Ghost Kitchens

 Ghost kitchens—supplemental facilities set up by restaurants to cater exclusively to delivery and takeout customers—have grown to become an incredibly popular model for eateries seeking to make it through the pandemic. Now, there are ghost franchises, too: entire brands specifically developed under a delivery-only business model that can be set up anywhere in the country. 

What are the implications for restaurateurs of the continued proliferation of the ghost kitchen/ghost franchise/virtual concept model? Are these concepts a lifeline for independent restaurateurs, or a liability that serve big brands more than small businesses? 

John Kelly, CEO of Zenreach, the Walkthrough Marketing Experts driving business to brick-and-mortar stores and restaurants believes ghost franchises are going to be the new normal.

Kelly says, “Not all trends that we have seen emerge during the pandemic are going to disappear. Food delivery is one area that will probably level out to a new normal that is higher post-pandemic than pre-pandemic, and that bodes well for ghost kitchens. Good quality food ready for delivery without the costs of the traditional restaurant will have certain appeal to both restaurateur and consumer alike.”  

Kelly goes on to say, “As with most industries, big brand restaurants have certain advantages over independent restaurateurs (name recognition and trust being one key), and those same advantages can certainly apply to ghost kitchens, since diners are more likely to choose from names they recognize and trust.”

I had a chance to email him to learn more.

What are ghost kitchens?

A ghost kitchen is a supplemental prep facility set up by established brick-and-mortar restaurants to cater exclusively to delivery and takeout customers. This model has grown to become incredibly popular for eateries with limited or no indoor seating seeking to make it through the pandemic. 

 

Now, there are ghost franchises, too: entire brands specifically developed under a delivery-only business model that can be packaged for franchisees and set up anywhere in the country. 

 

 

What might consumers need to be aware of in terms of ghost kitchens?

The ghost kitchen model has absolutely exploded in the last year, seeing triple-digit growth that could lead it to develop into a trillion-dollar industry by 2030. Food delivery is one area that will probably level out to a new normal that is higher post-pandemic than pre-pandemic, and that bodes well for ghost kitchens. Good quality food ready for delivery without the costs of the traditional restaurant will have certain appeal to both restaurateur and consumer alike.
 
One advantage of the ghost kitchen model for customers is that the relative ease of setting one up has resulted in an abundance of concepts, which means more options for consumers. Additionally, the money saved by the restaurant operator on overhead and other operational costs could, in theory, be passed on to the consumer. 

 

A key disadvantage for customers is that they miss out on the experience that dining in at a full-service restaurant provides (the well-appointed dining room, the attentive staff, the full bar, etc.).

How can current restaurant owners leverage the idea of ghost kitchens to add to their existing business?

For restaurant owners and managers, it's easy to see the appeal of ghost kitchens. Opening a brick-and-mortar restaurant involves massive up-front risks and costs: typically, an operator has to sign a multi-year lease, hire full front- and back-of-house teams, and invest in additional construction or remodeling. 

 

Ghost kitchens, on the other hand, reduce the costs of real estate, labor, and menu innovation by shifting resources to focus exclusively on off-premise sales channels. Furthermore, the ghost kitchen model obviates the need for customer-facing staff such as servers, expeditors, bussers, etc. In essence, ghost kitchens strip food preparation down to its leanest, most necessary elements. 

As with most industries, big brand restaurants have certain advantages over independent restaurateurs (name recognition and trust being a key one), and those same advantages can certainly apply to ghost kitchens, since diners are more likely to choose from names they recognize and trust. 

 

At the same time, the low cost and relative ease of setting up a ghost kitchen means that the barrier for entry is lower for new and smaller restaurants as well.