Finance:Ghost kitchen

Short description: Food preparation and cooking facility for delivery-only meals

A ghost kitchen (also known as a delivery-only restaurant, virtual kitchen, shadow kitchen, commissary kitchen, cloud kitchen, or dark kitchen) is a professional food preparation and cooking facility set up for the preparation of delivery-only meals. Some ghost kitchens have allowed takeout meals or included drive-throughs. They do not include a storefront or indoor seating for customers. A ghost kitchen differs from a virtual restaurant in that a ghost kitchen is not a restaurant brand in itself and may contain kitchen space and facilities for more than one restaurant brand. Ghost kitchens can work within brick-and-mortar restaurants or function as standalone facilities.

History

The term "ghost kitchen" was first used in a 2015 NBC New York article. The article was critical of ghost kitchens in New York City, where restaurant owners were found by an investigative team to be listing their restaurant under multiple different brands on delivery applications such as Seamless and Grubhub. These kitchens had names and addresses that failed to match any listing on the city's database of restaurant inspection grades. Several of these locations were non-retail food processing establishments, which did not have restaurant permits to sell food directly to customers. Consequently, the virtual brands were taken off of Seamless and GrubHub and each company passed policies to fact-check restaurant information and give transparency to customers using the delivery applications.

Ghost kitchens have emerged as a business model in response to the rapid growth in consumer demand for restaurant delivery meals, the rising usage of third-party delivery applications, and the lower costs incurred by using kitchen facilities located outside of high-rent, high-foot-trafficked urban locations. Using a ghost kitchen allows established restaurants with dining-in service to expand their delivery operations without adding stress to the existing kitchen, frees up parking taken by the delivery vehicles, and allows restaurant to enter new areas with lower costs.

Function

A ghost kitchen prepares meals for a restaurant or virtual restaurant to then be picked up for delivery, takeout, or given at a drive-through.

Not needing space for customer seating and dining areas saves rent. The physical location matters less, so ghost kitchens can be set up in less expensive areas. There is no need to hire wait staff to serve customers or maintain the would-be seating area. There is no need for front-of-house staff, renovations, and paper menus. Optimized delivery and increased kitchen space in a ghost kitchen contribute to lower labor costs. Whereas a typical restaurant delivers 15 to 20 orders per hour, a ghost kitchen can deliver 60 orders per hour with a single employee. The reduced space lowers overall overhead and operational costs, thus yielding higher profit margins without reducing the price of the food provided.

The lack of a physical brand allows companies to experiment with new menus, brands, and concepts with ease and low risk. Menus can be adjusted to match current trends or target multiple demographics with a variety of cuisines. The online nature of ghost kitchens makes it possible for virtual restaurants to track customer data and analytics through the food ordering process and make data-driven decisions. They can track the popularity of items, wait times, and customer feedback via ratings and adjust their menus accordingly.

Growth from the COVID-19 pandemic

Many brick-and-mortar restaurants limited dining on their property or shut down entirely due to the COVID-19 pandemic and government restrictions. Ghost kitchens helped brick-and-mortar restaurants recoup their losses and minimize employee layoffs by allowing them to prepare food for multiple brands and keep themselves in business. They kept many restaurants in business during the pandemic when they would otherwise have to close down by lowering costs and allowing them to work with delivery services. While the brick-and-mortar restaurants survived, virtual brands proliferated and operated at low cost by using their facilities as ghost kitchens, and food delivery companies prospered because of the boom in demand caused by restricted indoor dining..

The COVID-19 pandemic accelerated the growth of the ghost kitchen industry by five years within three months in 2020. Many restaurants survive due to ghost kitchens and the food delivery options they make available. This spike in growth is predicted to potentially create a $1 trillion industry by 2030.

Impact on the foodservice industry

Across the world, the food delivery industry is increasing at a high rate. Ghost kitchens have proliferated to match the increased demand for food delivery services. The expansion of ghost kitchens, in turn, led to growth in both the food delivery and restaurant industries.

In the United States, food delivery applications produce $35 billion in annual revenue, and are projected to grow to $42 billion in annual revenue by 2025, with 111 million users. As of 2020, there were 1,500 ghost kitchens in the United States. The United States restaurant industry is about $800 billion.

In Europe, food delivery applications produce over $18.9 billion in revenue annually, and are projected to grow to $29.1 billion by 2025, with 150 million users.

In China, food delivery applications produce $51.5 billion in revenue annually, and are projected to grow to $100 billion by 2025, with 650 million users. As of 2020, there were 7,500 ghost kitchens in China.

Globally, food delivery applications produce $120 billion in revenue annually, and are projected to grow to $230 billion by 2025.

List of chain restaurant-associated ghost kitchens

Several virtual restaurant brands have associated brick-and-mortar locations. The following are virtual restaurants known to use ghost kitchens.

• Burger Den and Melt Down are ghost kitchen brands owned and operated by Denny's.
• Conviction Chicken is a ghost kitchen operated by TGI Fridays.
• Cosmic Wings is a ghost kitchen operated by Applebee's.
• Dockside Charlie's & Coop & Run are ghost kitchens operated by O'Charley's.
• Fresh Set, Chicken Sammy's, Donatos Pizza, & The Wing Dept. are ghost kitchens operated by Red Robin.
• It's Just Wings and Maggiano’s Italian Classics are ghost kitchens operated by Chili's.
• Pasqually's Pizza & Wings is a ghost kitchen brand owned and operated by Chuck E. Cheese.
• Rotisserie Roast is a ghost kitchen operated by Boston Market.
• Slo Roast is a ghost kitchen operated by BJ's Restaurants.
• Tender Shack is a ghost kitchen operated by Outback Steakhouse.
• Thighstop is a ghost kitchen operated by Wingstop.
• Thrilled Cheese is a ghost kitchen operated by IHOP.
• Twisted Tenders is a ghost kitchen operated by Logan's Roadhouse.
• Hootie’s Burger Bar, Hootie’s Bait and Tackle and Hootie’s Chicken Tenders are ghost kitchen brands owned and operated by Hooters.
• Wow Bao, Wingville, & Macaroniville are ghost kitchens operated by Fazoli's.

See also

• Food truck
• Traiteur (culinary profession)
• Virtual restaurant