Ghost Kitchens and Virtual Restaurants

April 12, 2020
Ghost Kitchens and Virtual Restaurants

More and more restaurants are using or looking to use ghost kitchens.  Ghost kitchens are kitchens that are located outside of the normal restaurant.  In most cases, there is no dining area or carry-out space–it is simply a kitchen.  In the past, most stand-alone kitchens would be more of an assembly line operation to mass produce food for institutional customers.  However, today these offsite kitchens are being deployed to handle trends in the fast-casual restaurant industry.

The biggest trend is delivery.  In many cases, these ghost kitchens are used in combination with delivery services like DoorDash, GrubHub and Uber Eats.

In some cases, the ghost kitchens are owned by one company providing food for their brand or brands.  In other cases, they are owned by one company that leases space to other companies, such as Kitchen Unlimited and Cloud Kitchens.

Many names are used other than ghost kitchens.  Popular ones include dark kitchen, virtual kitchen, or commissary kitchen.  Additionally, several companies are using central kitchens to delivery to their food to their local branch restaurants.

Virtual restaurants are restaurants that have no physical restaurant.  They use one or more ghost kitchens to produce their food, and then deliver it to their customers.

Video Spotlight: Restaurants are cashing in on the delivery boom with ‘ghost kitchens’ (Oct 18, 2019, CNBC Television)

This post is based on The Spoon article, Applebee’s Is Planning Ghost Kitchens for Delivery and Takeout Orders, by Jennifer Marston, March 2, 2020, and the YouTube video featured in the Video Spotlight. Image source: Maskot/Getty Images.

Discussion Questions:

1. Why use a ghost kitchen?

Guidance: In many cases, potential locations for restaurants are expensive.  Coupled with the increased demand for food delivery, and many restaurants that are delivery-only or concentrating on deliveries, a full restaurant doesn’t make sense.

A ghost kitchen could be the answer.  Since there is no dining area, the footprint is greatly reduced, which substantially reduces costs.  Additionally, many ghost kitchens are shared by different brands to further spread the costs.

2. Where should a ghost kitchen be located?

Guidance: Location for traditional restaurants is driven by customer traffic and costs.  However, ghost kitchen locations are driven by delivery considerations and costs.  In many cases, the ghost kitchen can be located in a less expensive area.

3. Why use a virtual restaurant?

Guidance: Virtual restaurants are being used in a variety of ways.  One is to enter new markets.  This works well for established brands that are considering entering new markets, especially when the cost of a traditional restaurant is expensive.  The existing brand is used to attract customers, and then to reach them through delivery.  In some cases, this is a way to test the market without having the expense of a brick and mortar restaurant.  Another use is to expand their markets, by offering a different menu that is available for delivery only.  It is not uncommon to use a different brand.

One common reason for the virtual restaurant is to use excess kitchen capacity of a traditional brick-and-mortar restaurant.


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