As a professional chef for over a decade, the concept of ghost kitchens fills me with dread, but it is quickly emerging as a restaurant trend that will be part of the “new normal”.
I grew up with the hustle and bustle of a traditional kitchen. The manic pre-service mise en place scramble before the arrival of customers. Although chefs don’t typically get to meet the customers, they are usually only a handful of feet away in a buzzing dining room. You can feel the atmosphere rush through.
A combination of technology, market economics and the effects of the coronavirus on the restaurant industry has changed the playing field in a short period of time. Rather than sitting a few feet away, customers are now likely to be a few miles away sitting on their couch. Your “customer” will probably arrive on a scooter wearing a helmet, holding out their iPhone to pick up the food.
Ghost kitchens (also called ‘cloud kitchens’, ‘delivery kitchens’ or ‘virtual kitchens’) are built with one thing in mind: serving delivery customers.
With no walk in customers, the whole kitchen design only has to keep the following aspects in mind…
- Speed of food preparation
- Quick entrance / exit for delivery drivers
- Technology friendly
- Proximity to large urban populations
A Perfect Storm Of Converging Factors
Ghost kitchens as a concept had been on the rise even before the virus started to change the restaurant business forever. They had a break out year in 2019 with huge investment, including one company raising $400 billion in funds from Saudi Arabia, fronted by Uber founder Travis Kalanick.
The following factors have come together as being key to the bright future of ghost kitchens:
- The rise of delivery app technology worldwide
- People being stuck at home because of coronavirus
- Restaurants being closed and having to rethink their entire model
- A recession and reduced consumer spending
Just like Zoom has benefited from people working at home and online retail sales are flourishing, the coronavirus has put this trend on steroids. The disparity between different restaurant sectors was clear from the very start. In March, when the majority of closures hit, fine dining sales dropped by more than 90%. Casual dining was down 75%, fast casual was down 65%, and quick service (fast food) dropped by 50%.
But, delivery orders surged by 67%. This is where ghost kitchens have a huge advantage and opportunity…
What Problems Do Ghost Kitchens Solve?
Most restaurants do not have the set up for delivery at mass scale. Delivery drivers walking through a venue with helmets on and huge backpacks is not the best look for any venue. Parking is limited, and chefs cooking for two types of customers (dine in and delivery) is not ideal.
Ghost kitchens on the other hand, solely have delivery orders in mind. They offer a number of unique benefits such as:
- Consumers can order from a menu that is specifically for takeaway (no limits on food dishes that won’t travel well)
- Customers can order several types of food from one kitchen premises rather than just one type of cuisine (Italian, Indian etc).
- Lower rents for commercial units as footfall or prime locations are not needed
- Proximity to customers where a wide variety restaurants are limited (Suburbs etc)
Big Tech Encroaching On Another Industry
The big worry for restaurants and foodie entrepreneurs is that this could be “big tech” eating up another industry. The third-party food delivery companies take anywhere from 10-35% of the total fee, which changes the market economics massively when it comes to preparing food.
Companies like Amazon (retail), Google (Newspapers and classifieds) and Facebook (traditional advertising) have swallowed and decimated multiple industries via tech. The danger is the same is about to happen to restaurants.
Big tech companies can at first seem like a friend who brings extra business. As many have found out, once you let the wolf in the door they can blow the house down.
Could delivery companies look to increase their own margins? Will they end up building their own ghost kitchens, hiring the chefs and controlling the whole process? Absolutely 100%, because it gives them even bigger economies of scale and they have oceans of data to predict everything from consumer eating trends to underserved locations.
Ghost Kitchens in 2020: Summary
- Virtual kitchens are here to stay and a trend that will accelerate
- They are cheaper, faster and more efficient to service delivery customers
- They have an advantage of offering additional choice to delivery customers
- Big technology will eat further into restaurant margins and ultimately force more restaurants to close.
Not every kitchen in the world will be a ghost kitchen. People will still want to eat out and the world will still need talented chefs and vibrant restaurants. But, with up to 200,000 restaurants predicted to remain closed after the coronavirus in the USA alone, this is clearly a trend that is speeding up.
The chef in me hates the thought of cooking a meal to-go that goes into the back of a thermal backpack. Unfortunately, that is where the world is going.
Just like there is a place for traditional books and local bookstores ebooks, kindles and audio books also emerged to suit different customer’s tastes. Ghost kitchens are the foodie manifestation of that digital trend. It looks like they will be the key trend for 2020 and heading into 2021.