategy this is the difference between making a lot of money and profiting versus bleeding out and losing money and right off the bat I want you to know that there is no right formula because a lot of this is trial and error we need to be really well aware and document our third-party app commission fees that we're putting out and on top of that our cost of goods solds and on top of that our packaging costs at the same time this could very well mean your paper packaging your extra hours you put in in creating your item for instance if you are not aware of the third-party apps and how much they actually cost then that could very well mean you bleeding into your profits just because they say they're charging you 20% we need to add in the refund cost we need to add in the promotional cost the marketing cost and this could very well add up to 30% just for you to pay this fee to your third-party apps and if you do not work that calculation this expense into the pricing of your menu then you could very well be losing money on every item that you sell another area that you should definitely look at is your operational cost what do I mean by that well you know what packaging is actually a very big deal because the more packaging that we push out there for example paper packaging boxes and all this good stuff and if we do not account for these costs which could very well run us up another 50 cents or to a dollar then what's going to happen is that we won't have enough margins in order for us to make profit at the end of the day now a tip for you is that when you are first starting off your brand you don't really need to invest in custom packaging you don't need to go overboard you would want to prove your concept first so then that way when a lot of people are buying it and then you upgrade and then you can charge more for your item for example even Denny's when they first started launching their ghost kitchen operation they were using white boxes and not until they prove that there is demand for their product then they upgraded into custom packaging and once your brand has gained some traction has gained some momentum and some loyal fans then you would want to increase your quality by investing in better packaging so then that way your customers can become loyal fans of yours Mr. Beast one of the biggest youtubers out there when they created the Mr. Beast burgers he didn't invest in custom packaging until a few months after he has launched now a key point that you must be aware of and never ever do is never played the price game what I mean by that just because you see a competitor selling a burger at $10 never try to undercut them and compete with pricing because no one wins when you compete with pricing at then a day you don't know whether your competitor is actually doing well whether they have a different strategy where they would be profiting with other items on their menu when you don't know that and you are just looking at their prices to make your decision of pricing your item then no one wins you could very well be losing money so never ever try to undercut someone and compete with pricing now as a bonus tip for you friends if you are operating your own restaurant already and if you want to have your own virtual brand the new menu try your best to utilize the existing ingredients that you already have in your restaurant this will save you tons in ingredient cost as coded by Joe lie the chief operating officer at the kitchen United you don't need to create something entirely new or different but rather it should be something that's complimentary to your existing operation the second thing that you must do in order for you to be able to have a profitable cloud kitchen is to market like a new business this is one of the key things that majority of the ghost kitchen operations out there they fail to do they think just because they're on third-party apps automatically they're gonna get new business to come in yes you're gonna get new business however it is very very competitive and it is getting more and more saturated so you must have this mindset to always market your business like a new business all the time you need to increase and maximize the number of touch points that your customers will have with your brand to market your business you want to be able to touch on all the different types of channels for example have your own website make sure it's SEO optimized search engine optimized so when people search for best chicken wings they're gonna be able to find you second thing have all your social media channels out there and ready to go whether it's Twitter Instagram or TikTok work on influencer marketing work on your delivery app promotions these are all areas that you can increase the touch points and last but not least remember to capture their emails this is huge when it comes to a ghost kitchen operation friends remember for one thing consumers don't know what you're doing until you tell them and that's the reason why I'm telling you that if you are looking to build your new brand build a new food idea and you don't know how then definitely check it out in the link below a free masterclass where I share with you how do you go from an idea phase to actually selling hundreds of units every single month bring your idea to life and start doing something you're passionate about doing something that you enjoy this masterclass is completely free for you to attend the link is in the description below if it's still there we're still hosting it if it's not there and sorry guys out of luck the third tip guys this is a big one in order for you to be profitable you must optimize your labor and your operational food cost now I know a lot of people are saying about how cloud kitchen is much more profitable and should be more profitable because rent is cheaper however you are only relying on delivery sales and with the hefty cost of third-party app commissions which goes from 20 to 30% now you're left with your labor costs and your costs of good souls and if you do not manage these two properly then it's going to be very difficult to be profitable now in order for us to optimize our labor costs we must understand how our consumers behave people buy lunch all the time people buy dinner all the time and that's reason why these are the peak hours for your operation so usually account for two hours for lunch two hours for dinner time that's when you load up on your staffing and that's when you are able to maximize your output now if you do not want to stagger your shifting cut people's hours another great way to actually minimize your labor costs is to cross train your staff so during the town times what can they do they can either be doing financing they could be doing marketing they could be doing ordering they could be doing a bunch of things to take a load off your plate so then that way you can maximize their labor hours now as a big caveat for you guys you must always and repeat always always test your operation even for your peak hours I assume that you're gonna be busy during your lunch time I assume that you're gonna be busy during your dinner times but that is not a fact never ever take a blind guest like that always test when you're in the marketplace look at your data look at when people are ordering look at when the times slow down because with different types of food products your times might be completely different I'll give you a quick example doghouse is a franchise chain and usually their operational hours they close at 10 p.m. but for one of the franchisees have been hearing from their customers that you know what we wish you open later we wish to be able to have your hot dogs late at night and what did he do he decided to open up and now more than 50% of their sales comes between 9 p.m. to 2 a.m. the moral of the story make sure you guys test test and test so there you go friends I've just shared with you the critical components to make your cloud kitchen operation profitable so then that way you can make more money in your pockets now speaking about money if you guys want to make even more money for your operation then definitely attend a free masterclass in the link below we teach you how to go from idea to execution to actually end product that people enjoy and you know what this class is completely free so definitely check it out in the link below and once again if you enjoyed this type of content guys what do you do you smash the like button that just shows me and Jason that this is the right content to create so we can make more of this for you now I'll see you guys in the next video