Opening a brick and mortar restaurant comes with both risks and rewards. Large investments of both time and money can be required to get off the ground, and there’s no guarantee that the endeavor will be a success.
What if there were a way to start serving food to hungry customers in just a few weeks, with a much smaller financial investment?
Innovative entrepreneurs are now using two new, revolutionary concepts to start restaurants with less risk: “ghost kitchens” and “ghost restaurants.” Often employed together, either or both concepts can help culinary school graduates start their own restaurants without all the risks of the traditional brick and mortar restaurant model.
Read on to learn more about the rise of ghost restaurants and ghost kitchens. You’ll see how they offer more flexibility, fewer barriers to entry, and lower startup risks than the traditional full-service restaurant model.
What is a Ghost Kitchen?
A ghost kitchen is a commercial food prep and cooking space where delivery and takeout orders are fulfilled. This could be the delivery arm of an existing brick and mortar restaurant, or it could be where a ghost restaurant operates. (More on ghost restaurants in a moment.)
With the rise of delivery platforms like GrubHub, UberEats, and DoorDash, delivery has become more accessible to both operators and customers. The food delivery industry has grown at three times the rate of on-site ordering between 2014 and 2019. And 2020 has seen a further spike in the market, as consumers forego dining in for delivery due to COVID-19.
The result has been increased demand for commercial kitchen space outside of existing restaurants. Ghost kitchen companies have risen to meet the demand, providing ready-made commercial kitchen space for multiple operators under one roof.
Some ghost kitchens offer extra amenities to make the delivery model easier. Denver’s Chef Ready, for example, includes food runners to bring orders out to delivery drivers, and an optional deep cleaning service. They may also include tablets and other hardware for incoming orders.
What is a Ghost Restaurant?
Where “ghost kitchen” refers to the physical space where delivery orders are fulfilled, “ghost restaurant” refers to a virtual brand. Ghost restaurants don’t have a brick and mortar presence, and their menus are only sold online and through delivery apps.
Some restaurateurs with brick and mortar restaurants are expanding into the ghost restaurant market as well. Los Angeles’s Eric Greenspan, for example, is chef/owner of three restaurants, plus four ghost restaurant brands in his “virtual food court.”
With the increase in the online ordering market, entrepreneurs are exploring this option to reduce startup and operating costs. Since the space and equipment are rented instead of purchased, there is lower risk in the ghost restaurant model.
Entrepreneurship with Lower Risks
Lower Startup Costs
The ghost restaurant model comes with much lower startup costs than a brick and mortar restaurant. Owners don’t have to find real estate or pay for expensive remodeling. Instead, they can rent a space that already comes equipped with a hood vent and other essentials, and start cooking in a matter of weeks.
The ghost kitchen also requires much less staff to operate. Without servers, hosts, bartenders, or front of house managers, labor costs remain low. Logistics are often covered by the ghost kitchen provider, so chef/owners can focus on the food. Some even include market data in their services to help tenants understand local demand.
One of the major benefits to ghost restaurants is the flexibility. Since there is no physical location, no signage, and no printed menus, operators can easily change branding, logos, restaurant names, menu items, and photography. This lets operators test their concepts and pivot quickly if something isn’t working.
Test Multiple Concepts
You could even try multiple ghost restaurant concepts at once out of the same ghost kitchen. Keep them all running to satisfy different audiences, or test which concept is the most successful and focus on that.
Graduates from Auguste Escoffier School of Culinary Arts are uniquely positioned to embark on this journey. The Culinary Entrepreneurship course includes lessons in management and leadership, as well as business planning and pricing. At the end of the course, students will write a business plan for their own food service establishment.
COVID-19 and Ghost Kitchens
While the delivery market has been growing steadily over the past several years, COVID-19 has kicked the market into overdrive. Online food delivery revenue is currently up 20% year over year, in part due to the pandemic. That represents a $26.5 billion market as of September 2020.
Of course, this growth hasn’t all occurred within ghost kitchens or ghost restaurants. Many brick and mortar restaurants have transitioned to takeout and delivery only during the pandemic.
But the easier startup and convenience of the delivery model has led some restaurant owners to expand into ghost kitchens to address the changed climate.
Escoffier Culinary Arts graduate Nahika Hillery runs an Austin food truck called Kreyòl Korner Caribbean Cuisine. She transitioned to a ghost kitchen during the pandemic, so she could focus on delivery.
“I started to look into other ideas. I explored renting out a [ghost] kitchen that provided 100% delivery and curbside. So we’re basically using a [ghost] kitchen model to run the food truck now. That led us to also invest in another location in Houston, and we’re renting out a cloud kitchen there.”
Nahika Hillery, Austin Culinary Arts Graduate & Owner of Kreyòl Korner Caribbean Cuisine
National brands are also hopping on the ghost restaurant model. Chuck E. Cheese, for example, has opened a ghost restaurant brand called Pasqually’s Pizza & Wings. During the pandemic, they’re operating the brand out of the shuttered Chuck E. Cheese locations.
A New World of Entrepreneurship
With a smaller footprint, lower cost, and increased flexibility, ghost kitchens and ghost restaurants provide a new business model for the online ordering world. This may put culinary entrepreneurship within easier reach for culinary school graduates, without a major investment and the risk that comes with it.
If you want to learn more about culinary entrepreneurship, check out degrees and diplomas from Escoffier!
Enjoyed this article? Here are some others you might like:
- Culinary School Graduates Will Require New Skills Post-COVID-19
- Building an Online Pastry Shop
- How Culinary Students Explore Flavor Profiles
This article was originally published on April 18, 2019, and has been updated.