Are ghost kitchens here to stay?

As we have come out of lockdown this month, it’s only fair to start reminiscing about what we’ve gone through in lockdown For me specifically, it was a lot of self-reflection, self-care, and many takeout meals. Not only were takeout meals were a part of my self-care, but also a way to help out local businesses in the area.

It’s pretty obvious that lockdown raised the demand for food delivery apps. We saw huge IPO’s last year for Deliveroo and DoorDash. Alongside the increased demand for food delivery apps came the demand for ghost kitchens.

But for someone who really didn’t think about where my food was coming from and focused more on the when (my hanger would get the best of me), I was surprised to hear about the innovations from the restaurant industry when they were badly hit by lockdowns. Ghost kitchens became an adaptable way for many restaurants-new and old-to survive during last year.

What are ghost kitchens?

Ghost kitchens are food preparation operations with no waiters, no dining room and no physical customers. They remove the concepts of dining areas and fancy decor, and just focus on the main concept of making the food. It’s similar to a co-op but for restaurants-many restaurants can operate out of the same ghost kitchen, either working from the same facility or breaking the space into separate spots. Even DoorDash got onto the hype, it  launched a shared ghost kitchen with four restaurants using the same space. 

Without huge operating costs, like staff and and square footage, these restaurants have the potential to make a lot of money without draining their revenue on inconvenient things like serving staff and covers. The initial investment to operate in a ghost kitchen is much smaller than opening a full dine-in restaurant, which could allow more restaurants to open up.

While invisible to the naked eye, ghost kitchens make their presence known on food delivery apps. And it just makes sense that the demand for delivery apps and ghost kitchens were parallel. When no one in the U.S or the U.K was able to dine out in restaurants, why even bother having a dining area at all? 

Ghost kitchens can provide flexibility for customers by allowing them to customise their orders and what time they want their food to arrive. Customers can also try restaurants that wouldn’t be in their area otherwise or that might usually be out of budget. And for restaurants, it gave them to opportunity to get creative and focus on the quality of the food rather than the service to customers.

We are out of lockdown-now what?

The demand for ghost kitchens was there during lockdowns. But now that we can potentially see lockdown ending, the excitement for eating out again is there for many people (including me).

So the question really remains-is the demand for ghost kitchens still there once lockdown is over?  We don not really know. Some people seem to think so.

Delivery service was growing in the years prior to the pandemic anyway. In 2019, many restaurants were already exploring and transitioning into this space. Ghost kitchens can help fill this demand gap.

Consumer sentiment has also changed. A Restaurant Business survey found that 15% of customers said they would not resume regular behaviour until COVID-19 is completely contained, and with new variants spreading, who knows when that will be.

But people seem to think that the reason why ghost kitchen will stay will not really be on the consumer end, but more on the restaurants. These collaborative spaces break the barriers to entry, make for a smarter business, and allow restaurants to rethink their human capital management.

While some restaurants will open their doors to customers after lockdown, some may decide not to, and just operate a different way.

Final Thoughts

But this ties in to the bigger question for a lot of other industries-will e-commerce be affected now that shopping centres are open? And will food delivery apps also take a hit? Whether yes or no, Polestar will be tracking these consumer and business changes in our quarterly valuations. 

Be sure to check those out!

Using technology and infrastructure that exists in our digital, delivery-first world, there’s never been a better time to build a restaurant business via ghost kitchens.

By Anusheh Khan on 29/07/2021