What are ghost kitchens and should you turn your restaurant into one?

The global pandemic not only accelerated the growth of food deliveries, it created a whole new concept in the restaurant industry - ghost kitchens.

Food delivery services have been on the rise for the past few years. The global pandemic accelerated the growth of food deliveries and created a whole new concept in the restaurant industry - ghost kitchens.

What are ghost kitchens?

Ghost kitchens (also known as cloud kitchens, dark kitchens or virtual restaurants) are delivery only restaurants with no dine-in or takeaway options. These "virtual restaurants" have no fixed location for customers to visit or pick up food. They either have their own delivery services or partner up with third-party delivery apps to distribute their guests orders.

Ghost kitchens are gaining a lot of popularity in the US right now and they are anticipated to be one of Europe's biggest trends in 2021. In regard to the global pandemic, ghost kitchens are meeting two big market needs - social distancing and food delivery. During the COVID-19 lockdowns, many restaurants worldwide adapted operating like ghost kitchens, offering only delivery to their guests.

How do ghost kitchens make money?

It's pretty simple.

To run a ghost kitchen, you need to rent a kitchen space, hire staff to prepare food and set up delivery options. From there, you get your online ordering systems up and running and start accepting, preparing and sending out orders.

The greatest advantage of ghost kitchens are the savings. Running a restaurant and managing staff is not an easy task. In the case of these "virtual restaurants" you don't need to worry about hiring and managing waiting staff and your labour expenses are brought to the minimum - chefs and kitchen staff.

Furthermore, you will save a lot of money on rent because you don't need to rent a dining space. You only need kitchen space.

How to handle the disadvantages of virtual restaurants?

The biggest disadvantage to ghost kitchens is that they don't get any foot traffic. They rely entirely on online customers.

As we all know online competition is fierce. Relying only on third-part delivery apps to get orders, means getting in a marketplace with a 100 more restaurants. Moreover, third-party delivery providers are an expensive service and as nice it is that they do deliveries for you, you have no control over how the food is handled and what state it's delivered in.

To turn all of these disadvantages into advantages, you need to invest in marketing your food place. You need to run advertisements to attract new guests and get a loyalty program system to retain those guests.

Connecting a loyalty program to your online ordering page is one of the best solutions. This way you can get your guests' contact information when they place their first order and after that then send them personalized offers to keep them coming back for more tasty food.

Step by step - How to turn your restaurant into a ghost kitchen?

If you like the concept of ghost restaurants, let's take a look at how you can actually transform your current restaurant into a virtual one!

First things first, you need a new location. You will only need about one-third of a physical restaurant to run a virtual one. It is very important that the space you choose for your ghost kitchen is in a densely populated city area. This will make your delivery services fast and easy. The faster delivery service you can offer, the higher your customers' satisfaction will be.

If there are no good available spaces right now, try to renegotiate the contract you have with your landlord.

The second step of turning your restaurant into a ghost kitchen is to restructure your staff. You will no longer need waiting staff but you will need extra hands in the kitchen for order preparation and packaging, and delivery people.

Third step is to optimize your menu for deliveries. Choose food that is fast to make, easy to pack and travels well. Focus on the most selling items from the menu and decide if and how you should expand your offering.

One of the biggest drivers to ghost kitchens is technology. The good thing is that people have already adapted to ordering food online. What you need to do is optimize your operations so you have a fast and smooth process from start to finish. Set up a user-friendly online ordering system. Make sure your orders are printed out in the kitchen as soon as they come in your POS system. Once the order is prepared and packaged, you need a specified pick up area for your own delivery people and any third-party food delivery services you are working with.

Finally (and probably most importantly), build a loyal customer base. Investing in a loyalty program that will help you retain your customers which is 5 times cheaper than investing in acquiring new customers. As we already discussed, virtual restaurants miss out on foot traffic and third-party delivery app marketplaces are overcrowded with competitors, so it is super important to find a way to build your own customer base and secure the future of your business.

Is the restaurants' future virtual?

Ghost kitchens are on the rise because they satisfy the growing demand for food ordering and delivery services. Currently, this demand is huge. Post COVID-19, restaurants will have to adapt again.. to whatever the new consumers' needs and demand are.

Will restaurants become less reliant on dine-in experiences .. possibly.

Will restaurants become 100% virtual .. remains to be seen.

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