Are you considering opening a ghost kitchen? Given the high consumer demand and low setup costs, it’s a business worth a look!
Ghost kitchens are popping up all over, and the trend is here to stay. Even celebrity chefs are opening ghost kitchens. If you already run a restaurant or want to start one, these delivery-only restaurants offer opportunities aplenty.
Setting up a ghost kitchen (or a cloud kitchen) involves balancing three elements: the ordering process, food preparation, and delivery. From The Beginner’s Guide to Ghost Kitchens, this article outlines the steps needed to get started.
9 Steps for Launching a Successful Ghost Kitchen
The following steps will help you start a successful ghost kitchen business.
- Decide on the Type of Ghost Kitchen
- Select Your Location
- Plan Your Kitchen Setup
- Follow Licensing, Health, and Safety Regulations
- Optimize Your Delivery Menu
- Choose Your Online Ordering and Delivery Methods
- Prioritize Your Food Packaging
- Hire Staff for Your Ghost Kitchen
- Optimize Your Scheduling
Step 1: Decide on the Type of Ghost Kitchen
Did you know that there are different types of ghost kitchens? Will your ghost kitchen be an incubator ghost restaurant, entrepreneur ghost restaurant, or kitchen pod?
Before diving into the ghost restaurant business, decide what type you want to pursue. Each type of virtual restaurant has its benefits and drawbacks, and each requires a different level of investment. For example, you can build your kitchen from scratch or rent an existing restaurant kitchen.
If you already have an existing restaurant, you can use a shared-kitchen model. The benefit here is that you can feature specific items not found on your conventional menu and fill a particular market niche. Additionally, it’s wise to serve a specialized menu and offer food that is more suited for delivery.
Step 2: Select Your Location
Ghost kitchens are trending, in part, because they can be set up almost anywhere; a kitchen space is all you need. (How about a food truck ghost kitchen?) You don’t have to pay high rent or worry about walk-in or drive-in customers.
Yet the old saying “location, location, location” applies to ghost kitchens too. Some of the factors to consider in selecting an ideal location for your ghost kitchen include:
Area: Your choice of location is key to your business’s success. Establish your virtual kitchen in an area surrounded by your target market. That way, food delivery to customers will be faster, and you’ll have future growth options.
Affordability: The bottom-line consideration when starting any business is cost. Since you want to keep overhead costs to a minimum, you should choose an affordable space.
Space Size: The space needed to establish a ghost kitchen is minimal. Nonetheless, it should be large enough for your staff to move around. Also, consider safety precautions and legal requirements when it comes to commercial kitchens.
Parking Space: Most ghost kitchens operate purely on a delivery-only basis. However, you will need a parking space for your drivers. The area should be large enough to accommodate several drivers based on demand and the flow of orders.
Safety: After securing the perfect space for your venture, make sure it’s safe for operation. In addition to common workplace injuries, restaurants have their own set of hazards. Burns, falls, and chemical exposures top restaurant injury lists.
Check that you have the necessary safety measures in place too. In addition to taking common-sense measures, look to reputable sources for information on restaurant safety. And be sure to obey the safety regulations for your locale.
Step 3: Plan Your Kitchen Setup
When you hear the term “ghost kitchen,” you might picture phantom cooks with floating spatulas! But everything from the food items to the utensils in a ghost kitchen is real. So you’ll need to invest in top-quality cooking equipment.
When choosing your kitchen setup:
Create a Floor Plan: A floor plan gives you a clear picture of your kitchen design. Create a plan before booking a contractor. Set a clear layout and choose fixtures, cabinets, and finishes that suit your style.
Design Wide Walkways: Your kitchen floor plan should include enough room to walk around in. If your kitchen has an island, plan enough space to clear your island from cooktop and storage spaces.
Eliminate Wasted Steps: Keep your items readily accessible as needed. For example, plastic containers and wraps should be near a work surface. Flatware and dishware should be near the dishwasher.
Organize Items within Reach: Take time to organize your pantry and other storage areas. Frequently used ingredients and items should be within easy reach.
Make Recycling Easy: When planning your setup, include spots for recycling. For instance, you can equip a cabinet with containers for plastic, glass, and metal. You can also have a spare drawer on the side to hold old papers or newspapers to recycle. Plan for recyclable food waste too.
Step 4: Follow Licensing, Health, and Safety Regulations
To prepare and sell food online, you’ll need to work from a licensed commercial kitchen. Apply for a business license before starting operations to avoid disruptions.
Your local health department may want to visit your space. The inspector will review your production methods, food storage areas, and general workflow and check for licensing and other requirements.
Inspectors may also review your menu and the third-party services you use. Make sure you have a person in charge who has an updated ServSafe Food Manager certification.
Step 5: Optimize Your Delivery Menu
When it comes to creating a ghost kitchen menu, your focus should be on simplicity and popularity. Instead of having a full-blown menu, offer a few standard choices and fan favorites.
Make sure each menu item is well suited to delivery orders. Take into account food prep time, temperature, and how well particular menu items travel. If your food arrives soggy or cold, customers will think twice about ordering from you the next time they want delivery.
Try to keep your food costs low by offering simple food and a limited menu. Although you shouldn’t sacrifice creativity, you can reduce costs by featuring items with similar ingredients and preparations. That said, your menu doesn’t need to be plain or boring — you can incorporate plenty of variety into a pared-down menu.
Be sure to factor delivery costs into your menu prices. If you’re using third-party delivery apps, you will likely face 30-40% commission fees. To keep your business profitable, you may need to cover these fees in your food prices.
Step 6: Choose Your Online Ordering and Delivery Methods
Your online ordering and delivery method(s) should be cost-effective and convenient.
Online Ordering Platform
The success of your cloud kitchen will depend on the quality of your ordering platform. Given the American appetite for browsing the internet, a reliable online ordering platform will help you appeal to more customers. The best platforms make the ordering process easy. They improve efficiency and allow for real-time data tracking.
Look for an online ordering platform with transparent pricing and no hidden fees. Ideally, it will also have extra features like tools for marketing and coupon creation.
Some components of an effective online ordering platform are:
- Range of order types (pickup, curbside, delivery, etc.)
- Branding options such as your logo and colors
- Options for both in-house delivery and flat-fee third-party delivery integration
- Customer accounts
- Customer data
- Way to get customer feedback
White-Label Online Ordering Platform
For ghost kitchen owners, a white-label online ordering platform is a worthy consideration. These include all the modules you need to start a delivery business online. You can customize the look to match your brand with a custom logo and color options.
Some extra benefits of a white-label system include:
Efficient Order Management: Manage orders from a single admin control panel. There, you can see incoming orders and notify customers when their orders are ready. Plus, you can customize your menu depending on changes in customers’ purchasing behaviors.
Timely Delivery: White-label online ordering platforms make doorstep deliveries easier and faster. They have customizable solutions, catering to all customer delivery demands.
More Delivery Options: Your online ordering system gives you more comprehensive options for delivery. For example, the MenuDrive system lets restaurants set up in-house delivery with their own drivers. MenuDrive also partners with DoorDash for commission-free delivery. The restaurant customer pays a flat fee, and the restaurant pays nothing. Restaurants can use one platform for in-house delivery, third-party delivery, or both.
Food Delivery Platforms
Since delivery is the backbone of ghost kitchens, choose your delivery options wisely. Many virtual kitchens use a third party, such as Grubhub or Uber Eats, for delivery. However, some take on delivery themselves.
Delivery services like Postmates, Grubhub, and Uber Eats have a ready customer base. By partnering with a delivery service, you can get your menu in front of more eyes. Hungry customers appreciate these platforms for their simple, streamlined ordering process.
Food delivery apps allow you to focus on your menu and food prep. You don’t have to worry about anything that happens once the food leaves the kitchen. At that point, it’s up to the delivery service to ensure a smooth ride.
That said, if there are any bumps along the road — late or lost orders, wrong deliveries, etc. — your restaurant could end up taking the blame for mistakes made by the delivery company. If you use a third-party delivery service, make sure it’s a reputable one.
When choosing a delivery company, be sure to factor commission fees into your budget. Many platforms take a percentage of each order as their fee. Rates range from 25 to 40%.
In-house delivery allows you to avoid the fees charged by third-party delivery. It lets you give work to your existing employees.
In-house delivery also gives you more control over the online ordering experience. You can make decisions on branding, design, order notifications, and other key aspects of online ordering. Plus, you will be able to collect customer contact information. (This information is unavailable through third-party delivery services.)
If you want to set up different fees for different delivery zones, in-house delivery may be the right choice. Setting zones is easier if your ordering platform integrates with your in-house delivery.
With in-house delivery, you will need to add drivers to your restaurant’s labor force. Check with your insurance company to make sure your delivery services are covered.
Step 7: Prioritize Your Food Packaging
In any online business, the packaging is critical. After all, it’s the first tangible thing your customer touches. Stamping your logo on a brown paper bag is not enough to be competitive in the current market.
Use Attractive Packaging: Be creative and smart with your packaging, even your utensils. Your packaging should be intriguing. It should lure your customers in and make them want to learn more about your business – and, of course, eat your food.
Reinforce Your Brand: Use packaging to tell the story of your virtual brand. Reinforce your identity and convey your brand values. Think about Dunkin’ (formerly Dunkin’ Donuts). Their iconic pink, orange, and brown is synonymous with donuts and fresh coffee. According to Dunkin’, the brand’s bold look “reflects the energy and excitement that Dunkin’ serves daily.”
Keep Your Food Warm: And keep your cold food cold! There is nothing worse than cold fries or gummy pasta. And what about that warm salad? Yuck! In addition to controlling temperature during delivery, consider how your packing will reheat. Can it go in the microwave?
Step 8: Hire Staff for Your Ghost Kitchen
Once you start your ghost kitchen, its success will depend on how good your staff is. In most cases, you only need a few staff members, such as a chef and kitchen manager. The low number of employees should make recruitment easier than hiring for a full-service restaurant.
Consider the following:
Applicant Solutions: Hiring staff for your new ghost kitchen starts with finding candidates. Some candidates may contact you for a job. But it’s more likely that you will need to put some effort into recruiting the right people. Consider using local social media groups. Recruit at student career fairs, especially from vocational and culinary schools. Ask for employee referrals.
Recruitment Portals: Several recruitment portals provide a platform for finding kitchen employees.
- Poached is a dedicated recruitment portal for food- and drink-related jobs.
- Industry lets people search for jobs by location and type.
- Culinary Agents is a networking site that caters to hospitality, food, and beverage industry professionals.
Labor Law Resources: Your kitchen will need to follow labor and employment laws. These laws ensure a healthy, safe, and fair workplace for employees.
Some of the most important labor laws are:
- The Occupational Safety and Health Act (OSHA)
- Restaurant Wages and the Fair Labor Standards Act
- The Equal Employment Opportunity Commission
- Employing Youths or Minors
- Laws Enforced by the EEOC
Interview Tips: When interviewing your staff, consider their food preparation skills. They should also understand safe food handling and sanitation practices. The best candidates should show excellent organizational, interpersonal, and time management skills. Also screen for candidates who may not perform under pressure and those who have low energy.
If you’re using in-house drivers, you’ll need to recruit them too. Check that your drivers have a valid driver’s license, a clean driving record, and auto insurance. Of course, they will also need access to a reliable vehicle.
Training Your Employees: Once hired, your staff needs to be trained. Although a ghost kitchen may only require a small team, the staff should have the knowledge and skills to meet customers’ needs. Proper training also ensures that employees will prepare quality meals and demonstrate your values to customers.
Step 9: Optimize Your Scheduling
The ghost kitchen business model is attractive because it streamlines your workflow. Your sole focus is on preparing and packaging meals for delivery. Effective scheduling helps keep your labor costs low and your employees happy.
Restaurant scheduling software can make the process easier. These packages let you create and manage schedules.
Use Proven Scheduling Methods: No need to reinvent the scheduling process. Schedule your staff the same as you would for a brick-and-mortar restaurant.
Create Schedules in Advance: Establish a straightforward process (and deadline) for accepting scheduling requests. Try to give your employees two consecutive days off each week. Having clear expectations and time to rejuvenate helps to prevent burnout.
Don’t Forget Your Delivery Team: If you’re using in-house drivers, add your drivers to the schedule. Consider the number of drivers you will need, the lengths of their shifts, and their coverage area.
These nine steps will help you start a ghost kitchen, but that’s just the beginning. Read about successful operations, growing your business, and what’s next for ghost kitchens in our guide below.