Ghost kitchens: If you’ve been following restaurant industry news, you’ve undoubtedly heard the phrase by now, but, be honest, are you 100% sure exactly what they are? If not, you’ve come to the right place. Welcome to Ghost Kitchens 101- your source for education on one of the hottest restaurant franchising models for this “new normal” we’re in…and beyond!
The coronavirus pandemic has disturbed the restaurant industry in unexpected ways, forcing restaurants to either shut down completely or adapt to a delivery and takeout-only model. There is a need to find new and creative ways to drive revenue, and the future of the restaurant industry may lie in a trend started a few years back: ghost kitchens.
What are Ghost Kitchens?
Ghost kitchens, also known as dark kitchens or cloud kitchens, are professional food preparation and cooking facilities, like those that can be found in existing restaurants across the country. While they contain everything a typical restaurant has, ghost kitchen restaurants are set up for delivery-only meals, and do not have a dining area for walk-in customers.
Ghost kitchens, in a nutshell, are restaurants without dining space, wait staff, or any other trappings of a traditional full-service restaurant. Their focus is to fulfill online food orders using third-party applications like UberEats, Grubhub, and their own delivery operations. Restaurants that use ghost kitchen franchises may have a separate physical location for dine-in services, but the ghost kitchens’ facilities are built exclusively to produce delivery meals.
The State of Ghost Kitchens after COVID-19
COVID-19 and social distancing left consumers’ favorite activities out of reach, such as trips to the movies and dining indoors at restaurants. As governments around the world restricted restaurants’ dine-in capacities to avoid the spread of COVID-19, many have adopted ghost kitchens as an innovative pivot in order to maintain or increase revenue. US Foods Holding Corporation has even announced an initiative to help restaurants launch ghost kitchens.
Famous Dave’s BBQ was one of the first national restaurants to develop a ghost kitchen concept, even before COVID-19 ground dine-in business to a halt last March. Thanks to our long history of perfecting take-out and delivery as lucrative revenue streams for our Franchise Owners, we saw potential in this exciting new trend and possessed the know-how and experience to execute it successfully, to rave reviews from happy BBQ customers!
In order to ensure a built-in audience of interested restaurant enthusiasts, ghost kitchens are seeing the most traction in high-density areas having plenty of potential delivery customers. Famous Dave’s helps Franchise Owners maximize their success as ghost kitchen proprietors by helping them select the optimal location for bringing in revenue from takeout and delivery, and takes the guesswork out of determining which neighborhoods are likely to be the most profitable- this ain’t our first ghost kitchen rodeo, and we have the expertise to help new Franchise Owners capitalize on the best possible locations for their ghost kitchens.
Ghost Kitchen Benefits
Even before the dramatic changes to the restaurant world forced by the pandemic, ghost kitchens were already making waves. They are a shared working space to prepare food and provide delivery services used by many restaurants. The shared facilities of ghost kitchens are favorable for new brands, allowing them to open delivery-only restaurants with less risk. Customers can order from any combination of restaurants and have it all at once in the same order.
The benefits of ghost kitchens are numerous. You can drastically cut the operating cost by having less square footage and fewer employees. The initial investment for operating a ghost kitchen is much less than opening a dine-in restaurant. The ghost kitchen business model comes with diverse and captivating advantages that can be used to create a more sustainable business.
Profitable Low-Cost Business; Traditional Restaurant Rewards
The increasing demand of consumers has made ghost kitchens quite popular in the restaurant industry. The most obvious advantage that comes with the ghost kitchen business model is the low infrastructure cost. You do not need to retrofit an old building or fill a new space with fixtures and furnishings. The cost of infrastructure is limited to the kitchen area. Since the ghost kitchens trend is booming globally, it’s the right time to invest in it.
The cost for operating a ghost kitchen is one-third of the cost to operate a traditional restaurant. It also takes money to keep a restaurant open. The overhead costs involved in the functioning of a restaurant include maintenance and utility cost, staffing costs, high rent or mortgage payments based in prime locations, and more. However, the overhead cost of a ghost kitchen is much lower than setting up a physical restaurant.
Another advantage of a ghost kitchen is that it requires only a one-time investment. You only have to put significant money into the space while building your kitchen. It won’t require constant style renovations or the added expense of keeping the customer-facing fixtures updated. You do not need to pay rent or utilities for seating space or furnishings. This one-time low-cost investment to build a ghost kitchen lets you make money for the long term.
High potential profitability
Due to the pandemic situation, we have already become accustomed to food delivery, and our habits have fundamentally changed. This will have a huge impact on the traditional restaurant industry. The restaurant business is already facing razor-thin profit margins due to lockdowns.
The good news for restaurant owners is that it’s not difficult to integrate delivery into your existing business. The ghost kitchen models provide high potential profitability to restaurant owners with logistics and efficiency of third-party applications. Moreover, restaurants tend to have limited seats, while in a ghost kitchen, you can take orders according to your target and more easily scale operation to increase revenue.
Flexible and convenient
If you have no experience in the food market, a ghost kitchen seems like a great way to test your food concept and business interests. With less need for marketing and lower upfront costs, listing a ghost restaurant on third-party delivery applications seems like the lowest risk option.
Ghost kitchens can adapt to changes quickly, as customer preferences or market conditions fluctuate. Moreover, food delivery makes it easy for customers to enjoy restaurant-quality food at home, especially during a pandemic when everything is shut down.
Famous Dave’s Ghost Kitchens
Businesses were already working to establish ghost kitchens, but because of the pandemic, restaurants evolved faster than during normal times. The restaurant industry has been hit hard by COVID-19, but this new concept allows Famous Dave’s BBQ franchise and others to safely connect with our customers and continue to serve them the food they love while keeping an eye on our bottom line.
We opened ghost kitchens, like our new Cedar Rapids location, for delivery and pickup, giving customers full access to the mouth-watering menu that made us FAMOUS in the first place! Best of all, our exciting new ghost kitchen model comes with the lowest initial investment in Famous Dave’s franchise history: you can now invest in a red-hot restaurant industry trend AND bring our slow-cooked, pit-roasted BBQ, award-winning sauces, and classic made-from-scratch sides to hungry BBQ lovers in your community for as low as $81K! (No need to get your eyes checked- you read that number right!)
Best of all, owning one or more ghost kitchens means you are part of the Famous Dave’s franchise family, with access to all the outstanding corporate support, cutting-edge technology, and national brand recognition that comes with it- for a fraction of the price of a traditional dine-in restaurant model.
Now that you’ve got the info on ghost kitchens and you can see why they’ll be big business in the restaurant industry for years to come, why not see if you qualify to invest in one of our FAMOUS ghost kitchens? Visit our franchise website to learn more.