It is no secret to the industry that off-premise sales are on the rise, as customers often seek variety and convenience when selecting their dining options. While turning to off-premise is not always the best option for operators with a concept relying heavily on dine-in, some are finding new ways try out new concepts without the service-related elements. Enter the ghost kitchen: a delivery-only concept that operates completely on a virtual or online basis.
RIP expensive startup costs
Ghost kitchens don’t need to attract foot customers, giving operators the opportunity to look for underutilized locations to run their kitchens. Basements, parking lots and back alleys are all fair game. Some virtual kitchens operate multiple restaurants in a shared location. Without a need for a traditional storefront, signage or common necessities such as printed menus and dishes, operators have a lot of potential to achieve significant cost savings. Additionally, operating and labor costs are significantly reduced with no need to hire front of house staff or delivery drivers if using third party vendors.
The sky’s the limit
Without the need to handle service elements typical in most restaurants, operators can focus almost exclusively on the menu. Running a ghost kitchen provides the opportunity to experiment with multiple concepts, whether the intention is to open a full-service restaurant or remain virtual. Another perk – the ability to eliminate food waste and use the same ingredients for dishes across multiple concepts. When purchase data informs that an item isn’t working, operators are able to be more agile with menu changes since it’s not necessary to update printed menus each time.
The abundance of data that can be extracted from operating a high-volume delivery concept brings invaluable insight to restaurant owners. Compared to customers on foot, those choosing to order delivery usually have a personal login. This makes it much easier to collect data on specific customers and build out segments based on their interests.
The startling truth
There are numerous benefits to running a ghost kitchen, but several challenges exist for operators. Delivery-only concepts rely heavily on technology, and designing a custom application is not always the most cost-effective or efficient option. Thus, many ghost kitchens rely heavily on third party delivery services. Depending on outsourced staff and platforms can be tricky, particularly when close partnerships have not been established.
Customer retention is also harder to maintain especially with shifting concepts. Without an enduring brand presence or identity, it is easier for customers to shop around for other options at the click of a button. Ghost kitchens are also not exempt from the typical challenges related to off-premise sales, such as maintaining quick delivery time, food quality and packaging.
Traditional restaurants aren’t headed into the coffin
The rise in online ordering and the increase of ghost kitchen concepts may cause an industry shake-up, but it won’t lead to its demise. The industry will likely continue to see an increase in these types of concepts to meet customer demand for quick and convenient options. Nonetheless, delivery options will not be able to replace the dining out experience.