Ghost Kitchens – Rewriting the rules for the global food industry
At first glance, the emergence of “ghost kitchens” may not seem to be an earth-shattering trend. Other equally foreboding terms for this industry include “dark kitchens” and “shadow kitchens.”
But there’s nothing nefarious or creepy about them. Ghost kitchens are simply industrial kitchens that prepare food for delivery on behalf of a restaurant or a restaurant brand. They tend to be located near their customers and are served by shared driver delivery systems or the more common companies like UberEats or DoorDash.
There are several different models. In some cases, restaurants rent out a portion of their underutilized kitchen space to other food preparers. In other scenarios, the kitchens are found within shared commercial warehouse-like space, a “commissary concept” similar to the WeWork and Regus model for office space.
An alternative approach calls for establishing a ghost kitchen facility to support the delivery service of a single brand. Reef Kitchens, for example, just announced it would host 700 ghost kitchens for Wendy’s at its facilities in North America and the U.K. Most major chains are doing the same or plan to follow suit, from Wingstop to Five Guys.
Another ghost kitchen company, Kitchen United, is taking a slightly different approach by placing ghost kitchens in more visible spaces in grocery stores, complete with kiosks or apps that allow shoppers to order takeout meals or have them delivered. The company recently announced a partnership with Kroger. Ghost Kitchen Brands has a similar arrangement with Walmart.
Whatever the approach, the logic is clear. Consumers want their prepared food delivered. The average full-service restaurant is maintaining two food service models under one roof – one for their dine-in customers and one for their take-out or delivery customers. The latter used to be a sideline, an add-on anomaly; now that takeout and delivery is far more common, or even dominant in some restaurants, trying to do both from a single facility can be disruptive and inefficient.
The ghost kitchen phenomenon will be the norm very shortly. But it’s interesting to step back and consider what this trend says about us and our future.
What Do Ghost Kitchens Say about the Evolution of Change?
Lest anyone assume ghost kitchens are entirely a COVID-driven phenomena, the practice was in place and steadily growing several years prior to the restaurant industry upheaval of 2020. Then, in the midst of COVID, 60% of U.S. consumers reported ordering delivery or pickup at least once per week. Keep in mind, that’s call-ahead or app ordering, not drive-through service.
There’s no question the dramatic growth in ghost kitchens is an outgrowth of COVID. During 2020, out of necessity, we were eating more from home. And out of necessity, in order to survive, many restaurants relied on takeout and delivery. Some even thrived with this model and don’t see the need now to go back to offering on-premise dining.
From the delivery side of this model, services like DoorDash and UberEats were a godsend for individuals who were necessarily shut-in during 2020 and pleasant convenience for many others.
COVID is having a lasting, long-term impact on the trajectory of many aspects of our future – from healthcare, to politics, to work, and now to leisure activity. The emergence of ghost kitchens is another example of how COVID has dramatically accelerated some trends, like working from home, which we explored earlier this year.
Change is inevitable, and a crisis inevitably accelerates change.
What Do Ghost Kitchens Say about Consumers?
The shift to food delivery is an indication that we increasingly value time and convenience over experiences. Yes, there will always be an opportunity for an enjoyable sit-down experience in a more toney and pricey restaurant. And trips to faster-food restaurant chain establishments will continue to be valued as a family outing and an opportunity for everyone to unplug and socialize. But those instances will never rebound to their pre-pandemic peak.
Related to that, ghost kitchens also are an indication that we are becoming increasingly reliant on and comfortable with mobile technology and service apps. Many people resist learning these tools until they have to. And recently an older generation – just to generalize – had to and they came to love it.
One recent trend, though, that may be mildly disrupted by ghost kitchens is the loss of niche, single-location, family-owned restaurants. If these establishments continue to rely on street-front space and foot traffic, they’ll be in trouble, and they will decline. But if they pool resources with others to share common kitchen space, the economies may be enough for some of them to survive – at least as the provider of a delivered product.
What Do Ghost Kitchens Say about the Job Market?
Like most retail industries, restaurants are having difficulty fully staffing up. Whether people have left those niches of the job market or are just waiting out these uncertain times, retailers, including restaurants, will need to replace employees with apps and downsizing arrangements that define the ghost kitchen model.
The human element of food preparation and meal delivery remains … for now. Until they’re automated as well, jobs in both areas will shift to independent contract arrangements.
Five Additional Future Implications of Ghost Kitchens
- Teens and less-educated workers will bear the brunt of the loss of restaurant labor-intensive jobs – functions like wait-staffing, busing, and hosting.
- Consumers will continue to have access to wonderful, varied food thanks to ghost kitchens, but they’ll lose out on some opportunities for memorable dining out experiences.
- As restaurants close their street-front locations and consolidate kitchens, commercial property will be even more devalued, with the kind of vacant and empty storefronts like we’ve already seen with malls and movie theaters.
- Some restaurants will thrive. They’ll be able to focus on product and food innovation without worrying about all the overhead costs and facility maintenance headaches.
- The economies that restaurants can achieve by reducing their footprint and sharing space will be offset by delivery charges. Consumers won’t come out ahead.
And last, in some way, somehow, Amazon will try to find a way to corner the ghost kitchen industry and then tie it to a resurrected Amazon Restaurants program!