Ghost restaurant

A ghost restaurant is a food service business that serves customers exclusively by delivery based on phone orders or online food ordering.[1] By not having a full-service restaurant premise with a storefront and dining room, ghost restaurants can economize by occupying cheaper real estate.[2][3]

Although restaurants typically earn more from customers who dine at a restaurant, due to the money saved by not having a dining room and not hiring waitstaff, ghost restaurants have significantly lower overhead (even taking into account the expense of operating a delivery service or the fees charged by third party delivery companies like Grubhub and Caviar).[3] Operating a dining room, with the real estate it requires, staff, amenities, insurance, and other expenses, entails a significant cost.[4] Even restaurants with considerable to-go (British: takeaway) business traditionally dedicate the majority of their space to seating.[5] As visibility, curb appeal, foot traffic, and accessibility are not concerns, the kitchen can be housed in an inexpensive location that would not typically be considered desirable for a restaurant. City councils in the UK have expressed concerns about expansion because residents have complained about noise from delivery traffic.[6]

A typical ghost restaurant location is able to accommodate the preparation of several different types of cuisines.[7] Green Summit Group, for instance, operates several restaurant concepts from a single location.[8][9] Without a brick-and-mortar dining location to renovate, front-of-house staff, and paper menus to reprint, companies can also try out new brands and cuisines with less effort and expense.[9][5] The strategy of having multiple brands and cuisines can target a broader range of customers.

Most of the restaurants use existing third party delivery services. For example, Green Summit, which owns several ghost restaurants in Chicago and New York City[8] and partners with Grubhub.[5] Keatz operates kitchens in Europe.[10] Some companies incorporate their own delivery system into the business model, as was the case with the now defunct New York-based company Maple.[5][11] Maple, which was partly backed by restaurateur David Chang, oriented its business around productivity in terms of meals per hour per kitchen — a metric more typical of fast food restaurants[11]. Finding the correct business model seems to be a challenge -- Maple ceased operations in May 2017 and sold to the UK food-delivery company, Deliveroo.[12] Ando, the delivery-only restaurant launched in 2016,[13] also a David Chang venture, closed doors in January 2018 and was sold to Uber Eats.[14]

Ghost restaurants have been criticized for their unpleasant working conditions and cramped, windowless kitchen spaces.[15] Several 2015 news articles found some "ghost restaurants" operated as unregulated, unlicensed standalone entities[16] or as "fronts" for restaurants that might or might not have health code violations.[17]

Terminology

A ghost restaurant may also be called a delivery-only restaurant, online-only restaurant, or dark kitchen.

Types

By creating a ghost restaurant, a virtual restaurant brand is created. There are three ways a dark kitchen and virtual brand can be created.

Independent ghost kitchen owner

An individual can set up a ghost kitchen to start their own brand, which is identified with their own online restaurant.[18][19] One might choose to start up a ghost kitchen because setup costs are lower, and the time taken is shorter, than for a kitchen that also serves a walk-in restaurant. It might take only 3 or 4 weeks.[20][21]

Existing restaurants

Existing restaurants can opt to start a ghost restaurant next to their existing restaurant.[22] In this case the restaurant provides food from their kitchen for a different brand name. A Mexican burrito restaurant could prepare pizzas as well, and sell these online under another brand. However, they do not sell these dishes in their physical restaurant. This is a way to attract consumers in the search for pizza and targeting customers without making them skeptical about the pizzas having been made in a Mexican burrito kitchen.  

Another advantage of this strategy is that it makes testing out new dishes or menus easier because only a change in the online menu is needed to trial a new dish. Eventually, if the pizza sales were successful, the Mexican burrito restaurant could add them to the menu of their physical restaurant.[23]

Moreover, setting up a virtual brand does not require many major additional capital costs for an existing restaurant. They already have the kitchen space and the staff to prepare the food. They do not need a lengthy time to set up the new brand, as many of the elements needed for the kitchen aspects of the ghost restaurant are available. The additional costs of adding a virtual brand are developing the concept for the brand, the online menu, website, and ordering and delivery system (some of these elements, such as ordering and delivery systems, can be tasked to contracted to third parties). Some new cuisines may require new cooking equipment, such as steamers, cookers, or ovens.

Delivery platforms

Another way a ghost kitchen can arise is through delivery platforms such as UberEats and Deliveroo.[24] UberEats set up dark kitchens to prepare meals that are only available on their food ordering platform. These kitchens prepare a variety of dishes. To differentiate the multiple types of dishes and cuisines, they created different brand names. Brooklyn Burger Factory, MIA Wings and French tacos are all brands created for UberEats[25] which are only available on the UberEats application. This exclusivity can convince customers to choose their particular application, as the food is solely available on the UberEats platform.[26]

See also

References
  1. Shieber, Jonathan (November 2018). "The next big restaurant chain may not own any kitchens". Tech Cruch. Verizon Media. Retrieved 2 May 2019.
  2. Holmes, Mona (May 23, 2018). "Here's Why a Lot of Delivery Food Isn't Coming From Actual Restaurants The incubators are like WeWork for the restaurant industry". Eater Los Angeles. Vox Media. Retrieved 2 May 2019.
  3. Chamlee, Virginia (September 30, 2016). "Are Virtual Restaurants Dining's Next Hot Trend?". Eater.
  4. Chamlee, Virginia (September 30, 2016). "Are Virtual Restaurants Dining's Next Hot Trend?". Easter.
  5. Ungerleider, Neal (January 20, 2017). "Hold The Storefront: How Delivery-Only "Ghost" Restaurants Are Changing Takeout". Fast Company.
  6. Panja, Soheb (2018-04-13). "Deliveroo Cranks Up 'Dark Kitchens' Scheme, Asking Restaurants for Exclusive Spin-Offs". Eater London. Retrieved 2019-04-15.
  7. Turow Paul, Eve (March 24, 2017). "That Restaurant On Seamless Might Not Actually Exist". Forbes.com. Forbes Media LLC. if you have a 6,000 square foot kitchen you can make very high-quality food and have many different styles of cuisine coming from the same kitchen.
  8. Channick, Robert (March 27, 2017). "9 restaurants, 1 kitchen, no dining room". chicagotribune.com. TRIBUNE PUBLISHING COMPANY. Butcher Block, Milk Money and Leafage share the same address, chefs and owner.
  9. Eisenpress, Cara (February 21, 2016). "Behold 'ghost restaurants': Order online, but don't try to show up for dinner". Crain's.
  10. Martson, Jennifer (March 22, 2019). "Virtual Kitchen Network Keatz Raises €12M for Its Food-First Delivery Concept". The Spoon.
  11. Kessler, Sarah (March 21, 2016). "How Maple Built An Insanely Efficient, Chipotle-Crushing Food Delivery Machine". Fast Company.
  12. Fabricant, Florence (May 8, 2017). "Maple, the New York Start-Up, Has Delivered Its Last Meal". nytimes.com. The New York Times. Retrieved 4 March 2019.
  13. Gordiner, Jeff (March 22, 2016). "David Chang's Next Restaurant, Ando, Will Be Delivery Only". nytimes.com. The New York Times Co. Retrieved 4 March 2019.
  14. Fabricant, Florence. "Ando, David Chang's Meal-Delivery Business, Ends Service". nytimes.com. The New York Times Co. Retrieved 4 March 2019.
  15. Harris, John (2018-10-09). "Are dark kitchens the satanic mills of our era? | John Harris". The Guardian. ISSN 0261-3077. Retrieved 2019-04-15.
  16. Thompson, Elise Thompson. "Have You Missed Starry Kitchen's Balls? Us Too. Uber Eats is Here to Save Us All!". The LA Beat. Retrieved 19 September 2015.
  17. Glorioso, Chris & Givens, Ann & Stulberger, Evan (November 11, 2015). "LOCALI-Team: Restaurants Use False Identities on Food Delivery Websites". NBC News. New York.CS1 maint: uses authors parameter (link)
  18. "The Rise Of The Dark Kitchen". Disruption Hub. 2018-06-05. Retrieved 2019-04-17.
  19. Marston, Jennifer (2019-03-22). "Virtual Kitchen Network Keatz Raises €12M for Its Food-First Delivery Concept". The Spoon. Retrieved 2019-04-17.
  20. Chamlee, Virginia (2016-09-30). "Are Virtual Restaurants Dining's Next Hot Trend?". Eater. Retrieved 2019-04-17.
  21. "Why Start a Dark Kitchen?". Online food ordering connected with your restaurant | Deliverect. 2019-03-08. Retrieved 2019-04-17.
  22. Oct. 17, Jonathan Maze on; 2018. "Delivery could force changes in the restaurant business model". Restaurant Business. Retrieved 2019-04-17.CS1 maint: numeric names: authors list (link)
  23. "Meal delivery trend: virtual restaurants". RetailDetail. 2018-09-05. Retrieved 2019-04-17.
  24. Harris, John (2018-10-09). "Are dark kitchens the satanic mills of our era? | John Harris". The Guardian. ISSN 0261-3077. Retrieved 2019-04-17.
  25. Garlick, Hattie. "Dark kitchens: is this the future of takeaway?". Financial Times. Retrieved 2019-04-17.
  26. Filloon, Whitney (2018-10-24). "Your Favorite Uber Eats Restaurant Might Not Actually Exist". Eater. Retrieved 2019-04-17.
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