- Kitchens set up for delivery only give existing restaurants a chance to expand their reach and new food entrepreneurs an opportunity to keep their expenses down while breaking into the market
- The model has gained popularity due to COVID-19, and one analysis suggests that ghost kitchens could be a $1 trillion business by 2030
- Skeptics question whether ghost kitchens can be beneficial to smaller companies and suggest that the market may be oversaturated with these offerings
Summary by Dirk Langeveld
Prior to the COVID-19 pandemic, “ghost kitchens” were an emerging trend enabling restaurants to expand their market. During the public health crisis, they have become an important way of meeting consumer demand while also presenting new opportunities for startups.
Ghost kitchens don’t serve customers on site, but prepare food solely for delivery. Meals are typically delivered through a third-party service such as DoorDash or Uber Eats, allowing businesses to develop brands or cater to specific foods sought by consumers. Some restaurants have relied on the model to remain solvent as customers have shifted away from on-site dining and increasingly adopted delivery options due to the pandemic.
The trend began as a way for venues like hotels to make greater use of their kitchens, which include professional setups but are dormant most of the time. By allowing other companies to use the kitchen during down times, the venue earns income while restaurants were able to enjoy a cost-effective way of expanding their reach. Some property developers had also started establishing ghost kitchens in vacant retail space.
In addition to helping established eateries, ghost kitchens have been a valuable way for new food entrepreneurs to get started. By leasing kitchen space, they can build a customer base and avoid the risks of starting with a brick-and-mortar location. Ghost kitchens can also prove to be a useful testing ground for companies before they establish a location, helping a new restaurant to avoid the kinks that often accompany an opening.
While ghost kitchens have the potential to be a win-win situation, with the market research firm Euromonitor forecasting that delivery-only food service establishments will grow to a $1 trillion business in the next decade, the model has also resulted in some skepticism. Critics say ghost kitchens are more beneficial to larger chains able to move a significant amount of meals each day, with smaller companies experiencing thin profit margins – especially when the delivery service gets a cut of each sale.
There is also the potential that the market will become saturated as ghost kitchens and virtual brands flourished during the pandemic. And it remains to be seen whether customers will continue to favor delivery once COVID-19 passes or on-site dining will experience a resurgence in popularity.
