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What Are Ghost Kitchens, and Are They Right for Your Restaurant?

Restaurant delivery services and the business pressures of 2020 have turned the restaurant industry upside down. With many restaurants legally required to shut their doors to diners during the COVID-19 pandemic, 2020 saw a massive surge in online food delivery. According to Statista, online food delivery sales will top $28 billion in the U.S. alone in 2021.

While many diners will resume frequent visits to restaurants as they reopen at scale, there’s little doubt that restaurant delivery and takeout will remain popular for families, young professionals, and couples who want restaurant-quality meals—without the full dining experience.

Ghost kitchens, which are essentially restaurant kitchens without the restaurant seating attached, are a unique innovation that enables takeout and delivery without the costs and logistics of in-restaurant dining. But are ghost kitchens the right fit for your hospitality business? Keep reading to find out.

What are ghost kitchens?

Ghost kitchens are restaurants without a storefront. Diners will never sit at the chef’s table—or any table for that matter—but meals can be prepared and sent out using GrubHub, DoorDash, UberEats, their contemporaries, or in-house delivery. With a slimmer staff and smaller footprint, these kitchen-only restaurants also offer unique cost savings compared to traditional dining.

What are the benefits of ghost kitchens?

If you are the type of restaurateur who always thought running a restaurant would be great—minus the diners and the responsibility of managing front-of-house staff—ghost kitchens could be right up your alley. Beyond owner preferences, there are several practical benefits of operating a ghost kitchen.

Lower startup cost

The first realized benefit of a ghost kitchen is a lower startup cost. Ghost kitchens are smaller than traditional restaurants and don’t require the tables, chairs, decorations, glassware, cutlery, drink refills, and other costs associated with hosting guests.

Lower operating cost

With a smaller footprint, you get lower rent costs. You also don’t have to be located in a busy retail area—which opens the door to even more savings. There are no servers, hosts, hostesses, or bussers, and there’s less of a demand on the dishwashing line. Labor is one of the highest operating costs for restaurants, but ghost kitchens can drastically reduce that spend.

Less operating complexity

When you don’t have in-house dining, a lot less can go wrong. Though delivery is new to some businesses, third party delivery apps can take that off of your plate so you only have to worry about cooking and preparing orders.

Easier and cheaper to scale

Lower cost. Less complexity. Faster to open. Restaurant brands running out of ghost kitchens have a massive opportunity to grow more quickly than their brick-and-mortar competitors.
Now that you have a better idea of what ghost kitchens are and why they make sense for many business owners, executives, and managers, here’s a deeper dive into how ghost kitchens can save money and support your brand goals.

Ghost kitchens offer cost saving opportunities

The typical cost of opening a small restaurant in a high-demand urban area is $750,000 to $1.2 million. But when leasing space for a ghost kitchen, you may be able to start with just $50,000 in costs related to hiring, training, and leasing a fully equipped ghost kitchen.

With these numbers in mind, you can launch a new restaurant concept for about five percent of a traditional restaurant’s cost. That’s a mind-boggling cost difference. And while there are always risks when opening a new business, the risks are much smaller with a ghost kitchen.

Uber Founder and former CEO Travis Kalanick saw the opportunity in ghost kitchens and raised $400 million to create a ghost kitchen company of his own. With reliable low costs and growing demand, it’s no surprise to see big dollars flowing into this startup industry.

Ghost kitchens can support multiple restaurant concepts

An additional benefit of ghost kitchens is running multiple restaurants with one physical kitchen. Just as large hotels and resorts pump out a high volume of diverse meals from a large menu, a ghost kitchen can support multiple menus and brands with one set of equipment and one set of cooking staff.

If you’re already running a ghost kitchen, adding a second concept may cost as little as $5,000. Have ideas for both a Mexican restaurant and an Italian restaurant? You may find many synergies operating both from a single ghost kitchen. The more your menus and ingredients overlap, the more you can save on food costs.

Ghost kitchens benefit brands both big and small

Something unique about ghost kitchens is that both large corporations and startup entrepreneurs are taking advantage. For example, burrito empire Chipotle launched ghost kitchens in November 2020 in New York. And early in the pandemic, even Chuck E. Cheese began moonlighting as a pizza and wings concept, Pasqually’s, to sell takeout to a wider audience than the children’s parties they usually serve.

But many smaller brands are also getting started in ghost kitchens without any dependence on existing brand recognition. Consider Melt Shop: with only 17 restaurants across five states, they were still able to open 2 virtual brands by utilizing their existing kitchens. With countless diners still looking to try out new restaurants using their favorite delivery app, there’s a good chance many of these startup restaurants will grow in the future.

The idea isn’t far from the realities you already see in the bustling food cart scene in Portland, Oregon. There, restaurant owners often start in lower-cost food cart pods before moving to a brick-and-mortar restaurant if they see success. Restaurants that begin in ghost kitchens may choose to expand and serve in-house customers as they gain traction.

Ghost kitchens offer a new business opportunity for restaurateurs

The ghost kitchen wave takes a traditional business model and adapts it for lower costs and new consumer preferences. That’s a big win-win for many would-be and growing business owners looking to get started without spending six figures on opening a typical restaurant.

With the right resources, partners, and can-do attitude, your new restaurant concept may be just weeks or months away from delivering its first ghost kitchen meal. If you’re looking for equipment or expertise to get your ghost kitchen space up and running, Global Industrial can supply that with our foodservice and appliance selection and consulting solutions.

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