Boo! I’d like to introduce you to a new trend in the restaurant industry: ghost restaurants.

Ghost restaurants, or virtual kitchens, are the restaurant industry’s newest attempt to feed into the ever-growing on-demand consumer culture. Don’t let the spooky name fool you, they are really just delivery-only restaurants. No customer will ever set foot in a ghost restaurant, and this model has its fiscal advantages. 

Ghost Restaurant Advantages

Ghost restaurants spend far less on real estate than their traditional counterparts, as they do not need to worry about curb appeal, foot traffic, or accessibility. This enables kitchens to be housed in inexpensive locations that would previously be considered undesirable for restaurants. Furthermore, their square footage is maximized by being devoted entirely to the kitchen, no customer seating or waiting areas. According to the cofounder of Green Summit (a ghost restaurant company), fast-casual restaurants, like Chipotle, Panera Bread, or Pret, dedicate 75% of their space to seating, but only 10% of customers actually utilize it. That’s a lot of expensive and unutilized square footage that ghost kitchens do not need to pay for — it makes sense for restaurants to cut that cost, especially in a costly place like NYC. 

Another major advantage of the delivery-only model is flexibility. Ghost kitchens are brandless, they are just kitchens. One kitchen can host multiple different restaurants all with different types of food and styles easily. You do not need to change décor or dinnerware to fit the new cuisine, and you can even share food and equipment between different subdivisions of the same virtual kitchen. This brand plasticity enables you to keep up with trends and experiment while increasing your overall revenue opportunities. 

So What?

In terms of this new trends’ pervasiveness and popularity, there is not much to say. Yes, they exist but it is unlikely that they will take the restaurant industry by storm. In order to run a successful ghost restaurant, you need to have brand recognition. If you expect customers to choose your restaurant over countless others on an app, they need to know the name and reputation. If you currently operate a well-known full-service restaurant but want to save some money on rent, this may be an option for you. In fact, some large chains, like Chick-Fil-A, are creating a virtual kitchen to outsource delivery. Without a pre-existing successful full-service restaurant, however, you will need money to launch complex, costly digital marketing campaigns. In summary, this model certainly has its benefits but it takes a certain type of business to be able to successfully implement it.