Do Ghost Kitchen's Have a Competitive Advantage?

The COVID-19 pandemic has hit a lot of industries hard, and the hospitality industry is no exception. Within six months of the initial shutdown in March 2020, nearly 100,000 eateries had closed their doors for good. Others have continued to struggle with mask mandates, social distancing requirements and capacity caps wreaking havoc on existing business models. Though ghost kitchens didn't start because of the pandemic, they certainly have thrived given the circumstances.

The big reason ghost kitchens are defying the odds is because they offer so many advantages over regular restaurants. If you're considering opening a new restaurant, here's why a VK may be the way to go.

Lower Labor Costs

Labor costs make up a huge portion of overall restaurant expenses. In traditional restaurants, average labor costs start at around 25% in fast food and can easily exceed 40% in fine dining. Those high-end restaurants employ everything from hostesses to bathroom attendants to sommeliers, and every extra head and pair of hands adds to the bottom line.

With a ghost kitchen, the entire experience is down to ease of ordering and the taste of your food. With service staff cut out of the picture, you've already greatly reduced your labor costs. Be strategic about how you build your menu, and you can whittle down your kitchen staff too. Outsource delivery and online ordering management to a trusted third party and you won't even have to worry about that anymore.

Faster Order Fulfillment

The time that elapses between the moment a guest places an order in a traditional restaurant and the moment that actually get their food depends on a variety of factors.

  • The speed with which a hostess seats each party
  • Whether there are menus on the table
  • How easy it is to navigate the menu
  • How long it takes for the server to come to the table and take the order
  • Whether the server stops at another table before putting in that order
  • How quickly the POS system process that order and sends it back to the kitchen
  • The speed of the cooks
  • If the food sits in the window waiting for pickup

With a ghost kitchen, many of those steps cease to exist. Guests place their order online themselves. That order goes straight to the kitchen, it's made and then picked up and delivered. Faster cooking, faster delivery and a major boost in customer satisfaction are just three more reasons why ghost kitchens are thriving.

Fewer Mistakes

The more you streamline any process, the fewer opportunities there will be for mistakes. This is true in ghost kitchens, too. By skipping the need for service staff, there is less space for human error. No mistakenly thinking the guest asked for scampi when the asked for ham and cheese. No fingers slipping on the POS screen and sending back that medium-rare burger as medium well, necessitating a refire and slowing down the entire line.

Because ghost kitchens rely on SaaS software to take care of everything from integrating online ordering apps, to funneling new orders to your existing POS, orders are untouched by human hands rom the time a customer enters info to when the cook sees the data and starts sautéing. Cut back on steps and you cut back on potential problems.

Better Prepared for High-Volume Delivery

Studies show that millennials are eating out more and cooking less. Other people may crave variety, convenience or just miss the experience of dining. Whatever the reason, food delivery is hugely popular and becoming more so every day. For restaurants that may not have offered delivery originally, adapting to the demand for take out isn't always easy. They have to:

  • Figure out how to take orders
  • Ensure menu items are suitable for delivery
  • Link outside ordering systems to the in-house POS system
  • Set up food packaging stations and buy all the takeout containers needed to keep dishes safe during transport
  • Hire delivery people or outsource delivery

In contrast, ghost kitchens are built to not only accommodate but embrace every one of those points. They aren't challenges but accept parts of day-to-day operations. From the moment of launch, ghost kitchens can take orders and delivery them with greater efficiency versus traditional restaurants because that's what they were designed to do.

Exposure to a Larger Audience

Because it costs less to launch and run a ghost kitchen, it's easier to open several at various locations across a city or region. Whereas regular restaurants have limited delivery areas do to cost and logistics, ghost kitchens can multiple quickly and eventually cover far more ground. While restaurants can build new locations as well, it's simply not as cost effective or as realistic.

Delivery-only models also reach people who don't have the time or money to dine out in a restaurant. Think about workers who can't leave their desks, families who prefer to keep the kids at home or singletons and couples who just want to enjoy their pasta primavera or togarashi chicken wings in peace. That may never make a reservation for a sit-down restaurant but they're highly likely to consider ordering in.

Greater Flexibility

The COVID-19 pandemic has proven how important it is for food and beverage businesses to be adaptable, and that's exactly what ghost kitchens are. While branding is important for VKs, it's not everything. Thanks to the lack of a dining room, there is no décor or color scheme that needs to be swapped over if you decide to switch up your concept. A small staff means no need for a huge retraining effort. If the world shifts again — or if you simply want to make your own changes — a ghost kitchen empowers you to do just that with minimal fuss.

It's easy to see the many advantages ghost kitchens have over regular restaurants, but there's no reason the two concepts have to be mutually exclusive. Some entrepreneurs may choose to open a ghost kitchen now, when the demand for delivery is particularly high, and open a brick-and-mortar easter with in-house dining after the industry stabilizes. Conversely, a successful restaurateur may use a ghost kitchen to introduce their concept to a new hour. They'll have lower expenses while they get a foothold in a neighbourhood or city and then expand when the time is right.

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