The Growth of High Profit Ghost Kitchens in Food Service


When American consumers started investing more in the recreational aspects of their own home, an important shift began in the food service industry.  Before, consumers wanted to get out of the house and enjoy the ambiance of a new restaurant.  It was part of the culture and dining experience.

Today, most people prefer to dine at home for a variety of reasons.  It’s less crowded, more comfortable, or to be frank, thanks to demanding careers, commuting and other obligations, we all spend less time at home than we’d like to.  Enter the Ghost Kitchen food service revolution, that caters to the need for quality fast-casual food, delivered right to the customers door.

What Is A Ghost Kitchen?

You may have heard of this restaurant business model by a number of different names including virtual or dark kitchen.  If you haven’t heard of this style of culinary food service you will soon, because it is definitely a high-growth style that is sweeping across the globe, particularly in metropolitan areas.

What started out at first as something that was viewed possibly shady in the restaurant industry, has exploded into a tremendous and profitable business venture, that eliminates the overhead cost of table food service and traditional takeout.

A ghost kitchen establishment does not require a front store or walk in customer area.  The business is set up as an exclusive online food delivery provider. The typical establishment has a full commercial kitchen with all the facilities to process and prepare menu items, an administrative managerial office and a break room for staff.

Marketing of the foods offered by the ghost kitchen is done online through the business’ website and online ordering software.  A full menu is provided for customers, who can add the items to their cart for payment and delivery.  Some ghost kitchens provide an automated text service to let their customers know when the order is out for delivery, and expected delivery time.

The Cost Saving Benefits of a Ghost Kitchen Restaurant Business

There are many aspects and costs associated with operating a restaurant that offers full dining facilities.  When starting a new restaurant business, the investment includes purchasing many supplies and assets that are necessary for the operation of a food service dining area.

A ghost kitchen eliminates the need for:

  • Customer furnishings including booths, tables and chairs.
  • Linens including tablecloths and napkins.
  • Flatware, beverage glasses and tableware.
  • Waitstaff and tableside food service assistance.
  • Large and expensive commercial retail space and rent.
  • Cost savings for utilities.

Because restaurants are required to comply with health and safety ordinances, by eliminating the dining room and tableside services, they are able to cut the costs and labor needs.  This also makes it easier for new restauranteurs to keep the focus on the quality of their food and profit margin, without stretching resources to provide full dining services.

There are other economies of scale that benefit food service entrepreneurs with this unique business model.  For instance, customer service issues and prompt preparation and delivery of the orders can be expedited more easily.

There are also fewer concerns or problems to deal with in terms of workflow; many restaurants struggle with rush service windows during peak periods.  This can be managed effectively by software that helps organize each order and notify the customer if the order will be delayed when they confirm their order.

Imagine the profitability margins possible, when you can still prepare and sell the same entrees, appetizers and beverages conveniently online, while removing the need for traditional table service to your customers?   And while it’s true that some restaurants may experience some traffic loss from customers who want to dine-in, according to many industry reports, the shift in consumer preference leans heavily to order-in and delivery.

Your business will be catering (particularly in large metropolitan areas) to customers who want hot, delicious and fresh food ordered online, and delivered conveniently right to their home.

Expansion Using the Cost Saving Ghost Kitchen Business Model

Next generation food service entrepreneurs are rapidly expanding with ghost kitchen business models into major cities, and it appears to be an effective way to grow a food service chain.  Without the significant investments required to operate a traditional dine-in restaurant business.

Some successful restauranteurs who may have one flag-ship location, are using ghost kitchens to expand their brand economically into new markets, through exclusive online ordering.  Customers who have been patrons of the flag-ship restaurant location trust the quality and value of the restaurant and can enjoy prompt delivery of their favorite menu items.

Streamlining Delivery of Food Orders

Delivery remains one of the most expensive and arduous areas for restaurants to navigate.  In a traditional business model, the restaurant must cope not only with expediting every food order, but serving customers in the dining room, while responding to online or phone orders.

Some of the most successful restaurants struggle with balancing dine-in customers, walk-in takeout orders and deliveries.  And we know how quickly consumers can become disenfranchised with their favorite restaurant when a delivery order is delayed, or incorrect.

The most successful Ghost Kitchen businesses outsource their food delivery to apps, like Door Dash or GrubHub and other independent service providers.  Not only does that remove the responsibility of hiring and managing delivery drivers, but it helps subsidize the cost of delivery while keeping it affordable for the restaurant.

When outsourcing delivery, Ghost Kitchen businesses also benefit from being featured (in some cases) on the delivery providers website.  This reciprocal marketing allows them to capitalize on the large online audience that popular food delivery apps draw, to recruit new customers who are eager to try different food delivery options.

In a large city, you could be driving by many Ghost Kitchens in commercial areas without even knowing it.  Often there is little to no signage to indicate the location of the restaurant, in an effort to discourage customers from self-pickup.

Ghost Kitchens are an innovative new way for restauranteurs to affordably expand into new markets, and for budding entrepreneurs to launch into the food service industry, without being held back by the tremendous capital investment usually required for a traditional model.  In the future, many industry experts anticipate that we’ll see far fewer dine-in restaurants, as operational costs continue to increase and business owners find new ways to deliver great food and service, while retaining more robust profit margins.