Should You Invest in Ghost Kitchens?
While consumers will still patronize dine-in establishments, many prefer home delivery services over traditional restaurant experiences. With the demand for food delivery growing, many restaurateurs are looking to invest in ghost kitchens as a way to keep up with consumer demands. So, is it worth the investment?
- While other countries worldwide have been utilizing ghost kitchens for a while, the rise of the food delivery trend in the U.S. has caused a surge in the number of delivery establishments.
- Restaurateurs looking to invest in ghost kitchens usually consider one of the two ghost kitchen models: the pop-up ghost kitchen and the shared kitchen model.
- The benefits of investing in ghost kitchens include reduced operating costs, fewer staffing concerns, and improved delivery conditions.
The Rise of Ghost Kitchens in America
The United Arab Emirates, Saudi Arabia, Thailand, and South Korea are the current leaders of this international food trend. In the U.S., food delivery establishments experienced their most significant increase in 2022 in response to the rise in takeout orders. New business models are continuing to emerge to address delivery challenges.
You may have heard of ghost kitchens called by various names, such as cloud kitchens or virtual kitchens, but the idea is the same. Remote spaces focused on food production reduce delivery costs and eliminate third-party delivery apps. While conventional brick-and-mortar establishments must assess several aspects of the business to create an optimal environment, ghost kitchens streamline operations to focus solely on delivery orders.
Types of Ghost Kitchens
A ghost kitchen delivers the flexibility that allows you to utilize these kitchen models based on your establishment’s needs. While the concept of a ghost kitchen can vary from one establishment to the next, two common types have emerged in the food delivery industry: the pop-up model and the shared kitchen (or commissary) model.
Pop-up kitchens are spaces within a traditional restaurant dedicated exclusively to food delivery and usually operated by a separate staff. Do not confuse a pop-up ghost kitchen with pop-up restaurants or limited-time catering establishments – they are ideal for restaurants with established places for patrons to eat. By concentrating on delivery-only menu items, pop-up ghost kitchens are an excellent way to highlight specific categories of food and optimize your delivery program.
Shared Kitchen Model
For those without an existing brick-and-mortar space, the shared kitchen model may be a good fit. This ghost kitchen model allows investors to reduce costs by renting a shared kitchen rather than opening a restaurant. The space has equipment that supports batch cooking, so food production can begin immediately. You can usually find these kitchens located in high-demand delivery areas in warehouses, allowing them to concentrate on efficient, fast order fulfillment.
Benefits of Investing in a Ghost Kitchen
The concept of a ghost kitchen varies. However, ghost kitchens rely on equipment that offers flexibility to serve a wide variety of restaurant brands and their vast menus with the highest quality and consistency. As an evolving model, ghost kitchens allow you to create new or expand your current revenue stream. Here are the other benefits you can get when you invest in a ghost kitchen:
Reduced Operating Costs
Ghost kitchen avoids many of the expenses associated with running a conventional restaurant. According to Webstaurant, the average restaurant start-up costs are approximately $275,000. In comparison, one ghost kitchen restaurateur could open a communal ghost kitchen business for $20,000. The most successful ghost kitchens succeed by dominating certain product categories while offering minimal menu options, allowing them to create menu items that not only travel well but also increase revenue.
Fewer Staffing Concerns
The delivery-centric model also saves money because it requires less manpower. Ghost kitchens have fewer cooks and no client-side service staff, such as hostesses or waiters. With no real face-to-face interaction with customers, ghost kitchens do not require as much staff and often work well with multiple chefs. These kitchen models increase schedule predictability, reduce training or staff development, and maximize workflow, ultimately saving time and money. Programmable equipment that cooks food more consistently can also reduce training and labor costs in the kitchen.
Improved Delivery Conditions
Finding an ideal location for a restaurant takes careful planning and consideration. Unless you open multiple locations, you need a place that is convenient for customers and will get your establishment the most traffic. Ideally, your restaurant should be within a three- to five-mile radius of your patrons.
When focusing solely on takeout, ghost kitchen models work because they offer affordable shared spaces that make it possible for you to open a delivery location closer to more densely populated areas. You can open up multiple ghost kitchen locations at a fraction of the cost of opening a single brick-and-mortar restaurant and expand to reach more customers.
Who Should Open a Ghost Kitchen?
After reviewing the benefits, you might still be on the fence as to whether investing in a ghost kitchen is right for you. Ghost kitchens are the future of the restaurant industry because they allow investors to capitalize on the high demands of the food delivery trend. This versatile business concept can be a great investment option for:
- Smaller restaurants looking to make it big
- Well-established restaurant chains
- Chefs and entrepreneurs
- Food truck owners
- Campus dining areas
- Brands and influencers
Learn More About Ghost Kitchens at the Next SIAL Show
The ghost kitchen model offers a distinctive opportunity to expand your business and capture your brand’s online marketplace. Before tackling the ghost kitchen model, it is essential to think carefully about your situation. Talk to others who have made the investment or other industry experts with experience in this shared kitchen space. At SIAL America, we host annual shows that allow restaurateurs and other food service professionals to discuss the latest trends and ideas.
Learn more about ghost kitchens when you attend our next show. Interested in becoming an exhibitor? Contact us soon to get a space at our show in March.