The COVID-19 pandemic brought about the downfall of many different industries. Yet, as businesses shut down and the world came to a standstill — one particular industry thrived.
The food business industry. Part of the reason they could survive is that they were smart enough to pivot their business model quickly.
Despite all odds, the food industry saw a significant shift in its approach to serving customers and thus emerged the new concept of ghost kitchens or dark kitchens.
Through this article, we’ll dive deep into the ghost kitchen and ghost kitchen trends, how they impact the food experience, what the future holds for this trend, and will it shape the future of the food business industry.
Table of Contents
- What is the Ghost Kitchen Trend?
- Why are Ghost Kitchens So Popular?
- Are Ghost Kitchens Successful?
- Is Ghost Kitchen Profitable?
- Is it the most emerging food industry trend?
- Will the trend continue after covid 19?
What is the Ghost Kitchen Trend?
The ghost kitchen trend refers to converting conventional dine-in food avenues like existing restaurant operators into a solely delivery and takeout-focused arena. During the pandemic, multiple restaurants (traditional dine-in) had to take the ghost kitchen approach to serve more customers better and improve business profits.
The current demand of the ghost kitchen trend also allows business owners, regardless of whether they are small or large businesses, to reduce the expenses brought on by unprecedented times. Since ghost kitchens only facilitate delivery orders, this trend lets existing businesses stay afloat. This business model is also a less risky investment due to low operational expenses.
The emergence of meal delivery apps, such as PostMates, DoorDash, GrubHub, and more as a strong force in the food delivery industry has enabled the ghost kitchen model to scale better. Many virtual businesses have since opened up, thanks to the ghost kitchen concept. These food businesses lack the traditional brick-and-mortar/ physical storefront presence and often rent out space to run their kitchens.
Not only is this approach economically beneficial to the business operators, but there is low food wastage and fewer resources required to operate the business. In addition, by focusing on one type of foodservice model, which is online delivery, food businesses are now able to scale faster with the least amount of hassle.
Why are Ghost Kitchens so Popular?
Ghost kitchens are popular and beneficial for a multitude of reasons.
- A restaurant business with the physical space (existing kitchen space) and resources to run a full-fledged food service can quickly convert its business to solely serving takeout customers. Furthermore, business expenses, such as real estate costs, can be kept to a minimum.
- The ghost kitchens trend was able to gain such initial traction due to its profitability. With the ghost kitchen mode of operation, employees like wait staff, are not required to run the service, unlike traditional restaurants. This reduces costs for business owners by focusing only on delivery.
- Its popularity also comes from the convenience of it all. Customers can order a wide variety of food products from the comfort of their homes. And as mentioned before, the widespread use of third-party delivery services or delivery apps like DoorDash, GrubHub, and Uber Eats allow for more ghost kitchens to gain more momentum each day. This momentum pushes business owners to invest more into this space, making it a very popular and exciting business venture.
Are Ghost Kitchens Successful?
Considering the current situation that prevails worldwide, the service of ghost kitchens is extremely important and in rising demand. Ghost kitchens support a contactless service and the fact that social distancing is now a necessary norm practiced in our neighborhoods, they are much more successful.
With that being said, there are cons to every business model. When delivery became the only means of food service, many businesses switched to operating as a ghost kitchen. This has increased a considerable amount of competition in the market. Businesses have to now look for more innovative solutions to ensure their customers are not swayed by their competitors.
Since delivery is the bulk of the operation, business owners must ensure that delivery is done quickly and easily. This is one possible solution to retaining a loyal customer base. Of course, this can be done with software solutions Route Planner that plans and optimizes the delivery route that drivers take. Such solutions are the only way to reduce business expenses that arise from a model such as a ghost kitchens trend.
So far, the ghost kitchen trend seems to be gaining momentum, and the uncertainty of the future allows it to be a successful business option for today’s businesses. Now, you might get information about what Ghost Kitchens are, why they are so popular, and how the business works. But, first, let’s discuss whether this business model is profitable or not.
Are Ghost Kitchens Profitable?
The profitability of the ghost kitchen phenomenon can be measured by the plethora of benefits that it presents to food business/restaurant owners.
- Firstly, businesses need very little time to launch or set up a ghost kitchen service. Food businesses that were already operational pre-pandemic require no overhead to turn their business to a delivery-only model. For newer ghost kitchens, the initial setup is much simpler than, say, building a dine-in restaurant from scratch.
- Since dining in is eliminated from this model, fewer human resources are required to run ghost kitchens. The central employees you will need to run the delivery service besides the kitchen staff would be the delivery drivers.
- Software solutions that optimize the delivery make running ghost kitchens much simpler. Solutions like Route Planner helps to plan routes efficiently and optimize them to reduce the time taken to run deliveries. This small investment in the business can aid the restaurant owners in boosting profits.
- Building a loyal customer base is much easier since you can offer a wide variety of exclusive delivery products. In addition, with ghost kitchens and online delivery, many restaurants find it easier to provide flexible menu items and loyalty programs that cater to the shifting preferences of the collective.
- The resources needed to run the delivery service are few. This also means reduced kitchen equipment that is required. With all this, the capital needed to set up and run a ghost kitchen is far less than a traditional restaurant that offers dine-in.
Keeping the pros in mind, it is safe to say that the ghost kitchen model is highly scalable and profitable. But, a few things to keep in mind before entering the ghost kitchen space are the market’s enormous competition today — and the geographical limitations you may face depending on where you operate. These are some cons of the ghost kitchen trend that innovative technological solutions can solve.
Is it the Most Emerging Food Industry Trend?
Ghost or virtual kitchen seems to be a booming industry.
It is estimated that the food delivery sector will grow to a $24 billion industry by 2023.
And with 6 out of 10 Americans choosing to order food rather than dine-in, these numbers are only going to rise.
It is safe to say that the ghost kitchen trend is one of the modern times’ most emerging food trends.
The gigantic shift in consumer preferences has been able to allow such new trends to take a place in the food business industry. That combined with the uncertainty that hangs in the current world’s situation has been pivotal in catapulting trends like ghost kitchens to prosper and become an example of what the future might hold for the food industry.
The ghost kitchen trend indeed reduces the operating cost of the food business, but the most significant challenge these businesses face is delivery. By committing to deliver with third-party delivery apps, businesses stand to lose a large portion of the profit margins to them. Also, delivery costs like fuel rise to new records regularly. Hence, business owners need to be smart about the delivery options including food delivery route planner software they choose when implementing a ghost kitchen.
Will the Trend Continue After Covid 19?
The routine of online ordering food has become so ingrained into the daily lives of today’s consumers. More than a trend, online ordering, and food delivery has improved convenience on so many fronts. This is not just a fad but a more permanent lifestyle choice.
The rise of meal-delivery services that offer weekly curated healthy meal options delivered to your doorstep is a testament to the change in how consumers view to experience food.
Since the delivery-only model of the ghost kitchen became more popularized due to the pandemic, many businesses are jumping into the trend to see the many benefits play out in their own business.
Although the idea of a ghost kitchen is an enticing one, food business owners must weigh all pros and cons before entering the market. Having an excellent delivery strategy can help avoid all major pitfalls and can make this transition much smoother.
Tough times always create thriving businesses. Food businesses implementing a ghost kitchen model will have hurdles to overcome but this transition can be made very easy thanks to all the technology we have at our disposal.
With the availability of delivery management software that will plan and optimize multi-stop delivery routes for you and ensure leaps of growth and deliveries at 7x speed, you are sure to successfully ride the ghost kitchen trend.
Since the future after the pandemic still hangs by a thread, fluctuations in the economy and the mindset of consumers can very well be expected. But having a flexible model such as a ghost kitchen will help you enormously to grow your business by adapting to challenges that come up.
Image Credit: RODNAE Productions; Pexels; Thank you!