Ghost Kitchens on the Rise | Superorder

The Rise of Ghost Kitchens: Everything You Need to Know About the New 2020 Trend

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Ghost kitchens have been making quite a splash in 2020. Though they started gaining popularity as early as 2016, with Covid-19 forcing many restaurants to shift their strategy heavily towards delivery, ghost kitchens and delivery-only restaurants really took off this year. But, what exactly are ghost kitchens? We wrote this article to give you an insight into all things ghost kitchens to help you decide if ghost kitchens are the right next step for you and your restaurant!‍

Are Virtual Restaurants the Future? A Quick Definition

Simply put, ghost kitchens are a food preparation facility set up for the preparation of delivery-only meals. There are tons of these facilities all around the world and more and more are rising every year. What's leading to this growth?

The delivery space has seen enormous growth over the past several years. Here are just some interesting facts about the delivery space:

• Online ordering has grown 300% faster than dine-in since 2014.
• 87% of Americans who use delivery platforms agree that it makes their lives easier.
• 31% of consumers say they use third party delivery services at least twice a week.
• From 2010 - 2020, the total addressable food delivery market grew ~5% annually to today's worth of ~$325 billion. Analysts predict a $470 billion market by 2025.
• Over the first half of 2020, UberEats doubled its total revenue compared to all of 2019.
• Comparing Doordash's income from Jan 1, 2019 - Sep 30, 2019 and Jan 1, 2020 - Sep 30, 2020, they saw over a 3x increase in revenue - from $578 million to $1.9 billion

With food delivery growing tremendously every year, it is not surprising that more restauranteurs are looking into ghost kitchens as an avenue for expansion.

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Does it work for every restaurant owner?

Ghost kitchens are all the craze at the moment. However, as a restaurant owner, there are several things to consider before diving into this model. Although ghost kitchens require less investment than opening up a second location, they still require a substantial amount of investment both financially and time-wise. The major ghost kitchen players require you to pay monthly rents, buy and set up your own kitchen equipment, and hire new staff for the location. After setting up your ghost kitchen, you can then set up your delivery only restaurant and start serving the public.

Some restauranteurs are setting up virtual concepts inside ghost kitchen facilities to expand their brand without building a second stand-alone location. Setting up a ghost kitchen requires a smaller investment and allows a restauranteur to test out several virtual brands out of the same space! If you have an existing restaurant and wanted to expand to a different part of town, a ghost kitchen facility might make sense for you.

Here are the steps that you would need to take to open up a ghost kitchen facility:

1. Figure out the right location: Find a ghost kitchen facility that is close to an area that you would like to expand to.
2. Figure out the right rent: Ghost kitchen facilities charge a substantial fee for rent. It's best to negotiate with the landlord of the ghost kitchen to make sure that the rent makes sense to you financially.
3. Create a menu: Decide what you want to serve at your new virtual restaurant.
4. Set up: Ghost kitchens usually give you thirty or so days to set up a facility inside their property. You have to buy all equipment and get set up quickly!
5. Create a brand: You must create an entirely new brand for your virtual restaurant and set it up properly on delivery platforms. This includes creating a menu, a website, branded packaging, setting up delivery apps, and creating all the right touch-points to ensure that your customer can find you!
6. Get going! Once you are set up, you can now operate your delivery-only restaurant out of your ghost kitchen facility and start serving customers.

Although ghost kitchens allow restaurants to expand their brand, it still requires a hefty upfront expense and many complicated steps. If you already have a physical location, you may want to think about launching a virtual restaurant brand out of your existing location. It's a lower risk way of tapping into underutilized kitchen space - and growing the potential revenue of your location.

Here at Superorder, we specialize in helping operators create virtual restaurants out of their existing locations! To learn more about what a virtual restaurant looks like, check out our post on virtual restaurants here: (insert blog post about 'What is a virtual kitchen?') If you're ready to launch a virtual restaurant of your own, shoot us an email to signup@superorder.com or fill out this form to talk with a team expert!

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Book a demo here!

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Delivery Platforms Used by Cloud Kitchen

Some restauranteurs are curious about the delivery platforms that ghost kitchens use. Ghost kitchens themselves don't have control over delivery applications. Ghost kitchens serve simply as a place to produce food. Think about ghost kitchens like restaurant locations with no seating. You can operate your delivery only restaurant out of your ghost kitchen and use any and all delivery applications that exist in your region or area. Once your virtual restaurant is set up on the delivery platforms, you're ready to get cooking!

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Best Practices for Boosting Profits

Although ghost kitchens are similar to restaurants in the sense that you still need to produce tasty food and serve guests, the profitability of ghost kitchens is a bit different. Here are three strategies you can employ as a restauranteur to increase the chances that your ghost kitchen is more profitable.

Run multiple virtual restaurants out of the same ghost kitchen space.

• By running multiple overlapping brands out of the same ghost kitchen space, you will have the ability to maximize your labor and kitchen space and hit a wider amount of audience.

Hire tight but hire smart!

• In a ghost kitchen, your labor hires should be smart and efficient! You want to hire no more than 2-4 people. On the low end, you risk having operational difficulties if you lose a team member to illness or the general turnover. On the high end, you'll run into a problem of 'too many cooks in the kitchen,' literally and inefficient use of labor. The sweet spot is around three people in the kitchen- where orders can be made quickly

Test!

• Having a virtual restaurant means testing menu items is less risky! You should adopt an experimental mindset and test food items on your menu! This will help you make the best decisions for your delivery-only restaurant in terms of what food you should serve. Since you don't have regulars in the door, it's easier to test new items without the risk of losing returning customers.

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How to start your own virtual kitchen business

Deciding what you will serve in your ghost kitchen space depends on many factors. Ultimately, the goal should be to serve something that you know for certain that people will find delicious! A good pointer is to do some research in the area that you are opening to make sure that there is demand for the food you will be serving. Opening a ghost kitchen concept near universities? Maybe it's a good idea to order late night food. Opening a delivery only restaurant near office buildings, maybe salads and healthy bowls is best! The best way to decide what to serve is to ensure that it is delicious and that there is demand in your area!

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