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​Ghost Kitchens – All the Information You Need to Know

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​Ghost Kitchens – All the Information You Need to Know
By Dot It March 3, 2020 No comments

Don’t let the name scare you! Ghost kitchens are not what you may think. A ghost kitchen isn’t a kitchen that is being haunted by ghosts, also known as a non-terminal repeating phantasm or a class-five full-roaming vapor. Ghost kitchens are a growing trend in the restaurant industry, and you may be ordering from one even if you don’t know it!

So, what exactly are ghost kitchens, and why are they becoming so popular?

What are ghost kitchens?

Ghost kitchens are professional kitchens that are set up only for delivery or take-out. They are also known as virtual kitchens, dark kitchens, and cloud kitchens. For example, Frato’s Pizza in Chicago uses its kitchen to make pizza and serves customers who enter the restaurant like any pizza shop you’ve ever been too. The kitchen at Frato’s is tossing dough, adding cheese and toppings, and sliding pies into a hot oven to cook.

What makes Frato’s pizza kitchen a ghost kitchen is the fact that the cooks are preparing food items for four different restaurants that can be ordered only on food delivery like UberEats or Grubhub. This single kitchen not only serves the patrons of Frato’s who are looking for pizza, but also people who are ordering delivery or takeout from Halal Kitchen, Tenderlicious, Cheesy Deliciousness, and Heavenly Shakes.

But ghost kitchens don’t have to be a part of an existing restaurant kitchen. Restaurant owners are setting up ghost kitchens where everything is prepared to-go and there is no seating for customers to dine inside.

In 2019, the online delivery service Doordash opened a ghost kitchen in Northern California to service the needs of five different restaurant chains. The commercial kitchen services the needs of The Halal Guys, Nation’s Giant Hamburgers, Rooster & Rice, Humphry Slocombe (a local ice cream store), and Chick-fil-A.

Ghost kitchens rely on a third-party to integrate the kitchen space with supplies, cooks, and ingredients. Ghost kitchens function by taking an order request — a lot of times via a home delivery app — handling the request and preparing and packaging of the order before handing it off to a delivery driver to get it to the customer.

Why are ghost kitchens so popular?

You probably didn’t realize this, but the concept of ghost kitchens didn’t just pop up overnight. Back in 2018, the global ghost kitchen market was valued at $650 million, and by 2026, is projected to reach $2.63 billion. So why did ghost kitchens become so popular?

The popularity of ghost kitchens can be tied to the booming success of food delivery services like Grubhub, UberEats, Doordash, and others. Digital ordering and delivery have grown 300% faster than dine-in traffic since 2014, with 51% of Americans using delivery services to purchase meals from casual dining restaurants. The convenience of being able to have a restaurant quality meal ordered and delivered to your door without ever having to leave your home has become a normal activity for millions of Americans. One survey found that 26% of respondents said they order takeout or delivery at least once a week.

Setting up ghost kitchens provides an opportunity for restaurant owners to take advantage of the growing influence of restaurant delivery services. With the increased adoption of food delivery platforms, restaurant owners can save on the amount spent on the physical space, equipment, staff, and infrastructure. Ghost kitchens can provide a lower cost of entry into the food service industry.

But restaurant owners are not the only ones that are interested in entering the ghost kitchen industry. Like Doordash, Former Uber CEO Travis Kalanick has raised $400 million to enter the world of ghost kitchens. Google and SoftBank are both also making moves to become a part of the delivery-only restaurant space. Each has made significant investments in the ghost kitchen industry.

One forecast, from investment bank UBS, believes that delivery sales could rise an annual average of more than 20 percent to $365 billion worldwide by 2030.

With the projections looking bullish for the food delivery industry, the popularity and need for ghost kitchens are not going to be slowing down anytime soon.

Pros and Cons of Ghost Kitchens

Pros

Delivery-only ghost kitchens can help restaurant owners save on rent in areas where real estate prices are high.

Delivery-only ghost kitchens can focus simply on creating food that travels well to people, while also allowing regular restaurant locations to focus on the customer’s dine-in experience.

People wanting restaurant quality food delivered to them is on the rise. Five delivery platforms are currently valued at more than $1 billion. With 82% of delivery orders being placed from a person’s home.

More than one restaurant can operate from a single ghost kitchen, cutting down on overhead costs. They can also better utilize food products if items can be used to create dishes for multiple restaurants.

Cons

Depending on the food you serve, you may need to adjust your menu for a delivery-only kitchen. Some food does not travel well, and you won’t want to serve customers food that can’t withstand being in a container for anywhere from 15 to 45 minutes or more.

With delivery, customers expect their food to make it to them prepared correctly and hot. That is one of the challenges in food delivery because it is hard to keep prepared items warm in transit. Also, if something is made wrong, it could be up to 45 minutes before the customers even know, and then it is too late.

Less customer interaction, so getting your brand out there offers different hurdles than a normal dine-in restaurant.

With any type of computer software, third-party delivery apps could crash, causing delays or the complete inability to place an order.

How to start a ghost kitchen

Now that we understand the benefits of having a ghost kitchen, it’s time to learn some tips on how to start one. There are two ways to go about starting a ghost kitchen. The first is if you already own a restaurant or restaurants and you decide to add-on a ghost kitchen to your existing restaurant. If you already have a commercial kitchen, you can add on a ghost kitchen for your existing restaurant, create a new delivery-only restaurant, or lease space to another delivery-only restaurant. Each of these options can be financially beneficial to a restaurant owner.

If you decide to create your own delivery restaurant and run it out of your existing professional kitchen, then you need to consider creating a new brand for the new restaurant. A restaurant fulfillment company like Dot It can help with branding your new restaurant and can supply you with many of the supplies that you will need to be successful.

With a delivery only restaurant, especially one that uses third-party delivery services like Grubhub to receive orders from customers, your logo and packaging is crucial to establishing your brand. Deciding on the type of packaging that you will use to ship out your orders is your best chance to display your branding to try and connect with your customers. Make sure you brand all the labels and packaging that the food is packed in. Also, since the food will be delivered, it's important to use tamper-evident packaging for the food. This will help to build trust with your customers. SecureIt™ tamper-evident labels are ideal for to-go, food delivery, and catering packaging. Eighty-five percent of customers want restaurants to use tamper-evident labels with their deliveries.

Also, with delivery, you are going to create more waste with all the packaging items you will need. Planglow USA's Compostable Packaging is made from compostable, plant-based materials and never oil based plastics. A study in the UK found that people are willing to spend a little more on food if the packaging is in environmentally friendly packaging, that's how important eco-friendly efforts are.

When starting a menu for a ghost kitchen, you also need to consider the food you are going to prepare. Since customers won’t be sitting down and eating the food at your restaurant, you will need to come up with recipes that can stand up to being placed in travel containers and may not reach their destination for 30-45 minutes. Food that travels well will make a better impression on customers than food better suited for a restaurant experience. A customer receiving an order that doesn’t travel well will leave a bad taste in their mouth and could lead them to not try your restaurant again.

Another thing you need to consider when starting a delivery-only restaurant is that you won’t be able to gain attention with foot traffic. So, your marketing efforts need to take that into account. Customers will need to seek your restaurant out. People on the street won’t be able to walk past it and decide, “Oh that looks good, let’s eat here.” Consider cutting a deal with one of the third-party delivery services to help with promotion of your restaurant. For example, when Grubhub started delivering McDonald’s, McDonald’s sold a million burgers for a penny each. Offering delivery discounts is another way you can gain attention through delivery-service apps.

Posting photos of your menu items is a crucial step to market your new delivery-only restaurant. Delicious looking images of your menu items on social media accounts will help let people know they can order food from your ghost kitchen. The more pictures out in the world, the better!

Dot It can help you get your ghost kitchen off the ground. From marketing, printing, supplies, resources, and promotional products, Dot It should be your first call when preparing to open a ghost kitchen. Give Dot It a call today and let our wonderful team work with you and help lead you towards a path of success.