Analysis of Unit Economics for a Hypothetical Cloud Kitchen

Unlocking the intricacies of unit economics is pivotal for the success of any cloud kitchen venture. This article provides an insightful examination of the financial dynamics of a hypothetical cloud kitchen operating on two prominent food delivery platforms: Zomato and Swiggy.

I. Scenario Overview: Imagine a vibrant cloud kitchen specializing in delectable sandwiches, strategically stationed in a bustling urban locale. Let's embark on a journey to dissect the financial nuances of its operations on Zomato and Swiggy, shedding light on crucial insights.

II. Revenue Assessment: The primary revenue stream for our cloud kitchen emanates from online orders facilitated by Zomato and Swiggy. By gauging the average order value (AOV) and monthly order volume, we can discern the revenue potential of our hypothetical endeavor.

• Zomato AOV: Rs. 250
• Swiggy AOV: Rs. 200

III. Cost Analysis: A meticulous breakdown of costs, encompassing fixed expenses, variable costs, and aggregator commissions, is imperative for a comprehensive understanding of unit economics.

A. Fixed Costs:

• Monthly Rent & Utilities: Rs. 30,000
• Equipment Maintenance: Rs. 10,000

B. Variable Costs:

• Ingredients (per month): Rs. 50,000
• Packaging: Rs. 15,000

C. Aggregator Commissions:

• Zomato Commission: 30% of order value
• Swiggy Commission: 30% of order value

IV. Profitability Assessment

Let's delve into the profitability analysis of our cloud kitchen on Zomato and Swiggy, scrutinizing gross and net profit margins.

A. Zomato:

• Total Revenue: Rs. 125,000 (AOV * Monthly Orders)
• Total Variable Costs: Rs. 65,000 (Ingredients + Packaging)
• Total Commission: Rs. 37,500 (Zomato Commission)
• Gross Profit: Rs. 22,500 (Total Revenue - Total Variable Costs - Commission)
• Net Profit: Rs. -15,000 (Gross Profit - Fixed Costs)

B. Swiggy:

• Total Revenue: Rs. 100,000 (AOV * Monthly Orders)
• Total Variable Costs: Rs. 65,000 (Ingredients + Packaging)
• Total Commission: Rs. 30,000 (Swiggy Commission)
• Gross Profit: Rs. 5,000 (Total Revenue - Total Variable Costs - Commission)
• Net Profit: Rs. -35,000 (Gross Profit - Fixed Costs)

V. Conclusion

The meticulous analysis of unit economics unveils critical insights into the profitability of our hypothetical cloud kitchen on Zomato and Swiggy. Despite facing substantial aggregator commissions, our venture exhibits areas for strategic improvement, emphasizing the significance of prudent financial management in the competitive landscape of cloud kitchens.

This is just a basic calculation to let you understand how many orders do you need to get profitable on Zomato & Swiggy.

Share your calculations in the comments.