The Virtual Restaurant: Pros and Cons to Ghost Kitchens

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Have you ever been perusing GrubHub or DoorDash and spotted restaurants that all seem to be operating out of the same building? It isn’t a glitch, you have just discovered a ghost kitchen. The growth and development of third-party delivery services in the early 2000s gave rise to the concept of establishing kitchens for the sole purpose of preparing food for delivery: no front-of-house staff, no dining, no storefront, no parking, and no public face. In 2020 there was an explosion of growth in this concept, as restaurants had no choice but to close their doors for good.

A few establishments went into virtual restaurant mode to survive. While the terms are used interchangeably, a virtual restaurant operates differently from a ghost kitchen. A virtual restaurant is a previously established brand or business operating a delivery-only service out of its original kitchen, whereas the latter is a kitchen run by a third party that houses many “restaurants”, like a Reef ghost kitchen. Even a few major food chains have outsourced their delivery services to these ghost kitchens. If you order through a 3rd party app, your food may come from one of several ghost kitchens they are renting space from.

Pros of Ghost Kitchens

So what are the benefits of operating your restaurant this way? Here are a few positives that come from this ever-increasing foodservice trend.

Cost of Overhead Decreases Dramatically

You will save money on staffing as there are no diners to serve. Ghost kitchen real estate is usually fairly inexpensive and you are sharing the space with several other chefs. This means the costs are distributed and there is no upkeep needed on a storefront.

Rising to Meet Consumer Demands

The growth of food delivery enterprises continues and shows little to no signs of slowing down any time soon. People like the convenience of food delivery and utilize these services in rapidly increasing numbers. By 2025, experts are expecting food delivery to generate $96 billion in revenue.

Creative Menu Flexibility

Ghost kitchens are ideal for those who like to create a fluid menu or one that is very simplistic. Without established branding holding you back, it is easy to switch up the food you serve regularly and even offer smaller more focused spreads.

Cons of Ghost Kitchens

As with any endeavor, for every positive, there are some drawbacks as well. Here are a few of the negatives to operating a ghost kitchen.

Minimal Control Over Customer Satisfaction

If the food is on time, at an appropriate temperature, or in one piece is entirely in your driver’s hands. You can’t present the food yourself, so you can’t ensure it is up to your impeccable standards. When a customer goes to complain online, who will they talk about?

Third-Party Delivery Is Expensive

Depending on the service, you could pay between 20 to 40% of your revenue to the delivery company, which defeats the money-saving purpose of this decision in the first place.

Little to No Public Interaction

Without a physical storefront for people to be connected to, you will have to rely entirely on your virtual reputation and social media to connect with your customers. Customer loyalty drives many businesses’ sales and the food industry is not any different.

So do the pros outweigh the cons? That’s for you to decide.