February 10, 2021

Ghost Kitchens: Cutting Costs with a Modern Business Solution

AN INTRODUCTION OF THE ELEMENTS THAT HAVE CATAPULTED THIS TREND TO SUCCESS

Dark, virtual, delivery-only, or ghost kitchens? Call it what you want, but this trend has gotten a lot of press lately as foodservice operators have increased focus on quick service and to-go food options to support or sustain operations amidst COVID-19. It comes as no surprise that their market share is rising but the rate at which it’s happening has sped up as restauranteurs pivoted toward alternative solutions to keep businesses afloat during the pandemic.

So, what exactly are ghost kitchens? In short, these are production facilities that focus on-to-go or delivery options to service customers. Some are facilities that allow multiple businesses with varied menus to share space and leverage delivery services to get their food in customers' hands. Originally regarded as a gimmick, the demand for ghost kitchens displays the trends’ resiliency as the concept has expanded to alleviate growing demand. This is not to say that in-person dining is in danger, in fact, these kitchens are built to supplement high demand in orders and have broadened the landscape of foodservice over the last several years.

The Anatomy of a Ghost Kitchen

Initially, ghost kitchens were mostly operators that needed a full-service backend space while partnered with third-party delivery services. These kitchens are considered commissary kitchens, spaces that allow multiple restaurants to operate with shared equipment, dishwashing services, bookkeeping solutions, and more. This category currently holds the largest amount of market share in the ghost kitchen space.

Another type of kitchen is what is deemed a “pop-up” restaurant. This is defined as businesses that have added cooking spaces to their existing kitchens, expanding their menu offerings to include items that are only available for delivery. Most recently, the concept of pods has been introduced as ghost kitchens housed in shipping containers that sometimes operate as drive-thrus.

A Problem-based Strategy

An operator needs to assess their options when considering introducing this concept into their current business cycle. Ghost kitchens are a viable option for small businesses that are looking to use this space to supplement a growing volume of orders while seeking an affordable solution. Ghost kitchens offer a way to cut expenses associated with opening a traditional restaurant. Larger organizations can find revenue in this alternative by using excess kitchen space and employing underutilized staff for an optimized business model.

Based on these goals, dealers can strategize the designs included in their quotes to meet the growing demand in the appropriate customer base. No matter the budget, all businesses can benefit from this model by offering a curated menu with popular items that travel well when packaged for delivery.

Adapting The Kitchen Space

While some facilities implemented this model well before COVID-19, many of your customers may be adjusting their current operations to accommodate a model that will remain in demand beyond the pandemic. The operational aspects of running a ghost kitchen may seem simple but the process can be complex. Before a business can begin planning the operational aspects of their kitchen, they first need to find a location that will yield a higher order volume. This can be determined by doing research based on their existing customer base.

Even when compared to a catering operation, ghost kitchens require longer processes as all of these orders will require packaging and collection stations to optimize the order process. Ghost kitchens also traditionally operate with a smaller staff count, which can be beneficial if shift schedules are adjusted.

Leveraging AQ to Build Your Customer’s Ideal Kitchen

If helping to outfit a ghost kitchen is new for you as well, the good news is that there’s already equipment in the market to accommodate space-saving requirements, many of those listed on AQ. AQ’s suite of products can make this planning process run smoothly. Our catalog includes product categories that make it easier to search for appropriate equipment that maximizes your kitchen’s efficiency. These categories include Combi Ovens, Multi-Function Cooker, Multi-Function Cabinet,  and Food Packaging items, among others. Some examples of these types of items can be viewed below.

Vulcan VCS18 – Multifunction Cooker, Electric

Lainox NEOG084 – Multifunction Cabinet, Hold/Cold, Electric  

Omcan USA 50002 – Food Packaging MachineWhether a temporary or permanent change to the operation, its success will also rely heavily on the space's design aspects. The design blueprint will work as the reference for the margin of optimization in a kitchen and allows an operator to visualize the result early in the process. If the design isn’t great, the operations won’t be up to par, and your customer may end up with equipment on hand that isn’t the right fit.

AQ Design Solutions (AQD) hosts a powerful suite of commercial kitchen design tools that simplify the kitchen design process for dealers that license Autodesk AutoCAD and Revit. Including a design as part of the quoting process has become an expectation of many customers, and helps your customer visualize the software at their point of purchase. The software works by automatically syncing your designs and projects in AQ. As an authorized OEM for Autodesk, AQ gives users an innovative technology experience while expediting the design process regardless of your workflow.

You don’t have to be a design firm to benefit from AQDS. For dealers, using AQD to provide a front-end design can increase your chances of closing a deal. Licensed CAD and Revit users can use AQD’s automation capabilities to gain access to content in our library that quickly populates their project. Read below to learn what features make our product’s value worth it.

Long-term Benefits

The concept of ghost kitchens has already helped alleviate debts for neighborhood restaurants in urban areas. With these processes implemented, small businesses will be able to compete with larger organizations while expanding their menu offerings and increasing revenue. The operators of these kitchens will also benefit from a model that allows them to grow their business portfolio for a much lower cost than expected with a traditional model.

While it’s been called a fad, the concept has proven to surpass expectations with a growing number of facilities opening at a fast rate. Foodservice delivery sales more than doubled from 2014 to 2019 and are only expected to increase as commercial real estate developers look to fill the gap caused by abandoned leases. This space repurposing will further supplement the growth in market share for ghost kitchens.

Restaurants stand to increase their revenue by incorporating the concept by decreasing overall delivery and staffing costs while reducing food delivery times and increasing sales. There’s already been increasing successes reported on a global scale. According to Euromonitor data, the United States had about 1,500 ghost kitchens operating in June 2020. These totals are ahead of the UK’s 750 but are far behind China and India, which each have 7,500 and 3,500, respectively. This data points to plenty of growth opportunities for companies that are seriously considering the idea.

For an industry expected to grow by $1 trillion in the next ten years, restauranteurs stand to benefit greatly from the value that this market can bring to their overall business. A combination of space optimization and changing cost structures will be vital in the growth strategy for ghost kitchens.

Do you have a customer that built a ghost kitchen using the AQ platform? We would love to hear about it and feature it in our blog. Email us at marketing@AQ-FES.com.

Related Links: State of the FES Industry: Interpreting Trends Through AQ Data, Checking Up On Outdoor Dining Trends On AQ

Alex Cruz - Marketing Associate

Alex is in her first year as a Marketing Associate at AQ. Her focus is on delivering innovative content to our clients through our digital platforms. She brings with her years of experience in various B2B industries that enable her to provide a fresh perspective.

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