How to Start a Food Delivery or Cloud Kitchen Business in India: Licences, Costs and Unit Economics

Food delivery has grown fast in Indian cities, and cloud kitchens, which cook only for delivery with no dining room, let small operators start with far less capital than a restaurant. But thin margins, platform commissions and strict food regulations mean many fail. This guide takes you through the licences, the costs and the numbers that decide whether a kitchen makes money.

Business models

Licences and registrations

• FSSAI: every food business must have a registration or licence under the Food Safety and Standards Act, depending on turnover. Small operators with annual turnover under a set limit register, and larger ones need a state or central licence. Apply through the FSSAI portal, and display the licence number on invoices and menus.
• GST registration: required above the turnover threshold, and for those selling through aggregators in many cases. Restaurant services have a specific GST rate and conditions on input credit, so ask an accountant. Our GST guide covers the arithmetic.
• Local municipal and fire permissions, trade licence and a shop and establishment registration where applicable.
• Business registration and bank account in the business name.

The cost of getting started

Costs depend heavily on the city and scale, so get written quotes and plan a working-capital cushion of at least two to three months of fixed expenses. Use the EMI calculator if you borrow for equipment.

Unit economics of one order

Take an order with a value of ₹400 on a delivery platform. These are illustrative assumptions.

That contribution has to cover rent, salaries, utilities, software and marketing. If your fixed costs are ₹90,000 a month and the contribution is about ₹120 per order, you need roughly 750 orders a month, or about 25 a day, just to break even. Test your own numbers with the break-even calculator and food cost calculator. If the numbers do not work, change the menu, raise prices, lower waste or build direct orders.

Design a menu that works for delivery

• Choose dishes that travel well and taste good after 30 minutes in a bag. Fried and very saucy items often arrive poorly.
• Keep the menu small, with 15 to 30 items made from a shared set of ingredients to reduce waste.
• Price each item using its recipe cost. Our recipe servings scaler helps scale recipes and costs.
• Create combos to raise average order value.
• Standardise recipes and portion sizes so that quality stays consistent.

Quality, hygiene and ratings

Ratings decide your visibility on platforms. Pack neatly, use tamper-evident seals, keep hot food hot and cold food cold, label allergens and handle complaints politely and quickly. Follow FSSAI hygiene rules for staff health, storage and cleaning, and keep records of temperatures and supplier invoices. Poor hygiene is a legal and reputational risk.

Getting customers

1. List on the main delivery platforms with excellent photos and descriptions.
2. Build your own channel: a messaging number or website for repeat orders, which avoids commission.
3. Run local social media content and tie-ups with offices, hostels and housing societies.
4. Offer subscriptions or meal plans for regular customers.
5. Ask for reviews and respond to every complaint.

Common mistakes

• Underestimating commissions, discounts and packaging.
• An overlarge menu that wastes ingredients.
• Skipping licences. Penalties and platform removal are serious.
• Ignoring wastage and portion control.
• Scaling to several outlets before one kitchen is profitable.

Rules, fees and commissions change, so verify the current FSSAI, GST and platform terms before you commit funds.

Frequently asked questions

Do I need FSSAI for a cloud kitchen?

Yes. Every food business needs a registration or licence depending on turnover.

How much do delivery platforms charge?

Commissions vary by platform and plan, often in the range of 15% to 30% plus other charges. Check your contract.

What is a good food cost percentage?

Around 28% to 35% of selling price for many kitchens, depending on the menu.

How many orders do I need to break even?

Divide fixed monthly costs by the contribution per order. Work this out before you start.

Is a cloud kitchen cheaper than a restaurant?

Usually yes for setup, since no dining area, but commissions and competition can be high.

Can I start from home?

Possibly, with the right licences and local approvals. Check the rules for home food businesses.

Last reviewed 8 November 2026. Rates, limits and rules change, so confirm figures with the official source before you act.