Cloud Kitchen Business: Setup Cost, Licences, Commissions and Real Profit Math (2026)

Last updated: October 2026

A cloud kitchen is a delivery-only restaurant: no seating, no waiters, just a kitchen taking orders from Swiggy, Zomato, its own website and WhatsApp. It saves on expensive dine-in rent and interiors. But food delivery has high costs: commissions, packaging and discounts. Many cloud kitchens fail because owners don't do the maths. This guide shows the real numbers.

Quick Facts Investment₹5–15 lakh (single brand) Space250–500 sq ft kitchen in a good delivery zone Staff2–5 (cook, helper, packer) Biggest costsFood (28–35%), aggregator commission and fees (about 20–30%) Best forGood cooks and food entrepreneurs in dense cities

Setup Cost (Approx.) ItemCost Kitchen equipment (burners, chimney, fridge, freezer, SS tables, utensils)₹3–7 lakh Rent deposit and basic civil/electrical work₹1–3 lakh Licences, brand logo, menu design, photos₹0.5–1 lakh Initial packaging stock, raw material₹0.5–1 lakh Launch marketing and offers₹0.5–2 lakh

Licences You Need

• FSSAI registration or licence (based on turnover); required by aggregators
• Shop and Establishment registration
• Trade or health licence from your municipal corporation
• Fire NOC where required (gas usage, area)
• GST registration: required to list on most aggregator platforms. On food ordered through apps, the platform collects and pays GST on your behalf. See the GST guide.
• Udyam registration

Real Profit Math (Monthly)

Average order value ₹350. Variable costs as a share of sales: commission and fees 25%, food 32%, packaging 6%, discounts and ads 5%, so 68% in total. Fixed costs: rent ₹60,000, staff ₹1,20,000, utilities ₹25,000, so ₹2,05,000.

60 orders/day90 orders/day Sales (orders × ₹350 × 30)₹6,30,000₹9,45,000 Variable costs (68%)– ₹4,28,400– ₹6,42,600 Fixed costs– ₹2,05,000– ₹2,05,000 Profit / (Loss)– ₹3,400₹97,400

Lesson: In this example, about 60 orders a day is only break-even. Profit comes from more orders on the same fixed costs, lower food cost, and moving loyal customers to direct ordering, where there is no commission.

Indicative only. Commission rates and costs differ by city and platform agreement.

How to Get More Orders and Better Margin

• Pick one clear cuisine you do really well; a focused menu cuts waste
• Great photos and ratings: on apps, ratings decide visibility
• Consistent taste and packaging: no leaks, food arrives hot
• Direct orders: put a WhatsApp number or QR code in every packet; offer loyalty discounts
• Tiffin and subscription plans for offices and students give steady daily volume
• Multiple brands, one kitchen: run 2–3 menus (e.g. biryani, rolls, thali) using shared ingredients

Funding

A cloud kitchen fits a Mudra Kishore or Tarun loan. See MSME Loan Options.

Common Mistakes

• Choosing a cheap location outside the high-order delivery radius
• Huge menus with too many raw materials, which means wastage
• Depending only on heavy discounts to get orders
• Not tracking food cost per dish

Common Questions Can I start a cloud kitchen from home?

Small home kitchens can register with FSSAI and sell, but aggregators and local rules may need a proper commercial space as you scale.

How much commission do Swiggy and Zomato charge?

It varies by city and agreement. Many restaurants pay roughly 18–30% including fees. Read your contract carefully.

How long to break even?

Often several months. It depends on how fast you reach steady daily orders and control costs.

Disclaimer: Costs, commissions and rules are indicative and vary by city and platform. Confirm licences with your municipal body and FSSAI.