Ghost kitchens haunt the 2020 top trends list

The market for online restaurant food delivery is expected to reach $200B in the next five years, growing 300% faster than dine-in over the last five years. It’s no surprise restaurants are looking for ways to increase their presence in the delivery business. Ghost kitchens are the perfect way to test the waters—just ask industry giants like Halal Guys, Chick-Fil-A, and P.F. Changs who are exploring delivery in areas far from their nearest brick and mortar store.

So what are ghost kitchens?

Ghost kitchens are locations with no front-of-house. They don’t have tables or take-out. They are stripped down and focused completely on producing high-quality food in the kitchen, passing that food to delivery staff, and getting it to your front door. Think of them like a shared-space for restaurants. It’s easy to start small. There’s a low capital investment, fewer resources needed to get up and running, and there are other businesses in the same space, doing the same thing. They’re usually located in areas with cheap real estate near high concentrations of people and retail.

Companies that offer turn-key ghost kitchens are popping up all over the globe. DoorDash, Kitchen United, CloudKitchens, Reef Technologies, and Zuul Kitchens in the United States, Keatz, Karma Kitchen, and Deliveroo in Europe, Kitopi in the Middle East, and Rebel Foods and Swiggy Access in Asia.

Why do restaurants like ghost kitchens?

Test new concepts and locations with low commitment

Want to flex your creative muscles and try out a new cuisine or concept? Whether you’re looking to pivot from your established brand or you’re looking to break into the business, ghost kitchens give you an easy entry point.

Enterprising chefs and restaurateurs aren’t limited to just expanding their brick and mortar concepts. Many are creating delivery-only virtual brands to test new concepts. This might mean using excess supplies from a salad-focused brick-and-mortar brand to make a taco-focused virtual brand.

Some aren’t stopping at just one virtual brand either! Some spin up multiple concepts, creating a virtual food hall from one kitchen or multiple kitchens. The concepts can span anything from Thai to Southern to New York Deli style foods.

Despite being so different, they can use the same products to cut down on waste without cannibalizing from each other. Each one of these concepts can serve as a test or another way to generate new business. They give owners the ability to push each brand to become the top of the market for their category. With a wide range of choices, owners are more likely to capture a customer looking for a specific dish.

Opening ghost kitchens offer some brands the opportunity to introduce themselves to new markets. This can just mean expanding a delivery range in a local market, or it may mean introducing a brand to an entirely new neighborhood, city, or state. Some have used this as a way to generate buzz before a brick-and-mortar launch.

Financials

Starting a ghost kitchen has much lower upfront costs than a traditional brick-and-mortar. There are fewer employees and less square footage. Instead of pouring cash into construction, furniture, and decor that creates a vibrant in-person guest experience, all funds are focused on the kitchen, back-of-house staff, and creating a menu and packaging optimized for delivery.

When restaurants choose to bundle virtual brands together in the same physical space, sharing ingredients, equipment and staff save even more cash.

Prioritize the delivery experience

Ghost restaurants also allow owners to prioritize their delivery services. Some brands like to use their own delivery staff, while others are partnering with third-party food delivery services like Seamless, GrubHub, DoorDash, and UberEats.

By creating delivery-only locations, space can be optimized in both the ghost kitchen and their brick-and-mortar location. Each space can be set up to handle in-person and delivery to best suit each function without the other suffering.

Experiential marketing for non-hospitality companies

Ghost kitchens can give traditional marketers a new edge. Partnerships with chefs and restaurants can allow large companies, tv shows, and movies to reach consumers in a whole new area. This kind of experiential marketing gives brands a unique and memorable way to engage with their potential audience and create an immersive experience, appealing to a new sense.

Imagine if a cosmetic brand with ‘cupcake pink’ lipstick and ‘birthday cake’ foundation could offer dessert delivered from ghost kitchens in their distribution areas. Or if a new TV show set in Japan could offer the dishes characters on the show eat, as well as classics like ramen and sushi.

What do guests think of ghost kitchens?

Guests love them too! 68% of people who order takeout orders at least three to four per month and 30% say they usually purchase more food when ordering takeout than when they dine-in. The rising popularity of delivery shows guests like to eat in the comfort of their own homes without waiting in line. Online ordering allows guests to personalize their order, letting them control exactly what they’re eating and when it will arrive—within reason.  They can also try restaurants, foods, and concepts that are outside their neighborhood, city, or even state. It’s all the benefits of a private chef on a small budget and a much more casual wardrobe.

What could possibly go wrong?

Marketing

While there is less cost associated with a ghost kitchen, it’s missing one big piece of marketing—the free advertising a storefront offers. The value of walk-in traffic can’t simply be dismissed. Ghost kitchen operators will have to work extra hard to market the concept and gain loyal patrons.

Reliance on third-party delivery

If you don’t plan on handling delivery yourself, you place the fate of your business in the hands of the delivery service(s) you use. Setting up contracts with fair terms and conditions is important in the short term, and making relationships with multiple vendors in the long-term. Diversifying your distribution plan will leave you less vulnerable if your relationship with one delivery service hits a rocky patch.

These services also retain something important—your customer data. They’re already leveraging purchasing data to partner with restaurants on their own ghost kitchens. This information is valuable and while they may choose to partner with you, it may not always be used to help you.

May not be best for guests

While some patrons may prefer to have personalized meals without changing out of their pajamas, others rely on the public spaces offered by restaurants. A cup of coffee and a warm place to sit can make a world of difference for seniors looking to socialize, workers waiting for a meeting or shift to start, or young adults looking for a place to get together outside their house.

Your dishes and packaging isn’t delivery friendly

Some dishes are knock-outs at a dine-in spot but are a flop when delivered—like french fries. While there’s a hopeful future for french fries, your food may not fare so well. Make sure to test the food you have—your ghost kitchen may need to limit the menu to foods that deliver well. You can also reduce your delivery range to help ensure patrons always get a quality dish.

It’s not just your food. You’ll want to make sure your packaging retains heat, doesn’t disintegrate with moisture, and still complies with local laws.

So how do I start a ghost kitchen?

Start with location and staff. Establishing your location can be as easy as partnering with a ghost kitchen provider in your area. Ghost kitchens are a growing trend—while they may not currently be in your area, they could be soon! Keep an eye out and an open mind. You never know what kind of new options may become available.

As for your staff, use on-demand staffing! We’ve worked with a number of ghost kitchens and commissaries to provide this kind of staffing. You’ll be able to trial your new brand or brand extension without having to go through the recruiting and onboarding process for an entirely new staff. You’ll reduce costs and liability as well. If demand skyrockets, you’ll be able to hire extra staff seamlessly, in as little as two hours in advance.