You don't need to hire waiters or customize your building to make it comfortable for customers who eat at home. The kitchen operator rents a small space in a larger shared kitchen area. Think of it as a bunch of mini-kitchens inside a much larger one. There can be between 5 and 20 different restaurants in the same space that prepare dishes every day to represent their virtual food brand.
It's much cheaper to pay rent for a smaller kitchen than it is to spend a lot of money for the entire space. Even before COVID-19, foot traffic in restaurants in some areas had decreased thanks to the convenience of food delivery apps. But now, getting food from your favorite restaurants has become a daily necessity. Virtual kitchens save a lot of initial costs, but the concept also eliminates many of the ongoing daily costs of running a restaurant.
Labor costs can represent between 20 and 30% of gross income. As in any effort, you have those who succeed and those who fail. But the ghost kitchen phase has just begun. There have already been incredible success stories of restaurants that have lost 50% of their revenues, but then they have added several lines of ghost kitchens and have recovered all the lost profits and more.
Ghost kitchens are an example of the resilience of restaurant owners around the world in the face of a global pandemic. Not all ghost kitchen businesses are inherently exploitative or obsessed with profits over labor; in fact, some may even be responsible for saving independent restaurants that might otherwise have failed during the most difficult times of the pandemic without earning additional income. Either way, anyone can cook their hamburger, tacos, or pizza anywhere, making the ghost kitchen concept so lucrative and appealing to homeowners and investors. A ghost kitchen is the place where virtual restaurants produce food without a physical store to call home.
While ghost restaurants can technically increase the cost of the dishes on their menu, the extra surcharge doesn't make much sense, since customer safety is less at risk when placing an order at a ghost restaurant. Ghost kitchen facilities can offer different types of food under one roof, satisfying the consumer's appetite for a convenient variety. Ghost kitchens typically have a menu option for guests to choose from, while virtual dining rooms have multiple menus. Large companies, such as Panera Bread, use ghost kitchens to test new concepts, as they recognize that the next step in food is driven by technology.
Ghost kitchens don't have a fixed location, allowing restaurants to create food when they order it and deliver it to multiple zip codes. On its website, Virtual Dining Concepts states that restaurants that install ghost kitchens to operate one or more of their brands can expect a 30 percent increase in their profits. Ghost kitchens don't look like a typical restaurant: these places in particular don't have tables, chairs, reception stalls, bars, or patios. It offers ghost kitchen entrepreneurs the opportunity to present virtual brand concepts to a panel of experts, all with the intention of being accepted into the program.
Many restaurants that venture off-site through ghost kitchens partner with third-party delivery aggregators, such as Uber Eats, Grubhub and DoorDash, because they simply don't have the bandwidth needed to launch their own delivery service. Food costs represent another part of your income, but ghost kitchens tend to focus on a niche or a limited menu. If you love Shark Tank, then you'll love the Ghost Kitchen Incubator program from ShiftPixy Labs. The simplest of all the ghost kitchen models is where you would buy your product from a retailer, repackage it for your brand and deliver it.
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