A ghost kitchen or restaurant is a food service business that serves customers exclusively by delivery based on phone orders, online food ordering or via an app. It is basically a delivery-only restaurant.
So what does this mean? It means, unlike a traditional restaurant or take-aways where you have a shop where there’s a counter to order or place to sit, in a ghost restaurant your sales channel is an app or website.
If you’ve used Uber Eats or Mr. D for food orders then you probably ordered from shops such as KFC or McDonalds that have a physical presence in the form of a shop where you can sit and eat.
The prevalence of app-based delivery platforms has opened up a new paradigm in food businesses. You only need kitchen facilities this lowers the barrier even more, lower than even a food truck.
But how easy is it really when you have established competition at the touch of a button?
Ghost Kitchen vs. Ghost Restaurant
Before I go further, I just want to touch on a difference that may confuse some, is the parlance used in this industry.
A ghost kitchen (aka delivery kitchen, virtual kitchen, commissary kitchen, dark kitchen, or cloud kitchen) is a professional food preparation and cooking facility set up for the preparation of delivery-only meals.
A ghost restaurant (aka delivery-only restaurant, online-only restaurant, or dark kitchen) is a food service business that serves customers exclusively by delivery based on phone orders or online food ordering.
As you can see they are sometimes used interchangeably (as in the case of the dark kitchen) but there is a very important difference: a ghost restaurant is operated from a ghost kitchen. You see a ghost restaurant is a virtual brand; you can have many brands operating from one ghost kitchen. And this has opened up various business models:
One ghost restaurant brand from one ghost kitchen
Many ghost restaurant brand from one ghost kitchen with one owner: There can be many ghost restaurant brands operating from one ghost kitchen all owned by one owner. This will mean on the app it will show up as different brands (logos, menu’s etc.) but it will all come from one place, your customer will never see your place as the delivery guy collects and delivers. This means you can have a fried chicken brand, beef burger brand, pizza brand and fish and chips brand all operating from one ghost kitchen.
Many ghost restaurant brands operating from one ghost kitchen with different owners: Unlike above each brand here is owned by a different person and benefits from the cost-saving of sharing space. With the cost shared amongst restaurant brands.
Many ghost restaurants brands with different owners operating from one ghost kitchen site:
The B2B (business-to-business) business of operating only the facilities and renting it out various ghost restaurants. This is like WeWork but for ghost restaurants.
What to sell and where to sell it from
Product mix and location is important in this business.
Location: You may not need a premium shop front but you need to be within the delivery range of the platforms you are working on. So yes rent will be cheaper as you don’t need to operate from the ground floor or the main road but all delivery platforms have a radius that they cover. You also need to be within that radius. You must also be close to an affluent or middle-class area, densely populated or a business district; these are where food delivery apps are popular.
Product mix: If you are selling fried chicken and there is a KFC close by and also available on meal delivery apps in your target area. What is going to be your competitive advantage? You are either going to have to be cheaper or better or specialise. It’s going to be hard. So best to carve out a niche that others are not doing, the margins are good on pizza, but even better if you can specialise in a niche example in vegan or vegetarian products and build a brand that is because there is not a lot of established competition there.
How ghost restaurants work in the app age
The ghost restaurant advertises on the app and pays a commission for every order.
The ghost restaurant will have a phone, tablet or PC to track when orders come in and notify the app when the order is ready.
The app then notifies their drivers, the driver will come on their vehicle with an insulated bag to keep the order warm:
As app ordering becomes more and more popular, not only does it save time but its also safer to order via an app then to go out with your car, so even if the delivery fee is more than petrol I think this business will grow more popular in future. You sitting at home watching Netflix and feel like a pizza. Who feels like going out? Speaking about pizza, my local ghost pizza restaurant made it into capetownetc’s 10 Places to satisfy a pizza craving:
1. Carte Blanche did an insert on “The future of restaurants” in a post COVID world which I found interesting. The ghost kitchens were far better suited to adapt than their “brick-and-mortar” counterparts. The cut taken by the likes of Uber Eats and Mr. D is very high for traditional restaurants, but ghost kitchens not only already factored this in but are able to better survive due to their low-cost structure. Watch below.
2. Kauai owner The Real Foods Group launched a new chicken fast-food brand in SA called Free Bird but is delivery-only on Uber Eats and Mr D – for now.
The company is making use of so-called “dark” or “virtual” kitchens, which are like co-working spaces for restaurant kitchens. There’s no sit-down service – the kitchen only prepares for deliveries.
3. In the US, LA startup Bowlila shares a colony “ghost kitchen” with 25 other restaurants, each with its own small kitchen for takeout and delivery options.