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The Future of Ghost Kitchens

OM in the News previously reported on the rise of ghost kitchens, and we’re back with an update. Ghost kitchens as a concept have grown tremendously popular during the COVID-19 pandemic.

Red Robin recently introduced 3 national ghost brands — Chicken Sammy’s, The Wing Dept, and Fresh Set.  They join a long list of restaurants using the ghost kitchen concept. Restaurant chains and their products include Chili’s It’s Just Wings, Applebee’s Cosmic Wings, and Blooming Brands (the parent company for Outback Steakhouse and Bonefish Grill) with Aussie Grill and Tender Shack.

A ghost kitchen typically uses a kitchen that can be shared across several companies and/or brands.  Orders are placed online or through apps for delivery using services such as Uber Eats or DoorDash.

Franchises are using ghost brands to bring in more business, especially with less dine-in due to COVID-19.  MrBeast is an example of a ghost franchise.  They take the orders through their app, and send it to a number of ghost kitchens to be filled and delivered.  They opened over 300 locations overnight, using the ghost franchise concept.

A third variation is that local kitchens can join a ghost franchise, take orders through delivery apps, and then have those orders delivered by the delivery app company.

Video Spotlight: 

This post is based on the New York Times article, You’ve Heard of Ghost Kitchens. Meet the Ghost Franchises, by Marissa Conrad, updated March 8, 2021; the Mashed article, The Reason Virtual Kitchens Like MrBeast Burger Might Not Be Around Long, by Felix Behr, March 30, 2021; the NRN article, Red Robin Gourmet Burgers rolls out three virtual restaurant brands nationwide, by Mark Hamstra, March 10, 2021; and the YouTube video in the Spotlight. Image source: Steve Debenport/iStock/Getty Images

Discussion Questions:

1. What are the advantages of ghost kitchens?

Guidance: Ghost kitchens have been very popular during the pandemic, as restaurants have turned to delivery, with either closures in dining rooms, or limited capacities.  This concept has allowed restaurants to grow their delivery business and utilize underused kitchen capacity.

In addition to using leftover capacity in existing businesses, stand-alone ghost kitchens are now becoming common.  One apartment building developer–Akara Living–is planning a multi-brand ghost kitchen for its apartment buildings.  Walmart just entered the ghost kitchen market with Salidworks.

Another advantage of ghost kitchens is that location is not critical.  For a dine-in restaurant, location is important, which in many cases means higher costs.

Ghost kitchens that are part of a dine-in restaurant can use the facility to try out new menu items, or to expand a menu.  In some cases, this has led to the introduction of popular items from the ghost kitchen menu into the dine-in menu.

2.  What do you believe is the future of ghost kitchens?

Guidance: Opinions vary on the future of ghost kitchens.  Some people believe they will continue to grow, and become a major part of the restaurant industry.  This camp contends that customers have become used to take-out and delivery, and the trend will continue even after dining rooms open up.  Another school of thought is that ghost franchises will use their popularity to open conventional dine-in restaurants, leveraging the lessons learned and brand name recognition from their ghost franchise experience.

Another school of thought is that when dining rooms reopen, people will return to the dining room, and the importance of delivery will be reduced.  Add in the cost associated with being part of a ghost franchise (in some cases up to 50% of the revenue), and locally owned restaurants will leave the franchise to focus on their dining room.

Another consideration is that take-out lends itself to certain foods, such as burgers and wings. More variety can be offered to customers fresh from the oven in the dining room.

Regardless of their future, ghost kitchens have helped many restaurants stay in business during the pandemic.

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