December 14, 2020

Finding the ghost kitchen model that’s right for your business

For a more turnkey solution, REEF can quickly open up 200-sq.-ft. "kitchen vessels" inside shipping containers that can operate up to four to six brands.

At the start of 2020, virtual kitchens, also known as ghost kitchens, were an emergent business model grown out of the fact that food delivery apps were reshaping the restaurant industry.

When the pandemic hit and restaurants suddenly had limited-to-zero indoor dining capacity, ghost kitchens became a very credible solution to staying in business under a drastic change in revenue stream.

The ghost kitchen business model is so compelling that restaurant sales from virtual venues are expected to increase 42% this year, according to industry consultancy Foodservice IP, and to rise 25% a year over the next five years, according to Technomic.

While the term ghost kitchen refers broadly to any operation that only prepares orders for off-premises dining (no on-site dining, no waitstaff) there are myriad configurations of how the back-of-house is set up and organized.

Here are some of the more notable ghost kitchen models finding traction today:

In a model used by Florida’s Kitchen AF, an operation can be built to be deliberately off-premises-only with no associated dine-in, brick-and-mortar location. At Kitchen AF, the kitchen-only facility prepares the menus for nine different brands available for pick-up or delivery. All nine Kitchen AF concepts are branded to be associated with each other—Burger AF, Burrito AF, Soupy AF etc.—and the separate, but affiliated concepts exist for ease of scrolling menus on third-party apps.

Kitchen-only facilities also may be launched by existing dine-in restaurants as the brand tries to test or reach new markets. Some national chains, including Sweetgreen and Red Lobster, operate both brick-and-mortar and ghost kitchen locations.

For existing restaurants or new concepts, companies such as Kitchen Podular sell ghost kitchen pods, which are customized based on a restaurant’s needs and start at $100,000, which is about 50% less than a traditional food truck or real estate build. The restaurant brand has to staff its kitchen pod and take ownership of all aspects of the operation.

For a more turnkey solution, REEF can quickly open up 200-sq.-ft. "kitchen vessels" inside shipping containers that can operate up to four to six brands. In this model, REEF and its staff handle all preparation, distribution, and expansion of food concepts.

Shared kitchens that rent out space to multiple brands include Revolving Kitchen, Kitchen United, Zuul Kitchens, Cloud Kitchens, and DoorDash Kitchens. The space can be shared or be exclusive to one restaurant company but is typically staffed with the brand’s own employees. There’s a range of options but these rented-kitchen space companies offer services such as kitchen infrastructure, equipment installation and support, delivery fulfillment, pick-up windows, and virtual brand consulting.

Zuul Kitchen recently partnered with Thrillist to create a rotating ghost kitchen in which 10 landmark New York City restaurants, some currently closed due the pandemic, will have two-week residencies in a Zuul Kitchen out of which they’ll offer limited-edition meals for delivery only.

Simultaneously, there’s a rise in pop-up residencies in which chefs from a recently shuttered restaurant will join another restaurant, sharing its kitchen to recreate popular menu items from the original. In Chicago, for example, a restaurant called Mom’s recently closed but then took over the kitchen at nearby Marz Brewing, creating Mom’s on Marz.

There also are kitchen partnership services dedicated to connecting businesses that have no foodservice to a nearby restaurant in order to facilitate streamlined delivery. Companies such as Use Kitch and 2nd Kitchen provide the tech help and operational infrastructure to enable simple online ordering and food fulfillment between local restaurants and customers at local breweries, bars, bowling alleys, apartment complexes, hotels/motels and other facilities that have no kitchens.

Existing restaurant kitchens can become ghost kitchens to create items for a spin-off menu or concept that’s in addition to the restaurant’s usual fare. In Minneapolis, Nightingale, a fullservice restaurant launched Lake City Sandwiches out of its kitchen as an evening-only, delivery-only business.

Upscale Faith & Flower in Los Angeles launched a delivery-only pizza concept called DTLA using existing space in its kitchen. In Chicago, the bakers at Takeaway Bagel take over the breakfast daypart out of the kitchen of an Indian restaurant called Superkhana, which focuses on lunch and dinner.

Chicago’s Wow Bao offers a turnkey kitchen package for restaurants who want to supplement their revenue by preparing Wow Bao’s menu in their existing kitchen to expand their menu offerings for delivery orders.

For $2,000, restaurants can buy Wow Bao’s starter kit that includes everything they need to start serving Wow Bao’s menu. “Our goal is for the operator to do $2,000 a week in sales by week six,” says Geoff Alexander, Wow Bao CEO. “We had an operator in Minnesota do $9,000 last week.” The more in-app promos restaurants offer—and the faster they produce those orders—the higher the restaurant’s Wow Bao concept will appear in third-party app searches, generating more sales.

Whatever form these ghost kitchens take, shifting operations to off-premises orders can mean a big boost in both volume and sales.

“Pre-pandemic, about 30% of our business was delivery with about 150 delivery orders a day. The real advantage with delivery-only models is the unlimited bandwidth,” said Charles Bililies, Founder and CEO of Souvla, a group of fast-fine Greek restaurants in San Francisco, during a recent webinar. “We can produce so much more—300 orders a day minimum.”