The unprecedented boom in food delivery has ushered in an appetizing trend for profit-hungry restaurateurs: the ghost kitchen. Independent of the need for physical dining space, ghost kitchens help food brands gain traction with consumers interested in purchasing meals without the wait or need for a traditional “dining out” experience.
How popular is food delivery? McKinsey estimates the market has tripled since 2017. QSR magazine reports that 53% of adults consider takeout or delivery essential to their lifestyle. Consequently, Euromonitor predicts that the ghost kitchen concept could become a segment of the $1 trillion food industry by 2030. It’s no wonder a report by Technomic and the National Restaurant Association shows that half of restaurant owners have already incorporated a ghost kitchen angle into their real estate. models.
The Burning Benefits of the Booming Ghost Kitchen Concept
There’s no doubt that ghost kitchens present exciting possibilities for existing and future restaurants and brands. Perhaps most important is the ability for restaurateurs to reduce both labor costs and real estate costs. Without the need for hospitality staff, a restaurant can invest money in paying chefs, cooks, and food preparation. This reduces the need for as many employees.
Ghost kitchens are welcome alternatives because they don’t require large footprints or real estate visibility. Many ghost kitchen environments are in remote areas and even industrial parks. They don’t have signage because they don’t rely on foot traffic or branding. Their goal is to do one thing and do it well: fulfill the orders that come through digital sites and apps. That’s it. Especially for restaurant chains with multiple regional locations, merging into centralized shadow kitchens can provide significant cost savings.
Another advantage of the ghost kitchen is that multiple entities can share a single kitchen. For example, some ghost kitchens operate with two or more brands. Other ghost kitchens are actually part of regular restaurant kitchens – the restaurant contracts with other restaurants to help fill orders.
Last advantage, ghost kitchens allow catering brands to test new flavors. As a CNN article reports, Boston Market and Applebee’s are two recognizable restaurants that have toyed with different menu items in ghost kitchens during the pandemic.
How to confidently open a ghost kitchen
If you like the sound of lower overhead and improved profit margins, a shadow kitchen might be the right choice for your restaurant. You will want to maintain a high degree of quality, of course. And if you do, you may find that you can lower the typical entry barriers that come with entering or expanding into the restaurant industry. The first step is to find the right shadow kitchen location to enable agility and efficiency.
Below are some of the main factors to consider when considering the idea of a ghost kitchen for your restaurant or online-only brand concept. Keep in mind that some restaurants are 100% cloud-based, which may appeal to you as a restaurant owner looking to capitalize on consumer inclinations to use third-party delivery apps. However you intend to use your ghost kitchen, take the following attributes seriously.
1. Amenities and functionality
Generally speaking, most kitchens need to be around 300 square feet in order to function effectively. Even though ghost kitchens are skeletal equivalents of conventional kitchens, they should be outfitted with the proper amenities to meet expectations for food storage, preparation, and delivery.
With that in mind, you’ll be on better footing if you know in advance which kitchen equipment is “nice to have” versus “necessary.” Remember, there must be enough space for delivery drivers to pick up orders and for vendors to restock quickly. Having a list of must-have features will reduce your chances of picking the wrong location for your ghost kitchen.
2. Location, location, location
It may sound trite, but it bears repeating: location matters, even when setting up a non-traditional ghost kitchen. Granted, your ghost kitchen doesn’t have to be in a social center. But it must be accessible to delivery drivers and your target customers.
If possible, try to pitch a ghost kitchen within three to five miles of potential buyers. Be sure, however, to assess the saturation of your competitors before signing any leases or contracts. And make sure you’ve differentiated your concept from what’s available via the surrounding ghost kitchens.
3. Cost analysis
Ghost kitchens don’t need house decorations, signage, tables, chairs, and cutlery. And your rent will be lower because you won’t have to move to busy city centers. Nevertheless, you cannot assume that you will be profitable sooner rather than later until you do a cost analysis.
While putting together your cost analysis, weigh the ups and downs of various scenarios. Would it be helpful if you shared a ghost kitchen with another restaurant? Or have you worked with an existing physical restaurant to cater to a limited number of menu items? Do you want to own the shadow kitchen lease or sublet it to another party? If you’re leaning towards the latter, you’ll find plenty of businesses willing to sublet their space to delivery-only restaurants.
Ghost kitchens aren’t entirely new. They’ve been there for a while. However, they are having their day and changing the way restaurateurs view their restaurant’s strategy and real estate needs. If you’re not entirely sold on a ghost kitchen opening, give it a second, thorough look. After all, it’s a concept that spices up the food industry.