Sky Kitchen:A New Business Model for SMB Restaurants

Inspiration

Over 15,000 restaurants closed during the wake of COVID-19. We grew up eating from the local Korean restaurants in our respective cities, frequenting our favorite small restaurants with friends in college, and more. It deeply saddened us to see so many restaurants close - primarily because restaurant owners could not keep up with the costs of operating. Our goal was to diversify the risk and prevent fear from demotivating entrepreneurs with a passion for food.

What it does

Our model lowers the startup costs for individual restaurants. The Sky Kitchen is a space where a third-party investor fronts the cost of the space, technology, marketing, and basic costs. There are four kitchen spaces and a rotating pop-up store in the front. Four restaurants sign on for a year-long contract where they pay a monthly fixed fee +3% of their profit to the third-party group. The restaurants primarily focus on food delivery but every three months, one of the restaurants can use the pop-up space in the front to test their business model. Costs are significantly lower than if each restaurant was to go through a traditional restaurant model. It allows for failure without tremendous losses.

How we built it

Our focus was based on market research on existing consumer segments that matter to restaurants right now. We quickly found out that city millennials ordered a lot of delivery - both before and during COVID-19. Therefore, the model was built focused on delivery - a model that could survive another pandemic The execution plan is in its infancy but there would be a pilot launch and post-pilot evaluation to fuel the growth of Sky Kitchens.

Challenges we ran into

Determining the financial risk/reward for individual restaurants to sign onto a Sky Kitchen where they might not have full autonomy.

Accomplishments that we're proud of

Focusing on the restaurants first - in our market research, business plan development, and in our financial analyses.

What we learned

Individuals don't start restaurants slowly for profit. They want to share their love of food with the world because food is a universal language.

What's next for Sky Kitchen:A New Business Model for SMB Restaurants

We want to help local restaurants that are simply learning how to use technology to fuel their business now - regardless if we can find a Sky Kitchen investor or not.