We hope this guide is providing you with a clear sense of what it’s like to launch and grow a ghost kitchen business. Before starting a ghost kitchen, it’s important to consider both the benefits and drawbacks of this business model.
Advantages of Ghost Kitchens
Some of the key advantages of opening a ghost kitchen include:
- Minimal overhead costs – Ghost kitchens have lower real estate and operational costs than traditional restaurants. Front-of-house expenses are nonexistent. You don’t need to hire servers or customize your building to be convenient for dine-in customers. You can use services like DoorDash and Grubhub to outsource delivery. (Be mindful, however, of the commission fees involved.) The startup process is also relatively simple, and the workflow is efficient and streamlined.
- Flexible – Ghost kitchens are adaptable to changing market trends and customer demand. Everything, including the menu and branding, is mobile and can be changed quickly across all platforms. That means that during the initial stages of your business, you can try out different approaches to discover what your customers like best.
- Opportunity to capture a wider audience – With ghost kitchens, you get wider audience access in terms of volume and geography. A dine-in location is limited by a finite occupancy, which has been reduced during Covid-19 by social distancing restrictions. A ghost kitchen means you’re no longer restricted by table turnover either.
- Ability to meet online demand – With 60% of consumers in the US preferring takeout orders, the demand for delivery services is on the rise. Ghost restaurants allow you to meet the high demand for online food ordering. They let you adapt to an increasingly e-commerce-driven food-and-beverage industry.
Disadvantages of Ghost Kitchens
Although ghost kitchens have a wide range of benefits, restaurant owners in this sphere may experience some drawbacks.
- Maintaining recipe consistency and quality – A ghost kitchen handles multiple outlets on a daily basis. That can make it a major challenge to maintain consistency. It can be difficult to standardize recipes and restaurant operations, as every order is unique. As discussed elsewhere in this guide, the quality of your food is critical to your ghost kitchen’s success. But maintaining that quality can be a challenge, for reasons including travel time, temperature control, and food freshness.
- Dependence on high-commission food aggregators – A ghost kitchen with a business model emphasizing third-party delivery won’t generate sufficient revenue unless it ranks highly on online food aggregators. Enhancing your brand’s visibility on such platforms may be difficult, especially for a new business. You may need to spend on PPC (pay-per-click) ads to achieve higher search engine results. Additionally, food delivery apps may take up to 40% of your delivery earnings. That is a cut that many restaurants are unable to sustain, which is why it’s a good idea to have an in-house online ordering system.
- Delivery errors – A cloud kitchen operates with a third-party delivery fleet that may be prone to errors. The timing and accuracy of each order are crucial, yet neither is under the restaurant’s control once the food leaves the kitchen. If you’re using third-party delivery apps, your reputation is likely to be affected by the quality of their services.
- Masked customer information – At a standard restaurant, a customer database provides names, past orders, and contact details. At a ghost restaurant that relies on delivery apps, customer information is masked by those apps. Unless you take orders directly through your online ordering platform, customer information won’t be accessible to you.
- Customer retention – Cloud restaurants don’t interact with customers, which can make it difficult to build lasting relationships with them. For a ghost kitchen to be discovered, it needs a strong, appealing online presence. For customers to keep coming back, it needs customer retention strategies like a loyalty program and email marketing.
- Challenges of managing your online reputation – Since your business exists entirely online, you will have to manage your online reputation more diligently. A poor experience on a delivery app may result in a loss of customers for your restaurant.