Did you know there’s a $43 billion food service sector that exists only in the virtual space? There is, and if you’ve used a delivery app recently, there’s a good chance you’ve contributed to this rapidly evolving sector’s success.
Ghost kitchens, the National Restaurant Federation (NRF) reports, offer myriad opportunities for restaurants of all sizes. “At a time when the industry is still reeling from the impact of the pandemic, increased food costs, high rents and severe labor shortages,” Sandy Smith writes for the NRF, “these shared-space, delivery-focused kitchens boast an opportunity to expand, all while operating on a shoestring.”
What is a ghost kitchen?
Ghost kitchens, much like ghost towns, seem all but abandoned — at least on the surface. There are no servers, dining rooms, or even parking lots. Still, these food prep spaces are thriving in the virtual delivery app space.
Ghost kitchens employ workers who create food in a variety of spaces, including within the kitchens of established restaurants familiar to diners. Ghost kitchen operators can operate anywhere there are commercial kitchen facilities and a way to communicate with delivery apps, which list these restaurants alongside typical brick and mortar dining spots. The casual user is none the wiser, and the end result for delivery app customers is the same: doorstep delivery.
What is driving the growth of ghost/virtual kitchens?
BentoBox reports a 100% increase in the number of ghost kitchens listed on its virtual delivery platform in 2021, and on Yelp, well over 5,000 businesses self-identify as virtual restaurants. The search engine reports that searches for ghost kitchens on its platform were up more than 300% in 2021.
It’s not particularly surprising that the ghost kitchen concept has caught on with consumers. First, it’s become clear in the post-pandemic era that diners have embraced online ordering to the point where many prefer it over in-person dining. Second, restaurants have faced significant challenges trying to get back to normal operations during a worker shortage crisis and a seemingly endless supply chain disruption.
Ghost kitchens can become innovative, low-overhead branches of established brands that keep revenue churning. That overhead becomes even lower when restaurants band together to share resources in a “many-in-one” approach that has become more common overseas in recent years.
What’s next for ghost kitchens?
The trend toward virtual kitchens seems here to stay, with one industry watcher calling the phenomenon a “monumental shift in the food service industry.” “Instead of simply being a place to eat food,” writes Buck Jordan of FastCasual.com, “these ghost kitchens, just like behind-the-scenes ghostwriters, can quickly pivot and adapt their voice to changing needs.” If there’s one thing every restaurant operator can agree on, it’s that being able to quickly adjust to factors wholly out of their control is vital for survival.
National Restaurant News writer Michael Schaefer, global lead of food and beverage at Euromonitor International, surmises that virtual restaurants, which he defines as online-only establishments with no public-facing outlets, are here to stay. While early adopters have been around for years, during the pandemic, they have become the dominant business model.
Early concepts, Schaefer writes, were often vertically integrated with startups like Maple owning and operating independent ghost kitchens, but throughout 2020, there was an explosion of interest in concepts that connect existing virtual brands with independent restaurants with extra kitchen capacity. These spaces are often filling deliveries for multiple virtual brands.
Looking ahead, Schaefer suggests restaurants may follow the path of the broader retail industry, where dozens of direct-to-consumer brands have emerged to dominate various retail sectors by combining apps and delivery with a select number of physical stores. “These stores in particular serve as an important component of brand marketing,” Schaefer writes, “creating compelling and memorable experiences that drive repeat business — not unlike a good restaurant.”
Already, we’re seeing brands emerge and expand rapidly. One popular concept, driven by a popular YouTube personality, currently operates 1,000+ locations around the world, including more than 600 in the U.S. — quite the feat for a business that started a little over a year ago.
Onosys and virtual brands
Onosys is an ideal partner for virtual kitchen startups. As a first-party delivery portal, restaurants operators and in-house driver fleets benefit from a suite of last-mile delivery functionality. The platform centralizes route orders by size, value, capacity and destination, allowing real-time driver tracking and proof of delivery, and a variety of customer-facing feedback and notification features. Restaurants can use Onosys end-to-end, from route planning to dispatch and communications. Along the way, the powerful platform uncovers actionable data analytics insights.
Virtual kitchen operators who opt to partner with third-party delivery platforms benefit from reduced third-party marketplace fees and full integration with popular services, as well as several other attractive benefits.