During the pandemic, ghost kitchens or ‘electronic restaurants’ thrived. It was an affordable and easy way to deliver quality food quickly. Some entrepreneurs saw it as an easy way to manage a restaurant on a small budget, while others saw it as an excellent opportunity for an extra revenue stream.
Ghost kitchens partner with multiple established kitchens to produce their products. In return, they get a small cut of the profit. Experts say there are low unit volumes, operational troubles, and permitting stumble blocks, which might be why this model doesn’t work as well as expected in a post-COVID world.
Experts predicted that over a fifth of the US’ restaurant industry would be ghost kitchens by 2025.
But not too long ago, Bloomberg called it when reporting on the downfall of ghost kitchens and why no one seems to notice.
Many similar kitchens are closing down in India and Europe. Due to slow growth, GrabKitchen, DishServe, and others had to close their doors. GrabKitchen shut down nearly 50 kitchens as its customer base stopped growing.
What is a ghost kitchen?
Ghost kitchens, dark kitchens, or cloud kitchens are almost like an e-kitchen. It’s only available on food delivery apps. This service is even more specific because they only offer food items from online brands, cutting out the sit-down human interaction.
ALSO READ: MrBeast sues food delivery partner
So where is the food prepared? Chefs from existing restaurants prepare food promoted under a different brand, exclusively available through third-party food delivery applications.
Ghost kitchen troubles
YouTube sensation Jimmy Donaldson, or MrBeast as he’s known to his 172 million subscribers, operated his business from cloud kitchens. He had 300 locations, but none of them had any of his bright neon branding strapped over the buildings. He used established restaurants and third-party apps to serve customers.
Customers will never know where the food gets prepared, only that the exclusive food on the menu is from a ghost kitchen. In this case, MrBeast sued Virtual Dining Concepts, claiming the company delivered low-quality food items.
With this dark cloud hanging over the sector, it’s no wonder Kitchen United wants to change the term ‘ghost kitchen.’
Kitchen United tells Restaurant Dive it gives a misleading impression. Those still operating in the ghost kitchen premises are now using an omnichannel. There is a need to serve customers in more than one way. Customers want options, and not acknowledging this can block potential customers.
Valuable lessons from ghost kitchens
With the rise and fall of entrepreneurs in the hospitality sector, it’s a risk worth taking. There are many lessons to draw from the mistakes of ghost kitchens.
Overestimating growth potential
Problem: After a surge during the pandemic, entrepreneurs viewed ghost kitchens as a low-budget solution or an additional revenue stream.
Solution: Entrepreneurs should do thorough market research before investing in a model with an overestimated value.
Understanding operational challenges
Problem: Ghost kitchens have operational troubles, paired with low volumes and permits.
Solution: Entrepreneurs should carefully analyze and address these operational challenges to ensure sustainability.
Transparency in quality assurance
Problem: Ghost kitchens don’t always have complete oversight over operations, which means low-quality food items can slip in and tarnish the brand.
Solution: Entrepreneurs should always prioritize quality assurance and establish precise monitoring mechanisms.
About the author
Mia is a multi-award-winning journalist. She has more than 14 years of experience in mainstream media. She's covered many historic moments that happened in Africa and internationally. She has a strong focus on human interest stories, to bring her readers and viewers closer to the topics at hand. Do you have a story you would like her to expose, report on, or consider? Please send your request to Newsdesk@locate2u.com.
