Your Guide To Ghost Kitchens

These trendy off-site commercial cooking allies go by many names. Cloud Kitchens, Dark Kitchens, Virtual Kitchens, and the most popular – Ghost Kitchens. If you’re considering the path of off-premise takeout, delivery, or cooking for large catering events, a ghost kitchen is in your view. Whether you partner with a large ghost kitchen third-party operation like Kitchen United, Cloud Kitchens, Uber Eats or Kitopi, or you rent your own space and design it into your ideal ghost kitchen, this model can substantially grow your restaurants margins and revenue.

The Pros & Cons To Ghost Kitchens
With the ghost kitchen model growing, it’s important to assess the pros and cons of investing in one. Your restaurant’s profits could grow substantially with the right strategy.

The Stats That Back Up The Ghost Kitchen Model

  • According to the NRA, 75% of restaurant operators agree that off-premise dining holds the highest growth opportunities
  • Euromonitor estimates ghost kitchens will grow to over a 1 trillion-dollar global market by 2030
  • Restaurant Dive states that the United States currently has 1,500 ghost kitchens – and growing
  • Statista estimated that the online food market in the United States will be worth $23 billion by 2023

The data shows that ghost kitchens are here to stay. Let’s answer your questions about these innovative money-making machines.

Sign Up For More Great Content In Your Inbox

What Is A Ghost Kitchen?

A ghost kitchen (dark kitchen, virtual kitchen, cloud kitchen) is a commercial kitchen space that is often rented outside of a dine-in restaurant, that only produces takeout, delivery and catering orders. There are third-party ghost kitchens that many partner with to help execute their delivery and takeout model. Another option would be to invest in your own commercial kitchen space for these types of orders.

As third-party delivery apps like DoorDash and GrubHub continue to grow in the restaurant industry, ghost kitchens become more relevant. Many restaurateurs have adapted and are investing into this off-site model, to alleviate stress in their dine-in establishment.

Types Of Ghost Kitchens:

  • Incubator Kitchens – A commercial kitchen space that is attached to the dine-in kitchen, but still separate from dine-in operations. These are great for specialty cuisine!
  • Commissary Kitchens – A commercial kitchen that is completely separate from normal operations, and is typically rented or shared amongst many restaurants.
  • Kitchen Pods – A commercial kitchen outfitted in a shipping container or smaller space. “Dark Kitchens” came from this style of ghost kitchen.

How Can A Ghost Kitchen Improve My Restaurants Margins?

When you consider a restaurants profitability model, you have to consider the entire dining aspect. When considering start-up costs, things like indoor and outdoor furnishings, table settings, wait staff, extra utilities, and expensive retail spaces add up quickly when investing in the dine-in model. So, when you manage your robust delivery and takeout business alongside your dine-in business, you’re paying for all that extra expense, which hinders your takeout and delivery business growth, and cuts into your margins. Ghost kitchens have a lower operating cost, meaning your product revenue goes further.

Ghost Kitchen Benefits:

  • Less expensive real estate buying or leasing
  • Decreased overhead costs
  • Focusing on one production type – takeout/delivery
  • Less startup costs vs. full scale restaurant

How Do I Start A Ghost Kitchen?

Starting a ghost kitchen will require different steps for those who already operate a restaurant. If you’re a new brand with the intention of only operating a ghost kitchen for delivery and takeout profitability, you’ll have a little more work to do. First, choose your model. Incubator kitchens will have a much different cost and process than a commissary model or rented space. For an incubator kitchen, you’ll need to work with an expert design and build partner to outfit your commercial kitchen. When it comes to your choice in the ghost kitchen model, consider your cuisine. Incubator kitchens, or your personally designed commissary might be the best option for you. Not all shared commercial kitchen spaces offer specialty cooking equipment, like pizza ovens or commercial woks. Typically, they’re designed for the most common menu application, so be sure to understand their equipment package! If you’re finding a commercial kitchen to rent, or building your own new kitchen, you’ll need to follow a few important steps.

Steps To Starting A New Ghost Kitchen:

  • Register your business if you’re just getting started
  • Hire a restaurant design and build service (non-commissary kitchens)
  • Ensure you have your ServSafe Food Handler Certification
  • Obtain kitchen liability insurance
  • Schedule an inspection with a local regulator

How Much Does It Cost To Open A Ghost Kitchen?

It’s clear that ghost kitchens are becoming a more economic, margin friendly business operation for foodservice operators. Where restaurants in highly expensive areas can cost anywhere from $275,000 to $1,500,000 in start-up costs, renting a commissary kitchen can be as low as $20,000. Again, this depends on your model. If you’re renting your own kitchen space for your ghost or virtual kitchen, and investing in the commercial equipment, staff, and disposables needed to operate it, you’re going to have a higher cost in the beginning. The main savings come from dining room, bar and service staff costs.What’s The Downfall Of Investing In A Ghost Kitchen?The profitability model of ghost kitchens speaks for itself – it’s likely this investment will produce cash for your business. But, profitability always comes with hard work, determination, and some capital investment.

Ghost Kitchen Con’s:

  • You’ll be adding a new team and will have to train them.
  • You’ll likely utilize third-party delivery services, which is out of your control.
  • If you don’t have a restaurant already, you’ll have to develop brand awareness.
  • Some food items lose production quality during delivery.
  • Takeout and delivery models can be more susceptible to menu pricing pressure.

These obstacles can be overcome, and if you’ve made it this far along your ghost kitchen discovery path, you’re likely to succeed!Now that you’ve learned the ins and outs of the ghost kitchen model, get connected with an expert to help you build your new commercial kitchen, adapt your current one, or get equipped with the right tools in your commissary space. The Kitchen Spot connects you with restaurant supply and design experts that add value to your restaurant business.