Nevada Restaurant Association
The Rise of Ghost Kitchens
The phrase Ghost Kitchen probably brings to mind a dead space where food once was, but no longer is. However, this is far from reality. Ghost Kitchens are actually the newest trend in the food industry with QSR Magazine offering this definition: “Virtual—also called cloud or ghost—kitchens are stripped-down commercial cooking spaces with no dine-in option.” Dining in has become a thing of the past with delivery demand steadily on the rise. With delivery becoming the new way to dine, restaurants are shelling out large commissions to third-party companies such as DoorDash. Real estate prices have also climbed and restaurants face some hefty numbers when looking in prime locations. Plus, wages are on the rise. So, with all these costs to consider, restaurants are turning to ghost kitchens. They bring in profits and shoulder the bulk of delivery demand, all while consuming less expenses.
As more restaurants turn to ghost kitchens as their solution, more companies have jumped onboard as well. The leader in this area is Kitchen United, a company offering infrastructure and equipment at a monthly fee. Their facilities consist of shared kitchen space and a multi-restaurant virtual kitchen space. The shared kitchen space is meant to be utilized by smaller businesses looking to test product, while the virtual kitchen is meant to be used as a multi-restaurant delivery hub. The kitchen is meant to be staffed by just one or two line cooks, with Kitchen United employees running the food to consumers and delivery drivers. Kitchen United has two open locations right now, five opening soon, and fourteen planned for 2020 and beyond. DoorDash also just opened a shared kitchen space in Redwood City, California, which houses five restaurants. The space has pick-up and delivery options as well as the ability for customers to cross order from some of the merchants.
A rented kitchen is not the only way restaurants have embraced ghost kitchens. Some restaurants, like Bamboo Asia in the Bay Area, operate their own cloud kitchens. Bamboo Asia utilizes the cloud, as well as their own inventory solution software, to track inventory diminution and prep needs. Building a ghost kitchen to support existing operations has greatly benefited Bamboo Asia. They have been able to centralize processes and remove burden from individual locations and use the kitchen as a staging area for new locations. Plus, in spite of minimum wage increasing fifty percent in five years, their labor costs are still only 19.5 percent. Some other restaurants attempting to integrate their own ghost kitchens into business are Red Lobster, Starbucks and Chick-fil-A.
Some restaurants have embraced ghost kitchens a little differently. Rather that opening a satellite location, out of their business, they run two different businesses from one kitchen. In New York, Barry Dry has launched a virtual burger restaurant called Ghost Burger from the kitchen of his existing restaurant, Hole In The Wall. Ghost Burger has a small menu and is delivery only, helping Dry to bring in more profits without largely increasing his expenses. These “hidden” concept restaurants are increasing in popularity with companies such as Grubhub and UberEats offering suggestions to restaurants and what the local market wants based on consumer search data. However, not all have succeeded, such as Maple, which opened in New York in 2017 and closed two years later.
So the next time you hear ghost kitchens, do not be afraid. We are not talking haunted real estate. Rather we are entering a new era ruled by food to go with brick and mortar shops falling continually out of favor. With new demands to cater to and more expenses to be worried about, restaurants are moving away from sit down concepts and into obscure locations where they can be found churning out food for the delivery loving masses.