Ghost kitchens, or delivery-only restaurants, are all the rage. Over the last five years, investors have continued to bet on ghost kitchen startups, with the thinking that digital-forward solutions to dining are both appealing to consumers and profitable for food business owners. The model promises significant reductions in rent and labor costs, which have historically been the biggest financial burdens for restaurants. Then the pandemic touched down, the demand for delivery exploded, and ghost kitchens skyrocketed.
Under the ghost kitchen umbrella, there are various types of setups — from virtual outposts of known restaurant brands to companies that launch new concepts from the ground up to shared kitchen space for local food makers. Although there is no cut-and-dried formula for how ghost kitchens operate, it’s helpful to consider them from four angles.
#1: Shadow Restaurants
Ideal for: growing restaurant chains with an already established brand presence.
Say you are Shake Shack, Sweetgreen, or even Roberta’s. These are known restaurant brands that specialize in burgers, salads, and pizza, respectively. They already have loyal fan bases, so they don’t need to invest solely in physical spaces for expansion. Instead, they might think about opening up delivery-only restaurants to cater to new neighborhoods and cities. In order to do this, they can partner with ghost kitchen companies that offer kitchen space — like CloudKitchens or Zuul — or they can rent kitchen space in some other way. (Fun fact: during the pandemic, some hoteliers rented out their kitchen spaces to food operators, as a way to make up income lost from lack of guests.)
#2: Food Brand Incubators
Ideal for: business-focused entrepreneurs.
Say you are an entrepreneur with a food business idea. You aren’t set on having a dine-in restaurant, but you do want to produce great food for people to enjoy, make a profit, and bet on growth. It’s likely in your best interest to partner with a company like REEF or C3, who specialize in developing 360 virtual food brands — from marketing to staffing, and everything in between.
#3: Commissary Kitchens
Ideal for: local makers with a passion for their craft.
Say you are a jam maker or a dumpling chef. Maybe someday you’d like a brick-and-mortar, but mostly you care about making delicious food — oftentimes using local ingredients to do so. Your brand is close to your heart and you want to grow it carefully and personally, maintaining direct contact with your customers. This is where a commissary kitchen comes in. You can rent space, have access to necessary tools, and secure the proper certifications to operate legally while continuing to manage the day-to-day of your business on your own (or with a few helping hands).
#4: Virtual Restaurants
Ideal for: restaurateurs looking to diversify business and supplement revenue.
Say you’re a local bistro with extra kitchen space or a fried chicken franchisee that wants to make more money. You feel like you’ve done all you can to expand within your primary concept — from dine-in to delivery, and even catering — but your team has the bandwidth to do more (plus you can always hire more) and you’d like to keep growing your revenue. This is where a company like Nextbite comes in. They’ve created and tested delivery-only concepts, such as Grilled Cheese Society and Firebelly Wings, with data-driven menus that are simple to implement. So long as you have the space, adding one of their fully branded concepts to your kitchen production could be a good move, as it’s low-risk, low-cost, and flexible.
Investing in some type of ghost kitchen is a smart choice for anyone looking to level up their food business, whether that’s expansion into a new market or slow but steady local growth. The first step is finding the model that’s right for you.