A ghost kitchen (sometimes also called a “ghost restaurant“) is a foodservice operation that is meant for delivery only. In other words, these businesses have no dining room. In many cases, you cannot even do carryout from these businesses. It is a delivery only business and it is tightly aligned with new online food delivery services.
Why Would I Want to Start a Ghost Kitchen?
The primary advantage is cost. Without a dining room, you have a lower operating cost. No dining room means no waitstaff which also lowers expenses.
2018 revenue from online delivery is already set to double from 2016 levels
And without the need for eat-in seating, the typical footprint of a ghost kitchen can be much less than that of a standard restaurant. In addition, ghost kitchens need not be as concerned about their physical location as a traditional eatery. They can be located in lower rent areas and smaller spaces, thus saving even more.
So while cost savings are a great benefit, perhaps the real driver is the forecasted growth of the online delivery market. Although various sources report different numbers, one thing they all agree on is that the food delivery market is growing rapidly. Statistics aggregator Statista reports that 2018 revenue from online delivery is already set to double from 2016 levels.
And we are not just talking about pizza either. CNBC reports that diverse cuisine styles are strongly correlated with growth.
“Cuisines outside of pizza and Asian are handily outpacing the traditional delivery staples,” the analysts noted.
Bonus Question: What’s a Delivery Aggregator?
Food delivery is nothing new. Who hasn’t had a pizza delivered at this point? But in traditional food delivery scenarios, you typically call the specific restaurant you want to order from to place your order. With the advent of the internet, now you can do that online through a central website, but you still must select the specific location you wish to order from.
A delivery aggregator is a service that allows a customer to order from multiple restaurants in a single order. Services like Grubhub, Seamless, DoorDash, Amazon Restaurants, Uber Eats, and many others are delivery aggregators.
Restaurants can participate in several delivery aggregator programs simultaneously. Customers order through the delivery aggregator’s app or website. The order is transmitted to the restaurant. The order is then picked up by the delivery partner and delivered to the original customer.
Restaurants pay a fee to the delivery aggregator to be included in their service. Beyond just the delivery service, some of the delivery aggregators offer marketing support by promoting participating businesses.
So while your local pizza joint may hire its own drivers, a delivery aggregator does that for multiple restaurant businesses. And there are additional cost savings because the restaurant is not employing its own drivers.
As you might imagine, this is an ideal scenario for a ghost kitchen operator.
Beyond Home Delivery
Ghost kitchens can do more than just deliver food to customers’ homes. As other businesses look for ways to cut their own costs while still retaining services, a ghost kitchen can help fill in the gaps. For example, imagine a bar that would like to offer food to its customers as a way to extend their stay (and hopefully purchase more drinks). The bar could partner with a ghost kitchen to do its food prep and have the food delivered to the bar patron. This can be done so seamlessly that often the customer doesn’t even realize that their food is not being prepared on site.
This same scenario can work for smaller hotel properties that do not want to incur the expense of maintaining a room service food preparation operation.
Look for more of these types of arrangements as businesses look to shift costs to maintain profitability without sacrificing services.
Because ghost kitchens are not limited to the number of seats available in a dining room area, they can experience much higher volumes than a typical eat-in restaurant. This is especially true if the operation services multiple other businesses or participates in multiple delivery aggregator services.
Since there are cost savings in eliminating some staff and other costs associated with eat-in dining, the operator of a ghost kitchen may invest in higher capacity equipment or more durable equipment as it may be used more than if the kitchen were producing for just a single eat-in restaurant.
The concept of the ghost kitchen also allows operators to experiment with combining multiple cuisine types in a single kitchen operation. This could require specialty equipment depending on the types of cuisine offered.
And because none of the food is consumed on premises, the kitchen design must account for both heated and cooled holding cabinets or other solutions to store orders awaiting pickup and delivery.
Finally, the ghost kitchen will need to consider its choice of disposable products to be used in a delivery business. This includes your standard food & drink containers, napkins, and disposable flatware. But they may also need to consider newer categories of disposables such as tamper-evident bags or other packaging that help to build customer trust that their food is delivered in a safe and uncontaminated manner.
Bringing It All Home
Ghost kitchens are poised to take advantage of the steadily growing food delivery trend. With their smaller physical footprint, lower cost model and cost savings from eliminating eat-in dining, ghost kitchens are almost certain to become more prevalent in the not-so-distant future.