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A Guide to Ghost Kitchens and Virtual Restaurants in 2020

Restaurants

A Guide to Ghost Kitchens and Virtual Restaurants in 2020

March 25, 2020

ghost-kitchen

Food delivery is on the rise in America. With the options of apps and websites, long gone are the days when you would have to pick up a phone to place an order. More Americans are opting to eat their food at home as digital ordering and delivery have grown over 300% faster than dine-in customers since 2014. 

What We’ll Cover in This Guide:

The increase in delivery is excellent for business, but when you’re trying to balance priorities in your kitchen between dine-in and take-out, operations can get tricky. To help ease the pressure on their kitchen staff, many restaurants are turning towards ghost kitchens to help them keep up with the increased demand for delivery food.

What Is a Ghost Kitchen?

A ghost kitchen – sometimes called a dark kitchen – is a kitchen that only cooks food made for delivery. There are no tables, and no guests come into the store to order. If there’s a space to wait, it’s usually only for the delivery driver to pick up an order. Instead, cooks will pack up all of the meals for delivery. 

Ghost kitchens provide a space for companies that want to offer delivery for their customers but don’t have space to expand for the increased demand. A ghost kitchen might focus on cooking for only one restaurant, but others will prepare for multiple restaurants, providing a variety of foods for different concepts.

What Are Virtual Brands

One idea that takes advantage of ghost kitchens is virtual brands. A virtual brand is essentially a restaurant that doesn’t have a brick and mortar location. Their business operates online through the use of online orders and orders through delivery apps.  

Virtual brands might be a spinoff of other restaurants. If your restaurant has an excess of food leftover, you might be able to use that to offer a different style of food. This new style would open up an additional line of revenue for you. Using a virtual brand to provide this food would allow you to use you to operate as a new entity without having to open up a brick and mortar location. 

For example, if your location serves only Mexican food, you can expand your business by opening a virtual brand that serves hamburgers. The only difference is that your virtual brand would only serve burgers via delivery and not dine-in.

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What Are Virtual Restaurants?

Suppose you don’t want to go all out and create an entire virtual brand, but you still want to get in on the delivery hype. A virtual restaurant might be more suited to your needs.

A virtual restaurant will allow you to operate under the same restaurant identity, but the only difference is you have special orders that you only offer for delivery. 

Perhaps your restaurant is more upscale. You cater to elegant evening dinners or a fancy business lunch. You might realize that there’s a market for a smaller (and cheaper) lunch-sized portion of your meals. By opening a virtual restaurant, you can have those lunch portions delivered directly to your customers in their offices and homes without affecting your day to day operations.

virtual-restaurant

Who Uses Ghost Kitchen?

Many popular restaurants are toying with the idea of moving towards ghost kitchens, and some have already started. Chick-fil-a has already partnered with the leading ghost kitchen provider, and Wendy’s has been toying with the approach as well. The midwestern supermarket chain Kroger has partnered with ClusterTruck – an Indianapolis-based ghost kitchen – to expand their delivery services as well. 

As delivery continues to increase in demand, and services like Grubhub and UberEats take off, more popular brands will be turning to ghost kitchens to help them meet needs.

What Are the Benefits of Ghost Kitchens?

1. Online orders increase in revenue

As mentioned above, the demand for delivery is booming. Over half of restaurant orders from Millennials are for either take-out or delivery. If you’re not offering take-out as part of your business, that’s a huge missed opportunity. Being able to provide delivery services 

2. No need for a physical dining room

A physical dining room will come with its own set of problems and expenses. If you were to open a physical dining room, you’d have to fill it with seats, tables, decor, and other things that typically wouldn’t be top of mind. You would then need staff to clean the area and engage with customers. By not having a physical dining room, you can focus more on the quality of the food and less on the atmosphere of your space. 

Without a dining room to worry about, you can instead focus on getting more employees to deliver your food. As delivery is the backbone of your business, you’ll want your employees focused on what drives your revenue. s

3. Restaurants can be more agile

A dark kitchen will help your restaurant keep up with the influx of your delivery orders. At a typical restaurant, chefs cook delivery and dine-in meals in the same kitchen. This process can be confusing as they might plate some carry out orders. There’s more staff in the kitchen as an employee will be gathering to-go orders while others are preparing meals for the in-house customers. 

By using a ghost kitchen, your kitchen staff can focus on what’s there. Fewer people in the kitchen means that fewer people are getting in the way. Your team can concentrate and deliver exceptional service to dine-in patrons. 

4. Short-term commitment

When you use a ghost kitchen, you can change your menu items on the fly. This flexibility will give you the option to test different menu items. If you’re trying out a few different options to see what would work best, you don’t have to worry about printing out new menus or updating your signage boards. Update the description on your website or app, and you’re good to go. You can make these updates in a matter of minutes compared to the time it would take for printing. 

Similarly, you might be toying with the idea of opening up a brick and mortar store. A ghost kitchen will give you the perfect testing ground to see if there is a demand for your product before you commit full-on. Sure, those Minnesota style fish tacos might sound good on paper, but this will allow you to see if they play out as well as you think. 

5. Cutting-edge technology

As technology continues to advance, food ordering progresses as well. Many of the companies that operate ghost kitchens tend to fall in the tech category. Their operations rely on excellent customer experience – that’s the experience from the restaurant they’re cooking for and the client that receives the food. To keep everyone happy, these companies will continuously be working to improve the technologies that they use.

What Are the Cons of Ghost Kitchens?

1. No dining room

The entire concept of a ghost kitchen is to not have a physical location that a chef or brand is tied down to. While the benefits of not having a dining room have been previously stated, it also means that the virtual brands, chains, and chefs using dark kitchens will still need figure out how they will serve their food creations to their customers.

2. Fees of third-party apps

A downside of turning towards ghost and dark kitchens is the fees that you’ll get from the use of third-party apps. Each of the companies that you partner with will want to take their fair share. Costs can vary by city, but the more popular companies like Grubhub, Uber Eats, and DoorDash can take up to thirty percent of the final customer check. These fees can put a serious ding in your profits. 

3. Gentrification of communities

Ghost kitchens also have the potential to impact communities. As more real estate developers begin to look for locations where they can build these dark kitchens, run-down buildings seem like a perfect opportunity to start from scratch.

However, as these companies begin to take over these neighborhoods, they need to realize that revitalization doesn’t happen in a vacuum. As the business starts to grow and improve, it will attract other companies as well. Development of the neighborhood will start, and soon the lower-income residents of the communities will be priced out of their homes.

benefits-of-dark-kitchens

Who Are the Major Ghost Kitchen Companies?

As ghost kitchens have emerged as an option for delivery, entire companies have emerged from the need. 

  • CloudKitchens is a ghost kitchen company with substantial investment from former Uber CEO Travis Kalanik. The company totes itself as offering a smart kitchen for delivery-only restaurants. 
  • Kitchen United is a Pasadena-based dark kitchen that has attracted the attention of Google Ventures, which has invested $10 million into the company. With eight ghost kitchens throughout the united states, the company plans to expand to fifteen by the end of 2020.
  • UberEats opened its first ghost kitchen in 2019 in Paris. They have since opened more kitchens throughout Europe – but have yet to expand its dark kitchen service in the US.
  • Zuul Kitchens is a ghost kitchen in New York City’s SoHo neighborhood. As of 2019, they’ve opened nine separate kitchens.

Is a Ghost Kitchen Right for You?

Whether you’re wanting to start delivery or find a way to streamline your operations, a ghost kitchen might be just the thing you need. 

So next time you place your order for delivery, remember that while the food is still the same, it might have been cooked in an entirely separate kitchen from the restaurant that took your order. In some cases, there might not be a restaurant at all. 

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