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What does the end of the pandemic mean for ghost kitchens?

Published May 5, 2021

Well, it’s all over except the cleanup. We can see the end of the pandemic. Right? Well, maybe not quite yet—though many in the restaurant industry are starting to project when society might hit herd immunity and hopefully restore customer confidence in restaurant dining. 

Looking back, 2020 was an extremely challenging year for operators trying to pivot to support online ordering, curbside and delivery. According to data compiled by Technomic from public company reports, same-store sales were down as far as 35 percent for even the largest brands in Q2 2020 versus 2019.

Government-mandated dining room closures eliminated the average percent of dine-in guests pre-Covid. Meanwhile, restaurant operators have seen a 33 percent delivery/67 percent pickup (carryout and drive-thru) split for all foodservice orders.

This shift accelerated the growth of an already emerging trend: “ghost kitchens”, also called “dark kitchens” or “cloud kitchens.” In this article, we’ll look at what exactly these ghost kitchens are and why you should still be working on your ghost kitchen strategy.

What is a ghost kitchen?

If you’re not already familiar with the term, a ghost kitchen is a restaurant kitchen that doesn’t offer a dine-in service; it only prepares orders for delivery or take-out clientele. The traditional brick-and-mortar restaurant sheds this dine-in aspect to become what you might call more of a “culinary distribution center” than your traditional sit-down restaurant today. 

A ghost kitchen focuses solely on efficient preparation and packaging of orders in much the same way an Amazon Warehouse is a considered retail distribution center versus your average brick-and-mortar retail stores such as Target or Walmart. What’s more, a ghost kitchen might even service multiple restaurant brands with the very same staff in the very same space, all at once and entirely transparent to the recipient.

Related: 4 ways to overcome kitchen chaos and orchestrate off-premise orders seamlessly.

In a ghost kitchen, all the restaurant’s traditional business cost structure of the front-of-house are replaced with the costs of supporting or subcontracting a delivery infrastructure. The duties performed by your cashiers or servers are instead done by the guest self-placing an order that’s then fulfilled by the kitchen staff and handed off to a group of delivery personnel.

That delivery person might be you picking up the order in a nondescript pickup area, but more commonly the order is delivered via professional third-party delivery partners, such as DoorDash, Postmates, UberEats or local delivery service providers.  

From a guest-experience aspect, the hospitality of a welcoming smile and face-to-face, “How may I help you?” are replaced by the convenience of a few clicks on a website or app, followed by the sound of the doorbell ringing some 30 to 60 minutes later with their order. 

For as much as Covid-19 has prompted a shift in consumer dining patterns, the actual concept of a ghost kitchen is not truly anything new and revolutionary. The rise of ghost kitchens has been more evolutionary. Originally, you might just have thought of them as part of the pizza sector of the restaurant industry—just think of how a Dominos, Little Caesar’s or Papa Murphy’s works today with their compact kitchens and counter-service. 

What’s changed is the number of restaurant businesses and concepts that have come up with an online ordering solution that offer reliable dishes and meals for delivery purchase. 

According to data compiled by Technomic on the Top 500 US chains in 2020, over 80 percent of brands now offer a direct online ordering route (via website or app) to their stores. If the app doesn’t offer your specific cup of tea, various delivery aggregators such as UberEats and DoorDash offer multi-concept online ordering portals that will.

The bottom line is that, beyond dining rooms being forced to close, the technology was already in place to accommodate the shift in a way that’s similar to how Amazon changed the retail world and saw a huge boom last year in business.

If a dine-in experience isn’t what you’re looking for, the technology in the palm of your hand can offer a plethora of options. The name tag on your virtual, verbally smiling waitperson’s uniform now likely reads Alexa or Siri. If you wanted, these virtual assistants could even help schedule out a week’s worth of breakfast, lunch and dinner orders. And do it all in a fraction of the time it would take to pick them up yourself or prepare them at home. 

With technology partially replacing the traditional dining room, a business can operate out of a much smaller compact kitchen footprint and use non-traditional spaces for lower-cost restaurant space. A new ghost kitchen can be set up in a space as compact as around 200 square feet. Remember, though, that all laws and foodservice safety and quality standards still apply to the ghost kitchen; having the guest enjoy the food enough to order it again is still the ultimate measure of success. Yet, if a facility has adequate power, water, kitchen labor and supplies for high-quality food preparation, it can now exist pretty much anywhere and turn a profit as a restaurant business. 

In the real world, that concept has evolved into ghost kitchens run in shipping containers in parking lots, in the backs of sublet warehouses, in otherwise abandoned malls and other surprising places. It’s also evolved to include kitchen sublets from a burgeoning tier of commercial contract kitchen providers, such as Cloud Kitchen (started by former Uber CEO Travis Kalanick) or Kitchen United.

These contract kitchen providers offer leases on kitchen space for a much lower up-front cost for restaurant operators. I’ll delve more into the business models for ghost kitchens in my next article, but in short, this potentially significantly reduces start-up costs for new concepts and capital that needs to be risked up-front to start operations. 

It's easy to see why the rise of ghost kitchens had already become a growing worldwide trend prior to the pandemic. According to Euromonitor estimates from July 2020, there are already some 1,500 ghost kitchens operating in the U.S. alone as part of a growth path toward an estimated $1 trillion-dollar global ghost kitchen opportunity by 2030

Outside the U.S., countries like India (with 3,500) and China (with 7,500) continue to see sustained growth of ghost kitchens and 52 percent of global consumers are now comfortable ordering from a restaurant with a delivery-only format.

In summary, 2021 should be a rebound year for kitchens of all types as consumers start to feel comfortable returning to their favorite haunts and culinary venues; guests post-COVID will likely always hunger for moments where sitting down at their favorite table at their favorite restaurant is part of the joy of the restaurant experience.

Still, the pandemic dining room closures forced consumers to think differently about dining in and forced restaurants into becoming culinary distribution centers and ghost kitchens with real dining rooms, for a stretch of time. Not all operators were in a prime position to make the required technology shift, but there many that rapidly developed—and continue to cultivate—strategies that worked for them. 

Those operators are emerging with a stronger knowledge and greater proven experience in how to offer guests a quality online ordering experience from their local culinary distribution center and what food preparations will work for their brand.     

And while I sincerely hope the world does indeed see the light at the end of the tunnel, to quote Ghostbusters, I ain’t afraid of no ghost—because ghost kitchens have quietly been popping-up inside existing spaces around you for a while now; COVID only provided the imperative for innovation and accelerated their development.

Ultimately, this will only provide even greater choice and convenience, over time. Which reminds me, since you read the full article, you’re eligible to receive a 50% off coupon for a dozen of whatever you fancy at Delicious Dave’s Finest of Fine Wings, Pizza, Burgers, Subs, Donuts, Salads and More—coming soon, directly to your front door. Or maybe I’ll stick to restaurant transformations.

When your restaurant is backed by NCR VOYIX, it's simple to stay out front.

Whether that's literally up front with your customers, or out front of your competition.

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