What is a Ghost Kitchen?It goes by many names: ghost kitchen, delivery-only kitchen, virtual kitchen, cloud kitchen. No matter what you call it, the ghost kitchen concept has become nearly inescapable in today’s foodservice landscape—they’re even popping up in Walmart. Though ghost restaurants started becoming trendy prior to the COVID-19 pandemic, it was only during 2020 when these delivery-only restaurants really started to skyrocket in popularity. According to a recent report by CBRE, ghost kitchens could account for as much as 21% of the restaurant industry’s total profits by 2025. That’s big business. So what is a ghost kitchen exactly? Let’s take a closer look at what they are, how they operate, and what their impact will be on the industry going forward.
ghost kitchen noun
gōst · ki-chən
Definition of ghost kitchen
1: a commercial kitchen, often shared by multiple restaurant brands, whose sole purpose is cooking food for delivery, rather than dine-in
Benefits of Opening a Ghost Restaurant
There are numerous reasons why the ghost kitchen concept is making such an impact on the foodservice industry. Ghost kitchens are popping up in cities with dense populations due to the limited space for storefronts and rising rent costs. Business owners are beginning to open and test their concepts with lower risk using a virtual model, and many have begun to partner up with third-party delivery companies like Uber Eats and Postmates to set up ghost kitchens in their home cities. Here are some more benefits to opening a ghost kitchen:
Lower Overhead Costs
With rent costs increasing every year, business owners are looking for non-traditional buildings to create these delivery kitchens. Spaces without a traditional storefront are typically less expensive or can be placed in less desirable locations to save on rent. Plus, ghost kitchens don’t require a front of house, so the square footage (and subsequent rental costs) are much lower.
Many ghost kitchens are run by third-pary operators—whether that’s a delivery company like DoorDash or a tech startup like CloudKitchens, the latest brainchild of Uber founder and CEO Travis Kalanick. In these cases, multiple virtual brands can operate out of the same ghost kitchen space, all utilizing the same equipment, cooking staff, and delivery drivers. In addition to saving substantially on rent (most third parties charge the brands a monthly subscription fee instead), these operations allow restaurateurs to cut startup and labor costs, as well.
Due to their inherent space and labor constraints, virtual kitchens typically offer a much more streamlined menu to customers, too. This means ghost kitchens don’t need to spend as much as traditional restaurants on food costs either.
The foodservice industry is constantly changing and evolving, and the 2020 pandemic only accelerated its evolution. In addition to allowing restaurants to continue operating during the shutdown, delivery-only kitchens can also help businesses adjust when food prices increase, supply-chain issues hamper operation, and customer tastes change. This adaptability can give ghost kitchen owners the opportunity to quickly meet new customer demands and industry regulations.
Even before coronavirus, delivery was trending upward in popularity. Customers are increasingly looking for quality food delivered conveniently to their doors. Delivery-only kitchens allow you to more easily prepare and deliver fresh food to these customers that don’t want to venture out of their homes. This type of kitchen allows you to dedicate your time, ingredients, and labor completely to delivery— giving customers the convenience they want without sacrificing quality.
Easier to Scale and Innovate
If you’re frequently inspired to make changes to your menu or business, a delivery-only kitchen may be the perfect solution. This virtual model allows you to test out new dishes, or even entire cuisines, before adding them to your full-time menu. It also allows you to optimize delivery by temporarily testing it out in new markets via a ghost kitchen.
Let’s say that you already have a traditional restaurant that serves customers. Why should you care about the ghost kitchen concept? This business model can act as a valuable extension of your existing restaurant, giving you the chance to serve another demographic of customers—be they folks outside your current location or those that prefer delivery to dine-in. As an added bonus, many third-party ghost kitchen operators collect valuable data on consumer preferences, location performance, and menu item popularity that can inform your future business decisions.
Ghost Kitchen Tip: Make sure to stock up on disposable dinnerware and takeout containers!
Is the Ghost Kitchen Concept Here to Stay?With nearly 100,000 ghost kitchens already available on third-party apps, it seems like ghost kitchens are here to stay. For now. With the state of the restaurant industry still influx due to COVID-19, ghost kitchens are bridging the gap between normal operation and our not-too-distant pandemic past. These virtual kitchens allow businesses to actually stay in business as the foodservice industry deals with pandemic-inspired pitfalls ranging from new safety regulations and capacity caps to labor shortages and supply-chain delays.
Those current industry obstacles aside, delivery-only kitchens might become a permanent part of the restaurant ecosystem for another reason. Billions of dollars in capital have already been invested in this concept. Tech entrepreneurs are eyeing ghost kitchens as a new way to collect and profit off of customer data and analytics. While every other major player in the food game—from Guy Fieri to Applebee’s and IHOP—is experimenting with the virtual concept to see if it spells success for their brands.
Will ghost kitchens eventually scare away their dine-in competition? Probably not. There will always be a demand for the service and socializing involved in the traditional restaurant experience. However, ghost kitchens will continue to offer foodservice entrepreneurs a more affordable and innovation-friendly alternative for the foreseeable future.
Read More About Restaurant Trends
- How Home Meal Kit Service Can Boost Your Restaurant’s Bottom Line
- How Restaurants Can Adjust to the Post-COVID Labor Shortage
- What’s Next: 6 Emerging Trends for Restaurants Resuming Dine-In Services During COVID-19
- Contactless Hiring in the Service Industry
- Plant-Based Restaurants: The Future of Sustainability (and Profitability)
Kelsey Moriarty is a Content Specialist at Central Restaurant Products. Her focus at Central is in the Food Prep and Furniture areas. Kelsey’s background is in technology and marketing with particular experience in SEO and E-Commerce. She enjoys helping customers make better decisions as well as working on her copywriting skills!