How Can Ghost Restaurants Remain Profitable?

Yes, ghost restaurants are profitable, since they have very low overhead costs and can have several brands or several brand names for the same concept under one roof. Very low real estate rent, since it is not required to have a storefront. A lot of time was spent examining menu prices and labor costs, hours of operation, marketing and packaging to ensure cost-effectiveness, Vener said. And despite their promise to reduce overhead costs and offer sales opportunities with delivery, experts say that virtual brands are not always successful.

To ensure long-term success, operators need rigorous business plans that take into account all of these elements, as well as the additional costs associated with packaging, digital commissions and integrated third-party commissions.

Ghost kitchens

, which are usually remote spaces rented by existing restaurants to manage home and takeaway orders, aren't for everyone, but they can open up a new source of income, increase profits and gain more market share. Terri Bloomgarden, co-owner of Canter's Deli in the Fairfax neighborhood of downtown Los Angeles, says that traffic jams in the kitchen led her to open an external convenience store dedicated to home orders. Reaching a potential new market, downtown Los Angeles, was also considered. For Terri, the solution was the outdoor kitchen, but restaurants with larger kitchens and those currently operating with limited dining capacity may run out of food in their current kitchen.

The ghost kitchen concept can be activated at the most convenient and cost-effective times for the operator. Rich Levy co-founded three ghost kitchen concepts in Chicago: Cluckson's, Butterclaw Lobster Co. Leaving traditional restaurants behind, he focused on a specific niche, corporate catering, and then set up a minimum of 10 people for orders. Levy, a partner and an employee, take care of all the orders and, if you need more help for the events, he finds it. Greenspan is studying the possibility of turning at least one brand into a growth vehicle for physical locations, but plans to continue with exclusive delivery concepts.

If you use your current restaurant, you can reverse the loss of ability to eat at the restaurant (and, during the winter months, eat outside) by offering a ghost kitchen concept. This allows you to recover lost income while using your equipment, staff, and many of the same ingredients. The best way to control food quality is with dishes that are well transported, ensuring that hot foods stay hot and cold foods stay cold, says Collins. Ghost kitchens, for better or worse, rely heavily on third-party delivery services such as ChowNow, Uber Eats, Postmates and GrubHub making it difficult to establish a personal connection with diners. Now they say: “I'm hungry” turn on their favorite delivery app and start browsing it to decide what they want to eat.

At first you may have to rely on third-party marketplaces for customer acquisition due to the high fees charged on some platforms but once you're more established working with ChowNow at a flat rate can keep your business growing. Cannibalizing an established restaurant business is also a risk. A possible alternative solution? Operate only home delivery as a “sub-brand” independent of your flagship company and offer different food or a reduced version of the local menu. The latter is probably recommended since many delivery orders are made via mobile devices where simplicity is an advantage. If you operate as an independent brand be sure to establish a strong brand presence through a website social media and Google Business to gain the trust of customers. The US Foods Ghost Kitchens program helps operators create a digital presence with industry-leading marketing solutions and expert support.

Since takeaway food is becoming a reality especially during and after the pandemic ghost kitchens can help restaurants prepare for what inevitably looms on the horizon. The heat index on the latest trends in the restaurant industry play these numbers to get a bigger payout. With the gastronomic landscape suddenly turned upside down due to the increase in cases of COVID-19 Food Fanatics magazine is your source for information on restaurant industry trends food innovations and the latest food service business tips to improve your bottom line. Takeout and home orders now account for nearly half of all restaurant sales get the packaging supplies and takeaway services you need to meet demand. Stay up to date with our latest products and recipes for an optimal website experience upgrade to a newer version of the browser some functions of the website may not work as expected with the current version of your browser. Louis used the US Foods ghost kitchen platform to identify what surrounded them how to create a successful brand and what the cost-effectiveness mechanisms were leading to the creation of a wing concept Stinn said. This means that of all the startups ghost kitchens are some of the easiest to set up and maintain the property.

And before jumping into a ghost kitchen space restaurants should consider the changing labor and real estate landscape merging ghost kitchens with pickup locations covers more bases but may not be right for a new company while the industry continues to grow steadily the profit margins of any specific ghost kitchen will depend on the specific business model and the kitchen offered only plays one of several major roles in determining these margins. From there it's all about calculating the costs listed in the previous section and choosing your business model accordingly to achieve the desired profit margin in Ghost Kitchen. A ghost kitchen can be a very lucrative company and the industry seems to be on a winning trajectory even though physical restaurants keep opening again startups in the food industry are not taking much risk when opening physical stores and many are opting for the much more cautious and cost-effective approach of ghost or “cloud” kitchens. Restaurants with low foot traffic could benefit more from switching to ghost kitchens as they already have an established customer base and can transfer their marketing and methods to...