A Ghost kitchen is a food preparation facility that operates to cater delivery orders only. They don’t have waiters, a dining room, and no parking lots. It is a commercial kitchen having all the cooking facilities set up to fulfill only online orders from customers.
A ghost kitchen is sometimes also called a virtual kitchen, delivery-only restaurant, shadow kitchen, commissary kitchen, cloud kitchen, or dark kitchen.
Ghost kitchen relies majorly on third-party delivery apps to receive orders. As ghost kitchens don’t have any dine-in facility, the expenses minimize and the only major expenses involved are the rent and some operational expenses.
The adoption of ghost kitchens has accelerated recently owing to the impact of the COVID-19 pandemic on the restaurant business. This acceleration has resulted in a massive market size in the US, which is predicted to reach USD 13.97 billion by 2030.
Ghost Kitchen: What You Should Know?
As mentioned earlier ghost kitchens are commercially designed spaces that operate for food delivery services only. Ghost kitchens are generally established in areas having higher demand. The dishes in these commercial setups are prepared by the staff following the menu and delivered shortly.
The concept of a ghost kitchen is the right mix of technology with the food business. Some successful brands in this space advocate for a strong delivery model to tap onto the profits it offers. Ghost kitchens are believed to create a $1 trillion global market by 2030.
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Why are Ghost Kitchens so Popular?
The most important reasons for the popularity of ghost kitchens are:
- They are cost-friendly to open as compared to traditional restaurants
The only major investment ghost kitchen requires is a customized kitchen set-up. It doesn’t require overhead expenses as required to restaurants like staff salary (dine-in concept), administrative expenses, etc.
- Companies are willing to invest big money in the concept
Owing to the promising and profitable future the concept (ghost kitchens) offers, and the surging demands from the customers, companies are taking keen interest to invest huge dollars in the concept.
- The delivery platform offers a massive crowd to cater
Ghost kitchens rely on third-party food delivery apps to act as a marketing tool. Stats have it, around 60% of US consumers like ordering through apps weekly. With a minimal registration fee, restaurants get massive visibility, which helps in acquiring customers and saving huge marketing costs just to get initial visibility.
- A single kitchen can act as the cooking point for several restaurants
A single ghost kitchen can be the delivery hub of many restaurants. This saves the infrastructure cost (including dine-in, staff salary, decor & more) for all these restaurants
- It’s easy for restaurants to customize menus & add new food items
Experimenting with new dishes becomes easy and cost-friendly because of the digital-only presence of a restaurant. Concepts related to restaurants are also easy to change and implement.
Ghost kitchens earn huge margins on orders via delivery. As compared to traditional restaurants, they don’t have a huge labor cost and have an added cost of delivery fee.
Ghost Kitchen Types and Which One is the Best for You?
The three most popular ghost kitchen categories are:
- Commissary/Shared kitchen
Commissary/Shared kitchen’s popularity comes from the fact that businesses get to share their expenses, which saves them huge costs. According to McKinsey, this popularity will pave the way for full automation of the production of various menu items. Shared kitchens are either owned by an entrepreneur or a third-party company to serve orders. It could either be a hub for multiple restaurants or cloud kitchen brands or both.
Commissary/Shared kitchens are customized commercial food production hubs fitted with kitchen equipment. This concept works wonders in metropolitan areas. Cloud kitchen brands or those looking for a commercial space on a monthly basis can opt for a commissary/shared kitchen.
- Pop-Up Kitchens
Pop-Up kitchens are popular due to their cheaper operating costs and less overhead expense. The concept offers a great opportunity for new (first-time) restaurants and aspiring chefs to build their marketplace initially. The concept is great to try and test new food on the menu. If customers order a particular dish more often, the dish can be added to the regular menu.
A pop-up kitchen is associated with a traditional restaurant but it generally focuses on online orders. The model is suitable for restaurants looking to add more revenue through online orders. Pop-up kitchens got huge popularity in the early part of the pandemic.
- Kitchen Pods
A kitchen pod is an ideal solution for launching a ghost kitchen as soon as possible at a low budget. These pods are basically small (containers) kitchens fitted with amenities required for a ghost kitchen. Kitchen pods may have some limitations depending upon the zoning laws of different areas.
Kitchen pods are cost-effective as they eliminate the overhead expenses of a rented space. They are designed for efficiency and effectiveness but equally require safety measures in the first place.
What are Ghost Kitchen Trends in 2022?
- Virtual food halls
Virtual food halls allow customers to order from different dine-in restaurants through apps. It’s a great offering for customers to browse and order food items from multiple restaurants through a single transaction. The orders are generally served from restaurants working under a single roof.
- Dark kitchen conference
Dark kitchen conferences are multi-day events that feature conferences on upcoming industry trends, the latest restaurant tech, and more. These conferences feature imminent personalities (CEO, CTO, business leaders, etc.) related to restaurants or similar businesses.
- Restaurant SaaS Technology
Restaurant SaaS technology is helping numerous businesses to compete with established brands in the dark kitchen spaces. There are many companies that are offering their services with the right use of technology to offer visibility to newly established brands.
Who Should Start a Ghost Kitchen?
Having a lower upfront and overhead cost, ghost kitchens are the future of the restaurant industry. The concept is still new and that’s why it holds great possibilities too. Not only restaurants can pilot new dishes on their menu, but they can also capitalize on high demand.
This business concept is a lot versatile for those who want to take advantage of a business model that promises huge profits. According to Statista, Ghost kitchens are predicted to hold a 5% share of the takeaway foodservice market.
Following is a brief on who should start a ghost kitchen.
- Small restaurants planning to go big
In case you already have a restaurant and planning to expand, it is a great move to expand through a ghost kitchen. The concept will help to grow your customer base at a much lower risk and cost. This can be considered as an added business vertical without having to expand immensely by buying a new building. The set-up will add efficiency and will help in quick deliveries along with making a new and much-expanded market base for the new establishment.
- Brands & influencers
Influencers and brands keen to make capital out of this thriving business model can try their hands with this concept. This booming food delivery trend involves low upfront costs, which can easily be converted into profit in a short time span. If planned and implemented correctly, ghost kitchen can maximize returns on investment in a little time span.
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- Entrepreneur and chefs
Starting a ghost kitchen involves less investment and therefore risk too. It is an easy and affordable way for entrepreneurs and chefs to try and test their restaurant concept through a commercial setup. It’s true that you may not compete with brands on pricing at first or offer discounts on dishes initially, and match up the cost on marketing and on similar expenses but the concept sure helps to learn all this through a small but effective set-up. Because of the lower risk involved, the majority of aspiring chefs and entrepreneurs are considering ghost kitchens rather than investing in a restaurant setup.
- University area dining
Younger (34% of those aged 18-24) consumers feel more comfortable having their food ordered and delivered on time. As these consumers believe in maintaining a living standard, they can easily help to add a continued flow of revenue to the food business. A ghost kitchen in an off-site location is a great business offering to all these younger people keen to try new food items every now and then.
- Food truck owners
Ghost kitchen could offer great flexibility to food truck owners who often struggle to balance their in-person orders along with food deliveries. While chefs feel frustrated to cope with the orders in a small set-up, customers, on the other hand, need to wait for their orders. By adding some optimization in the already existing business model with the adoption of ghost kitchen, these running trucks can easily balance both the online and in-person orders.
- Established chains
Food chains or commercial set-ups planning to expand into metropolitan cities can too try out the ghost kitchen concept. The rent in such areas is immensely high, which adds to the adoption of a ghost kitchen as a solution. With a large customer base and a great possibility to serve quickly in the 5-mile radius with less staff could easily add to profit margins gained through ghost kitchen.
The Bottom Line
Ghost kitchens are the exciting future of the restaurant industry. The popularity at which the concept is growing is sure to offer expansion to the current restaurant industry.