June 11, 2025
The cloud kitchen model is transforming the foodservice industry by enabling growth without the overhead of dine-in establishments. According to Grand View Research, the global market of cloud kitchens was valued at $73.18 billion in 2024 and is projected to grow at a CAGR of 11.9% through 2030.
This surge is driven by the growing demand for online food delivery, shifting lifestyles, and technological advancements. With delivery and online ordering becoming the norm, cloud kitchens are poised to capture a larger share of the food service market than ever before.
However, success in this competitive landscape requires more than just adopting the cloud kitchen model. It demands a clear understanding of the unique opportunities and challenges cloud kitchens face today.
This blog explores how you can grow your cloud kitchen in the competitive landscape.
A cloud kitchen is a commercial food preparation facility designed exclusively for delivery and takeout orders, operating without a traditional dining area or storefront. It’s like the kitchen equivalent of an Amazon warehouse, optimized purely for fulfillment rather than customer experience.
Cloud kitchens are also known by several other names, including ghost kitchens, dark kitchens, virtual kitchens, delivery-only kitchens, kitchen-as-a-service (KaaS), and commissary kitchens. These terms emphasize their focus on delivery and takeout services, with no physical dining space.
Let’s look at the core features that define a modern cloud kitchen:
You'll often hear the terms cloud kitchen and ghost kitchen used interchangeably, and for good reason—they both refer to food preparation facilities operating solely for delivery and takeout, without a traditional dine-in area. Their core working models are similar, but there’s a subtle difference between the two:
So, while a ghost kitchen is usually a type of cloud kitchen, the term "cloud kitchen" can encompass these larger, multi-brand operations, highlighting their flexible, digital-first approach to food delivery.
Cloud kitchens are transforming how food is prepared and delivered, presenting a stark contrast to the familiar operations of a traditional restaurant. While both aim to provide delicious meals, their fundamental structures, operational focuses, and customer interactions vary significantly.
Let's break down the key distinctions between traditional kitchens and cloud kitchens:
The advantages go far beyond just lower rent, though that's certainly compelling. Cloud kitchens offer entrepreneurs something traditional restaurants never could: the ability to test, iterate, and scale with minimal risk.
While a traditional restaurant might need $300,000+ in startup capital, successful cloud kitchens have launched with as little as $50,000. This lower barrier to entry allows operators to test multiple concepts simultaneously.
For example, if your Korean BBQ concept isn't gaining traction, you can pivot to a Mediterranean concept without incurring significant changes to locations or major equipment investments.
The operational advantages are equally compelling:
Modern restaurant management platforms like iOrders have made this model more accessible by offering commission-free ordering and integrated delivery service, removing technical barriers that previously required significant upfront investment in proprietary technology.
Now, let's discuss the process of opening a cloud kitchen in Canada.
Starting a cloud kitchen in Canada can be a lucrative business venture with the right planning and strategy. Whether you're venturing into the food industry for the first time or looking to expand your existing restaurant business, setting up a cloud kitchen requires careful consideration of various factors.
Let's break down the essential steps.
Creating a strong brand and a well-thought-out menu is the foundation of any successful cloud kitchen.
If you're unsure about where to start, tools like iOrders can help streamline your online ordering, allowing you to focus on building your menu and business.
Running a cloud kitchen requires legal compliance. Ensuring you have the correct licenses and permits is a critical step to avoid penalties and stay in business.
For example, in Ontario, register with the Ontario Food Premises Regulation to ensure kitchen compliance with provincial standards.
Choosing the right location for your cloud kitchen can make or break your business. You need a spot easily accessible for delivery drivers, but it doesn't have to be high-traffic since there are no dine-in customers.
The next step involves getting your kitchen ready for food preparation, ensuring all necessary appliances and tools are in place.
To succeed in the cloud kitchen business, partnering with online food delivery platforms is essential. Platforms like Uber Eats, DoorDash, and SkipTheDishes are vital for reaching customers who prefer ordering food online.
Marketing plays a key role in attracting and retaining customers, especially when you're operating in a competitive market.
Now that you have a solid foundation for setting up your cloud kitchen, it's time to choose the business model that fits your current situation.
The cloud kitchen business is flexible, with several models you can adopt depending on your existing business setup and resources.
Let's explore the key models:
If you already own a traditional restaurant, you can opt for the Virtual Restaurant Model. This model involves using your existing kitchen to operate a delivery-only brand.
For those who operate a Virtual Restaurant, partnering with a cloud kitchen provider can be a great way to leverage existing infrastructure.
The Commissary Kitchen Model is designed for food businesses that want to share kitchen facilities to reduce overhead costs.
Starting a cloud kitchen in Canada can be an exciting opportunity with the right business model and planning. The key to success is choosing the right location, optimizing your kitchen workflows, and partnering with trusted delivery platforms.
iOrders helps cloud kitchens manage orders, track customer preferences, and improve delivery efficiency.
As the demand for cloud kitchens grows, the opportunities are vast. Take the time to explore the business model that works best for your situation and start building your cloud kitchen today.
Now, let’s talk about the common challenges faced by cloud kitchens.
While cloud kitchens offer tremendous opportunities, they also create entirely new problems that can sink even the most promising ventures. Understanding these pitfalls is crucial because the margin for error is smaller when you're competing purely on delivery experience.
Most cloud kitchen failures start with broken ordering systems. You might have the best tacos in town, but if customers can't easily place orders or track deliveries, it is of no use.
The problem compounds quickly: inefficient ordering leads to longer wait times, which results in frustrated customers, negative reviews, and ultimately, lost revenue.
A 5-minute delay in order processing can result in delivery delays of 20-30 minutes during peak hours. That's the difference between hot food and disappointed customers leaving one-star reviews.
You need systems that can handle the following:
Traditional point-of-sale systems designed for dine-in restaurants simply aren't built for the rapid-fire, multi-platform ordering that cloud kitchens require.
Cloud kitchens can quickly turn into money pits if you're not careful with your spending. The low initial investment becomes meaningless if operational costs spiral out of control.
The primary issues are delivery platform commission fees (ranging from 15% to 30% per order) and inadequate inventory management.
Smart operators track the following metrics:
Many operators overlook losses on popular items because they fail to account for hidden costs, including packaging, platform commissions, payment processing fees, and food waste resulting from over-ordering.
Investing in Facebook ads or delivery promotions without a strategy is like shooting arrows in the dark. Cloud kitchens require targeted marketing, as competition in the digital space leads to split-second customer decisions.
Successful cloud kitchen marketing focuses on these core aspects:
Traditional restaurant marketing tactics often fall short. In cloud kitchens, you can't rely on foot traffic, diners' word-of-mouth, or visibility from the location. Instead, you need to master digital strategies like search engine optimization, social media engagement, and data-driven targeting.
Building customer loyalty is exponentially harder when you never see your customers face-to-face. Traditional restaurants can recover from mistakes with personal service, but cloud kitchens have to get it right the first time, every time.
The following customer engagement strategies work for cloud kitchens:
The absence of physical interaction means that every touchpoint, from the app experience to packaging, becomes crucial for customer retention. A poorly designed ordering interface or delayed delivery notification can permanently lose customers.
The most overlooked challenge is the loss of customer data to third-party platforms. When most of your orders come through DoorDash, Uber Eats, or similar apps, you're renting your customers rather than owning the relationship.
It creates a dependency where platforms control access to customer data, reviews, and pricing. Many cloud kitchen operators realize too late that they've built their business on audiences they can't reach or analyze directly.
The solution involves building direct ordering channels and customer databases, but this requires sophisticated technology infrastructure that many operators lack.
iOrders fills this gap with a white-label mobile app, enabling cloud kitchen operators to form direct customer relationships and providing full control over customer data while utilizing third-party delivery platforms for increased reach.
Now that we understand the challenges, let's explore how the right technology and strategy can turn these obstacles into competitive advantages.
Growing a cloud kitchen in today's competitive market requires smart tools and strategies that simplify operations and boost customer loyalty. iOrders offers a suite of services designed specifically to meet these needs and help your kitchen thrive.
Third-party delivery platforms can take 15-30% of your revenue per order, costing over $30,000 annually for a kitchen making $100k in sales. iOrders eliminates this loss with a commission-free ordering system, putting money back in your pocket. The impact is immediate and measurable.
The platform integrates seamlessly with your existing operations while giving you complete control over these aspects:
Instead of paying DoorDash $4.50 on a $15 order, you keep the full amount minus standard payment processing fees (typically 2.9%). Over time, this difference can mean the difference between breaking even and building a profitable business.
Modern customers expect diverse ordering options, and iOrders offers responsive websites and QR code systems for all devices, enhancing convenience and capturing orders that might otherwise be lost to competitors.
QR ordering surged in 2025, with 43% of Canadian smartphone users comfortable scanning codes for food orders.
Customers can find you via social media, Google searches, or physical marketing materials and place orders directly without apps or third-party platforms.
The system optimizes mobile ordering, manages customizations, and processes payments securely. Each order expands your direct customer database rather than supplying data to external platforms.
Managing delivery logistics consumes significant time and resources. iOrders' Delivery-as-a-Service handles everything from order dispatch to customer communication, enabling focus on food quality and kitchen operations.
The service includes real-time tracking, automated customer notifications, and intelligent routing that reduces delivery times.
Here are the key benefits of delivery service:
It means fewer angry customers, better reviews, and higher repeat order rates. You get enterprise-level delivery management without the overhead of hiring and managing drivers.
Digital marketing for cloud kitchens needs specialized expertise, which most operators lack the time to develop. iOrders' managed marketing services cover search optimization and social media campaigns, utilizing data from your actual orders to maximize ROI.
This service includes the following:
This strategy relies on data. By analyzing customer habits, peak times, and menu performance, the marketing team creates targeted campaigns to attract customers likely to order specific dishes at certain times.
Customer retention is 5x more cost-effective than acquisition, but most cloud kitchens struggle to build repeat business. iOrders' loyalty and reward system makes it simple to reward frequent customers and encourage larger orders.
With successful implementations of loyalty programs, you can see the following benefits:
The platform tracks customer behavior and triggers rewards based on order frequency, spending, or milestones. Customers can view their points balance, available rewards, and progress towards the next reward in the ordering interface.
Timing is everything in food delivery, and iOrders' smart campaigns use AI to optimize when and how you reach customers. Instead of blanket promotions, the system sends targeted offers based on customer behavior and ordering patterns.
If data shows a customer orders Thai food on Tuesday evenings, they might receive a personalized discount for Thai dishes on Tuesday afternoon. This targeting improves conversion rates and reduces costs automatically based on performance.
Online reviews can make or break cloud kitchens, but managing them across multiple platforms is time-consuming. iOrders' AI review system monitors reviews across major platforms, alerts you to issues, and responds to customers.
Advanced features of the AI-powered Review system include the following:
The system detects negative feedback to resolve operational issues early. It also emphasizes positive feedback opportunities and urges satisfied customers to leave key reviews.
Many customers prefer mobile apps for frequent orders. iOrders offers white-label apps that resemble custom-built solutions for your brand, without the high development costs or delays.
The apps include all the functionality customers expect:
Customers download your app, not a generic platform, creating a stronger brand connection and higher retention rates.
These solutions address key challenges for cloud kitchens, but technology alone isn't sufficient. Success demands strategic implementation of these tools and operational excellence to retain customers.
The cloud kitchen revolution is underway. While some debate its longevity, savvy entrepreneurs are creating profitable food empires that were previously impossible.
Success in 2025 requires more than great recipes and low overhead. You need commission-free ordering systems, intelligent delivery management, data-driven marketing, and customer retention strategies that work in a purely digital environment.
The question isn't whether you should start a cloud kitchen—it's whether you'll equip yourself with the tools necessary to succeed.
Ready to transform your cloud kitchen into a profitable operation? Join iOrders today to launch, grow, and scale your cloud kitchen without the traditional barriers and ongoing commission fees that eat into your profits.
