Ghost Restaurants to Save the Restaurant Industry?

The future of food service has never been so up in the air. With COVID-19 a significant threat and restaurants unsure what the future holds, takeout and delivery have become increasingly important to businesses and customers alike. While people already enjoyed off-premise ordering, the pandemic has spurred it into a full-blown phenomenon. Who doesn’t want to enjoy their favorite meal at home? Meanwhile restaurants’ revenue streams have been saved by opening delivery and takeout services.

Ghost kitchens and ghost restaurants are, thus, both on the rise. Though they sound similar, there are minor differences between the two. Ghost kitchens, also known as cloud or dark kitchens, are spaces for food prep that only do takeout or dine-in services. Many ghost kitchens let multiple restaurants work out of the same space since they only need cooking space, not tables or cashier stands.

Conversely, ghost restaurants are delivery-only businesses that operate from a brick-and-mortar location. They’re brands, not workspaces; customers can order meals online, over the phone or via third-party app, but there’s no dine-in services available.

No one knows what will happen after the pandemic, but ghost kitchens and restaurants were rising in popularity before COVID-19 and have only grown since. Takeout and delivery are huge assets to the industry—and as long as restaurants follow health and safety standards, fewer workers in one space is an increasingly attractive, and safe, option for restaurateurs.

Pros of Ghost Restaurants

The reduced need for space and increased focus on making quality food means that businesses can save money by renting out a smaller and less trafficked location. Rather than shelling out for a building in a popular area, owners can choose an out-of-the-way spot that maximizes kitchen space for prep and output.

Owners also have a chance to meet demand with plenty of supply. Since the pandemic, customers increasingly expect fast delivery at their fingertips whenever they want. Mobile ordering and third party delivery platforms make off-premise dining more accessible than ever before. Meanwhile COVID-19 has already expedited delivery in some respects: For example, parking. Couriers find it easier and easier to park nearby when restaurants are reducing their capacity and experiencing less foot traffic, so drivers don’t have to travel so far to pick up a delivery.

There’s less food waste with ghost kitchens as well. Before the pandemic, the restaurant industry wasted approximately 20-30B pounds of food every year. Not only is this environmentally unsound, but it costs restaurants a lot of money to throw out and constantly replace ingredients. It’s especially cost-efficient to operate ghost kitchens that have multiple brands operating out of the same space because they can share and repurpose spare ingredients.

Ghost restaurants have the potential to massively improve and streamline online delivery during the pandemic and beyond.

Cons of Ghost Restaurants

As beneficial as ghost restaurants can be for delivery, there are also reasons that traditional restaurants remain so prolific. Opening a ghost restaurant might still be a good idea for your brand, but before you jump into the new business plan, consider the unique challenges that you’ll face in this new venture.

1. Marketing and acquisition is difficult without the benefits of visible storefronts and traditional advertising streams. When your business mostly operates online, it can be hard to break out amongst competition. You’ll need to create innovative marketing plans that really make you stand out.

2. Maintaining a positive reputation can be difficult without the face-to-face customer service that most restaurants rely on. When your business relies solely on its convenience and the quality of the food, but you can’t interact directly with customers, restaurants might not even know that something’s wrong until a negative review appears online. Then it’s reputation repairs, not mitigation, and that can be much more difficult to handle.

3. A lot of restaurants counteract minimal profits by marking up alcohol prices when they serve cocktails, wine and beer. Ghost restaurants can’t serve drinks so freely, and thus need to make up the lost revenue in other ways. While some states have relaxed their rules on alcohol delivery in light of quarantine, these new laws won’t last forever and regardless, ghost restaurants need to find other ways to make up the lost revenue.

Some restaurants added a COVID-19 surcharge to help pay for cleaning supplies, PPE and more. However this is difficult for ghost restaurants to justify since the staff doesn’t interact with customers, although as people are struggling financially and less comfortable dining out because of the pandemic, they may be willing to pay a little more for the security and convenience that ghost restaurants can offer.

Now is the perfect time to experiment. As the pandemic continues to proliferate without any sign of stopping soon, get creative with new ways to make your restaurant stand out and see if ghost restaurants are the future of your food service business.