The term “ghost kitchens” entered the common lexicon relatively recently. While the concept of a ghost kitchen has been around for some years now (the term appears to have been coined by an NBC article in 2015), it has recently gained prominence in the era of COVID.
Essentially, a ghost kitchen is a freestanding commercial kitchen that hosts multiple tenants and restaurant concepts – all creating food exclusively for delivery. Restaurateurs can strike a deal with a ghost kitchen to run their delivery-only restaurant concept out of the communal kitchen.
It’s an attractive business model for plucky food entrepreneurs who want a quick, inexpensive way to launch their food concept. But – there’s no sense mincing words – it has its drawbacks.
In this article, let’s untangle the pros and cons of ghost kitchens, and suggest alternatives for how to launch a virtual or ghost restaurant concept.
Ghost Kitchen Pros and Cons
The ghost kitchen model is attractive for a reason. When the idea first made waves roughly six years ago, it was a revolutionary way to think about opening a restaurant. Suddenly, you didn’t need massive sums of starting capital or protracted leases. Nevertheless, the model has its shortcomings.
Here are a few pros of ghost kitchens:
- Flexibility: Since your brand is virtual, you have wiggle room for experimentation. You can change items, revise prices and even launch an entirely new concept with minimal fuss.
- No Brick-and-Mortar Leases: This is the big one. When you run your restaurant through a ghost kitchen, you can (usually) go month-to-month rather than signing a long lease.
- A Fast Track to Launching: Food entrepreneurs like that you can ideate, develop and launch a ghost restaurant concept in very little time.
- Basic Restaurant Permits: You still need all of your basic restaurant permits (like a health license) to run a restaurant from a ghost kitchen, but you don’t need building permits or liquor licenses, which saves effort.
- Skeleton Crew: You can operate a restaurant concept from a ghost kitchen with just a few cooks. No front-of-house staff is necessary.
And here are a few cons of ghost kitchens:
- The Costs Can Still Add Up: Operating through a ghost kitchen, you are still on the hook for staffing, inventory, rent and monthly fees. These costs can add up.
- They’re Difficult to Market: With no physical presence and no strategic partnerships, ghost kitchen restaurants find it challenging to reach new customers.
- No Lucrative Liquor Markups: Full-service restaurants offset their costs with high liquor markups. Restaurants at ghost kitchens have no such recourse for offsetting their monthly costs.
- Location: Ghost kitchens aren’t always conveniently or strategically located, placing your restaurant in a disadvantageous market.
Alternatives to Ghost Kitchens
Luckily, there is a model that keeps everything beneficial about ghost kitchens while addressing the pain points listed above. You can partner with a managed delivery kitchen network to launch your restaurant concept. A delivery kitchen network – like REEF’s network – handles all the aspects of your food prep and delivery at zero capital expense, placing you in bustling neighbourhoods strategically chosen to fit your concept. Unlike ghost kitchens, you won’t shoulder the burden of staffing, inventory, rent or monthly fees. And you can easily expand your concept to new markets – even new countries.