Ghost Kitchens and Virtual Restaurants: The New Generation of Restaurants.

While the terms can sometimes be used interchangeably or swapped out for other terms like dark kitchen or cloud kitchen, there are some key differences. Virtual kitchens typically exist within or alongside established, already operating kitchens like Chili’s or Denny’s. These companies saw the opportunity to add additional brands or concepts to the commercial space they already owned to capitalize on the influx of online sales and the decrease in sit-down customers. Ghost Kitchens on the other hand typically have no brick and mortar location at all and are often operating out of rented space from a third party.

Let’s take a look at some of the advantages and challenges of ghost and virtual kitchens:

ADVANTAGE

Faster, less expensive, and easier set-up.

✓ In reality, all you need to set up a ghost kitchen is a couple of back-of-house employees and a rented space. For brands that are already running existing restaurants, they can often create multiple virtual restaurants within the space they already have. All it takes is a new menu and a post to one of the many food delivery services like UberEats or DoorDash.

✓ With limited staff requirements and no need for a prime location, this opens the opportunity of starting a restaurant to a much wider range of entrepreneurs. Without the need for large scale capital investment it also means an increase in customer options, which in turn creates more competition.

ADVANTAGE

Optimized menus.

✓ Targeted menu concepts allow owners to focus on one specific food and target that term for better SEO results. The amount of people searching “best burgers near me” is always going to be higher than some generic query like “good food”. That’s why we saw so many established brands like Chili’s find success in single item brands like “Just Wings”.

✓ Multiple brands can also be hosted out of the same kitchen for a similar effect. An Italian kitchen can set up three different concepts of a pizza, pasta, and ice cream restaurant all with zero additional overhead and minimal effort.

ADVANTAGE

An industry answer to the high cost of delivery services.

✓ With the average 3rd party delivery service taking roughly 30% of any given order, traditional restaurant businesses needed a solution to offset the cost. Setting up a virtual kitchen allows them to generate more orders with oftentimes the same overhead, leading to an increase in profit.

CHALLENGE

The competition.

— All the same reasons that make ghost and virtual kitchens so easy to start, also saturates the market and leads to fierce competition and makes it harder to get found.

CHALLENGE

A new kind of marketing.

— A lot of conventional wisdom gets turned on its head when it comes to ghost kitchens. As every aspect of the business turns virtual and fairly nondescript, it raises the question of how do you get found when operating this far under the radar. Many restaurant owners seem to have solved this problem with a “quantity over quality” approach by running four or five brands or concept kitchens out of the same location.