How the world eats has changed dramatically. The movement towards a digitally integrated world coupled with burgeoning consumer expectations has unlocked on-demand food delivery as a major category within the food retail industry.
Stay at home rules early in the pandemic and customer demand for outstanding food delivered directly to their door led many to boost their weekly allowance for food deliveries, as evidenced by a new survey from Canstar Blue, showing Australians spending an average of $40 per week on food delivery.
While COVID-19 brought threats and challenges for the hospitality and retail industries, it also allowed businesses to rethink their strategies, exploring alternative ways of extending the customer experience into peoples’ homes.
In a post pandemic world, where ‘Q-Commerce’ is now the norm, restaurateurs have been cooking up new ways to attract customers and drive revenue. Facing a chronic labour shortage and rising food costs, no other segment of the restaurant industry has risen quite as quickly as the emergence of ghost kitchens to help fight inflation and help restaurants stay in business.
What are ghost kitchens?
Quite simply ghost kitchens are kitchens that make food for delivery only. They don’t have a brick-and-mortar location, but rather just a kitchen space – often rented for that specific use. They have the ability to assist struggling vendors by allowing them to focus on turning out a high volume of delivery orders, without the cost of operating a “traditional” restaurant.
Who should consider the ghost kitchen model?
Ghost kitchens have numerous advantages over conventional restaurants, but that doesn’t mean they’re right for everyone.
Overall, you should ask yourself a few questions:
- Are you ready to invest in the latest kitchen and delivery tech?
- Are you more interested in pouring over data than face-to-face customer interactions?
- Are you obsessed with data-driven optimisation?
If the answer to all these questions is yes, there’s a good chance you’ll get on well with the ghost kitchen model. But before you jump in, here are some considerations for different business owners looking to move into this exciting new space.
The rookie restaurateur bootstrapping a business
The ghost kitchen model is appealing to those who are strapped for cash and want to open a low-risk business with minimal overheads.
Ghost kitchens avoid the costs of front-of-house staff and dining space and can operate with a lower marketing spend and lower setup costs than traditional restaurants.
But are they the right model to start out with? You are competing against the delivery-focused chains that have been optimising for years. And starting from scratch, you have no customer base or reputation to give you an initial boost.
It’s true that the ghost kitchen model can provide a platform to newbies with a lower barrier to entry. So it could make sense if you are focused on building a brand without the outlay of a brick-and-mortar outlet.
But you should also consider that investment in kitchen tech, order management equipment, menu optimisation and the right team will massively improve your chances of success in the competitive delivery market. So you should be wary of trying to do it on too tight of a budget.
The independent restaurant adding a virtual brand
With more people than ever ordering food to go, many restaurants have found off-premise orders outstripping dine-in customers. Many have turned to the ghost kitchen model to make the most of this change in consumer preferences.
Rather than starting a separate ghost kitchen, these enterprising souls leverage existing kitchen space to launch delivery-only concepts from their brick-and-mortar restaurants. These virtual restaurants could offer a spin-off from their regular dine-in menu or could be completely new concepts created to satisfy specific customer demand.
This model is a relatively low-cost way to adapt and take advantage of the ghost kitchen concept without forking out for an entirely new kitchen. To make the most of your existing resources and keep staff busy at quieter times.
The restaurant group moving into off-premise dining
If you run a successful restaurant group with a number of popular concepts in a particular city or area, you might consider a ghost kitchen to make the most of off-premise orders. Not only can it serve as a central production kitchen, but it can also be purpose-built for takeaway and delivery orders.
A ghost kitchen could enable you to reach more customers outside the catchment area of your restaurants. With the potential to increase the efficiency of production for the whole group while also offering new opportunities for revenue generation.
This means more people are able to try more of your restaurants paving the way for exponential growth.
The restaurant chain improving efficiency at scale
When you’re operating restaurant brands across nations and even at a global scale, every inch of space, every second lost, and every ounce of efficiency adds up to make a huge difference. More and more restaurant chains have been turning to some form of ghost kitchen to improve efficiency and cut overheads where possible.
Restaurant chains have the big data to pinpoint the demand in different areas and different cities. They can analyse the numbers and see exactly where a ghost kitchen makes sense over a traditional brick-and-mortar restaurant. Or where a central production kitchen is the best option to serve nearby locations while also producing meals for delivery.
Ghost kitchens are here to stay. As long as you take the time to plan effectively, get the right technology in place and properly market your business, there’s a huge amount of opportunity in the marketplace. In a fast-changing, increasingly digital world, the low risk, adaptable nature of ghost kitchens could make them the restaurants of the future. So don’t be scared to jump in or the missed opportunity might just haunt you.
Jeremy Van Dille is general manager of Deliverect Asia Pacific.