In recent months, consumers have ordered restaurant meals via third-party delivery companies in increasing numbers: Marketwatch reports that throughout the course of the pandemic, food-delivery apps’ business has more than doubled. Restaurants have long regarded these apps warily, weighing the benefits of being able to serve convenience-loving customers against the risks of having a delivery app’s fees dissolve their profits. Those fees aren’t likely to come down anytime soon, but what if other restaurant operating expenses can? Ghost kitchens are helping to make that possible by removing expensive overhead – like décor, prime real estate and large dining rooms – and freeing up revenue for delivery expenses. To be sure, the experience of dining in a restaurant is appealing to consumers (and something they will want to return to post-pandemic), but your food is at the core of people’s desire to order from you. Stripping your business down to its key ingredients – quality food and people who enjoy it – is about having space to prepare it and a means of connecting customers to it. That means locating a professional kitchen (minus the pricey real estate), setting up a technology platform through which people can place orders smoothly, and having a partnership with a vendor who can ensure your food arrives promptly and safely. The pandemic has made ghost kitchens a key growth engine for the restaurant industry at a time when few others exist. Businesses that already have strong brand awareness and delivery customers may find that a ghost kitchen can help them turn a more stable profit. Consider a ghost kitchen an opportunity to test a new concept for minimal investment, or to shift an existing concept to a delivery-only mode for minimal investment (especially if the kitchen is shared by multiple businesses). These kitchens aren’t likely to go away after COVID-19 is behind us – consumers have had too much time to get used to their convenience – so they may be one of many lasting changes to emerge from it. There are many ways to approach them. If you want to discuss whether a ghost kitchen could be right for your operation, contact Team Four.
Restaurant industry analysts have said that in a period of just a few months, the pandemic has thrust the ghost kitchen market several years into the future. As more ghost kitchens come into the market, traditional operators may need to adapt to shifting budgetary needs and consumer expectations. A Restaurant Dive article reported recently that Peter Schatzberg, founder of Dubai-based Sweetheart Kitchen, said while a typical restaurant processes 15 to 20 delivery orders per hour, a ghost kitchen can process 60 orders – and with a single employee. If ghost kitchens increasingly demonstrate such economies of scale – by churning out orders quickly to more customers, with fewer staff, working from real estate occupying a smaller footprint – it will likely change the game for restaurant operators offering delivery from their traditional kitchens. How could your restaurant adapt?
No question, the restaurant landscape will look a lot different once we emerge from the pandemic. Technomic estimates that 20 to 25 percent of independent restaurants won’t reopen. It’s easy to dwell on the sad realities of losing these businesses, but what if this period is what is required to usher in an industry transformation that many restaurant operators and employees would argue is long-needed? In a recent Eater report, two dozen restaurant leaders were asked to predict what the industry might look like in five years. Many of them see reasons for optimism – but first, they say some broken systems need to be overhauled when it comes to employee compensation, food transparency, consumer education about the true cost of food, management of the supply chain, and changes to the ownership structure of restaurant businesses. In the meantime, what’s clear is that consumers’ demand for restaurant meals won’t diminish – and as the Washington Post reports, new service formats like ghost kitchens are actually experiencing significant growth right now to meet that demand. While the experience of dining on restaurant food may well change in the coming months in years, perhaps the range of new restaurant businesses that emerge from this period will serve as incubators for fresh ideas on making the industry work more sustainably for all.
Even before the pandemic, ghost kitchens were on the rise for their ability to ensure faster, less expensive food preparation and more efficient delivery to customers looking for off-premise dining options. Now, many restaurant operators are looking at ghost kitchens as a critical way forward at a time of great uncertainty for the industry. They may be on to something: Recent research from Euromonitor found that the global market for ghost kitchens could reach $1 trillion by 2030 – and in the process, capture big slices of industry segments including drive-thru sales, take-out foodservice, ready-to-eat meals, pre-packaged cooking ingredients, dine-in foodservice and packaged snacks. But when you’ve been running a traditional brick-and-mortar restaurant, what actions (and investment) are required to pivot to the ghost-kitchen model? Food distributor US Foods is aiming to give operators a hand with that transition through its newly launched US Foods Ghost Kitchens program. The company promises that for an average start-up investment below $5,000, they can help operators open a ghost kitchen concept in about three weeks and achieve an average profit margin exceeding 35 percent. The program includes market research, marketing support, a digital technology framework, menu optimization and management guidance.
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