Ghost Kitchens – what you need to know
Don’t be spooked by the name. Ghost kitchens are a profitable option for many foodservice operators in today’s rapidly changing food service climate.
What is a Ghost Kitchen?
Ghost kitchen or ghost restaurant simply means a restaurant with only a kitchen, no dining area. But you may have heard them called other names – cloud kitchen, dark kitchen, virtual kitchen, commissary and even shadow kitchens. Essentially, they are all the same thing.
With no front of house, like a good mullet, the party is in the back. Just without the customers walking through the doors.
Obviously, that mean these kitchens specialize in delivery, takeout, curbside or drive thru or even a combination.
Why are ghost kitchens increasingly popular?
Even before the covid-19 pandemic, there has been an increased demand for takeout and delivery from restaurant businesses. To fill the need, ghost kitchens have already been embraced by many operators. And for good reason. When the number of seats or the number of turns are not limiting factors, sales can increase.
Right now, remaining profitable in an ever-changing market has chefs and business owners looking for other options. Ghost kitchens are a solution.
Benefits of a Ghost Kitchen
For many, the lower start-up costs are a major plus. Without a dining room or the need to impress guests visually, the initial outlay of money is reduced - no tables, chairs, décor, lighting and curbside appeal. Not to mention real estate costs. It's also easier to start small.
The nature of a ghost kitchen, meaning no in-house dining, reduces labour requirements as well.
Carefully planning the menu can give you a tighter control on food costs. Which can lead to increased margins.
With more flexibility and lower start-up costs, operating a ghost kitchen typically has reduced risk.
When you are working behind the kitchen door, it’s much easier to switch up the plan. Even on the fly if necessary. Maybe you have a menu where only half the offerings are working, cut the out. The cost of an ingredient skyrocketed? Change it out.
With flexibility comes the opportunity for creativity. In brick and mortar restaurants with printed menus, set décor and feel, it’s not as simple to go out on a limb with a new idea. Think of it like having an alter ego without the need for a costume change.
Maybe you have a brand new concept in mind that is outside your core menu. Without needing to build a brand new business, chefs can experiment and offer a different selection of items from the same kitchen.
Challenges of a Ghost Kitchen
Cost of delivery
Depending on the model you use to get the food to the customer, cost of delivery can eat away at your bottom line. With either in house delivery or using a food delivery service ensure you include all factors when setting menu prices.
When it takes seconds to get from the kitchen to table, the possibilities for visual appeal and maximizing the quality of your dishes is simple. But when you package for pick up or delivery for who knows how long, quality can suffer. An optimized menu is the only option. Customers demand quality food, at all times.
If you have an existing restaurant brand and customer base, moving to a ghost kitchen model is more seamless. However, starting fresh without existing customers, it can be difficult to gain traction without a smart marketing strategy. There is a lot of noise out there, and you must stand out.
Who should operate a ghost kitchen?
The business model for a ghost kitchen isn’t for everyone. To know if a virtual restaurant would work for your business, ask yourself some questions.
Even if you have an existing restaurant, is your physical location necessary? Do you require and thrive on the foot traffic? Does your dining room have wasted space? Meaning, do a large portion of your patrons already order takeout and delivery?
Real estate prices of high foot traffic locations might not be manageable for a foodservice business that already has very tight margins. A location that does not need a store front can operate from a lower rent neighbourhood. As long as you can still reach your core customers within a reasonable delivery time and maybe even access some new communities.
Food trucks can benefit from a stationary kitchen, allowing for efficient prep and increased storage capacity.
Starting small and building up your business is simpler when you don't need a long term commitment. Or maybe your current kitchen is too small to meet the demand for delivery.
Where to set up a ghost kitchen?
Anywhere and everywhere. But not all ghost kitchens are the same. Shared-use kitchens, community kitchens, existing restaurants or starting a new ghost kitchen. Depending on your plan, you may have multiple options.
Offering breakfast and lunch only? Why not pair up and share kitchen space with a dinner only concept? If you want to try out your delivery only restaurant and not commit long term renting from an existing restaurant kitchen could benefit both parties.
Location is still important, but not for the same reasons as a brick and mortar version. Owning or leasing aren’t the only options. Renting or pay per use may be feasible with your concept.
Without the need for foot and drive by traffic, real estate options increase. But keep in mind your customer base either existing or expected. Your orders need to get to your customers in a reasonable amount of time if you are only offering delivery or need to be accessible by third party delivery people and your customers if curbside, drive thru or pick up is part of the plan.
How to operate a profitable ghost kitchen concept?
Menu optimization - Set your menu for the business you have now. That means food that travels well, can be prepared with fewer staff and minimizes food costs - what works for a dine in restaurant menu, may not translate well to off-premise consumption. Intricate and fragile menu options, while beautiful and awe inspiring, don’t travel well.
Digital/Online Platforms - without big and bold signs, foot traffic nor the enticing aromas pulling customers in, your digital appearance is your draw. The same care and attention that you pay to the store front and feeling and décor of a physical space needs to come through online. Sell them by sight, using quality images of your menu offerings. That also means being continually engaged with your customer base.
Transportation – how is your menu being transported? Are you going to handle the deliveries? Through delivery apps or delivery companies?. Can your customers come and pick up (to save money) or use a drive thru or is curbside pick up an option?
Whichever you decide works best for your operation, the cost of driving your business through that channel needs to be reflected in your costs.
Packaging – Even if you have optimized your menu, have an amazing and engaging online presence and employ effective transportation channels if your menu items aren’t packaged properly you have missed the mark. No matter how close your kitchen is to your customers your food still needs to be packaged to get into their hands.
Temperature, texture, cleanliness and safety are key to making a first impression. And don’t forget to be earth friendly. Like having a clean and attractive dining room, your packaging is your customers first impression. Make it a lasting one.