We’ve seen the rise of ghost kitchens over the last few years, but do they have the appeal they once had, and will we see even more of this pandemic trend pop up in the future? Initially, some commercial realtors predicted that by 2025, ghost kitchens would make up as much as 20 per cent of the restaurant industry. However, those numbers seem high as the race to open ghost kitchens seems to have cooled with the re-opening of in-person dining.
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The challenges
As restaurants discovered the downside of ghost kitchens – low volume units, operational difficulties and permit challenges – many companies considering this venture have changed their plans, and many have closed their previously-opened locations.
The biggest issue is that they don’t seem to be able to generate enough sales for the volume required to make them viable and profitable investments, even when factoring in the savings on labour and real estate.
Another challenge that this model faces is the lack of loyalty or engagement with their guests, something many restaurants rely on for revenue. Studies show that guest satisfaction rates higher with dine-in restaurants when compared to ghost kitchens. 20 per cent of guests reported higher satisfaction with better order accuracy, 23 per cent were more satisfied with order quality, and 16 per cent saw more value when they visited a restaurant dining room.
To combat this, operators will need to step up their efforts, focusing on the customer experience and branding to build that necessary customer loyalty and reliable revenue.
Are ghost kitchens still a viable model?
While they have certainly lost momentum, all is not lost, as long as operators embrace change. Ghost kitchens that become omnichannel may be able to stay relevant and profitable. Focusing on a pick-up model will help kitchens make the most of their margins and better manage labour. As well, with many businesses opening back up, there is an opportunity for ghost kitchens to profit from the corporate catering scene and boost business during the daytime.
For consumers who are looking to maximize an off-premise experience, this model offers the convenience of online ordering, contactless payment, and third-party delivery apps, so they may have an advantage over restaurants for this customer. If operators can get attention for their business and build loyalty, they may be able to see success in this market.
Ghost kitchens are still a way for businesses with small overhead to operate with lower operational and labour costs, but as the foodservice industry continues to evolve, they will need to adopt an omnichannel approach to stay competitive and get ahead.
