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Until recently, ghost kitchens were an experimental concept with only a few locations in major U.S. cities. Now, they are growing in numbers and serving as a lifeline for small businesses that continue to face varied traffic, increased costs, and labor shortages.
And now that the pandemic has proven their worth, ghost kitchens are well on their way to becoming a staple of the delivery industry and a standard business model for future restaurants. But to achieve long-term success, restaurants need to find a way to appease consumers’ desire for transparency with the efficiency and flexibility that a ghost kitchen provides.
Even with more than 8,000 active ghost kitchens operating across the country, consumers still have mixed feelings. According to Dataessential, more than half (55%) think it’s dishonest for a restaurant to sell the same food under a different restaurant name, and 2/3 think that virtual brands should state that they are digital-only.
However, these are typical growing pains of any new advancement in an industry, especially one that’s grown as rapidly as ghost kitchens have. Rather than chalking it up to a lack of transparency, these issues are the classic example of “we don’t know what we don’t know.” As problems present themselves, a key indicator of long-term success is how feedback is taken into consideration moving forward.
Many large chains have already made it clear that any virtual brands are additions to their larger network, and smaller ghost kitchens are rapidly joining the change. The use of technology, first-party ordering and delivery apps are a large part of making that transparency part of the brand.
Today’s customer appreciates convenience -- being able to get brands and foods they love delivered is a crucial driver for them, and emphasizing how these new kitchens provide that will go a long way. The appreciation transforms into revenue, creating great long term benefits for successful ghost kitchens as a second business model.
With so many restrictions and limitations in place thanks to the pandemic and low staffing rates, restaurants are finding that their kitchens aren’t being used to their full potential. Ghost kitchens are uniquely positioned to serve a wider variety of customers, as well as use that extra kitchen space to turn a profit. Less overhead, smaller spaces, and no in-house seating create the perfect environment for simplified delivery-first service.
And notably, new technology is making it easier than ever for restaurants to set up online ordering and delivery and change offerings at a moment's notice, making adding a ghost kitchen a lower cost solution than in the past. One such operator, Tomlinson Brands, has used this online web to their advantage. They operate their multiple brands out of one dining room and kitchen for more choices with a fraction of the space and investment. Through their innovative first-party delivery, they see an average revenue boost of $32k per month, delivering from all their menus in one online order.
Ghost kitchens are here to stay for the long-term thanks to easy adoption and diversification that’s in demand. With the right use of transparency, virtual brands will carve out their own niche in the food service industry for success long after pandemic concerns have passed.
Steve Simoni is CEO and Co-Founder of hospitality tech firm Bbot. He previously worked in technical sales support and product management for SaaS companies like Marketo and EverString and founded a B2B technology company for the sales profession. Simoni and the other two Bbot founders met as U.S. Navy officers at the Naval Reactors Program in Washington, D.C., where Simoni worked on instrumentation and control for submarines and aircraft carriers, including a new circuit breaker design for the Virginia Class Submarine. He has a bachelor's in Electrical Engineering and a master's in Nuclear Engineering from Penn State.