January 23, 2021
Ghost kitchens are here to stay (at least for the foreseeable future) and are projected to be the future of restaurants. The COVID-19 pandemic forced the world to enact protocols such as social distancing, that put a dent in restaurant dining revenue. In this wake, virtual kitchens emerged as the best solution to ensure customers still received their meals. However, while a ghost kitchen concept seems simple enough, owners must ensure profitability, which isn't always a guarantee. The revenue should cover food, labor and operational costs, calling for effective marketing and pricing strategies and streamlined delivery frameworks. Here are a few tips for ghost kitchen companies looking to make their venture profitable.
The ghost kitchen business model involves using third-party applications and integrations. Its operations also come with extra packaging, delivery and other operational costs. As a ghost kitchen startup, it is essential to develop a comprehensive business plan that addresses all the key areas. You should analyze your business model, identify the customers and their online ordering journey, develop pricing and marketing strategies and fortify your brand to increase preference among the competition.
Pricing is critical when venturing into off-premise ghost kitchens and virtual brands. The initial capital shouldn't be a problem, considering you can rent fully-equipped meal-preparation facilities to complete food preparation. However, if you intend to purchase a ghost kitchen food truck, it is highly recommendable. The goal here is to ensure revenue from your ghost kitchen covers all the essential costs, including food, packaging, delivery, rent, equipment depreciation and other operational costs. Some cases may require trial and error, but it is important to review all aspects, including competition, to develop a pricing strategy that guarantees business continuity and profitability.
Marketing a new ghost kitchen can be overwhelming if you rely on third-party apps only. Your marketing mix will involve various digital avenues and SERPs. However, you shouldn't forget traditional marketing to get the buzz going. You should consider all plausible options during business analysis, from packaging branding to using influencers and third-party marketing platforms. The goal is to ensure your ghost kitchen is marketed to the right people. In most cases, you'll need a combination of digital and traditional marketing. Creating websites, social media pages and mobile apps can also improve brand awareness. Make sure you have a clear message and customers know exactly what your restaurant is offering.
Virtual kitchens are replacing traditional restaurants, but profitability isn't a guarantee. Once your ghost kitchen is up and running, you should continue calculating all labor and operational costs and make sure they are covered by the price. There are various ways to reduce operational costs. For instance, facility renting and a ghost kitchen Uber service can save you the cost of operating and maintaining a food truck. They also significantly reduce the initial capital requirement. However, you need to calculate how much you are spending on labor and other operational costs, including marketing and promotion. This will help you determine if the revenue is enough to break even and make a profit.
There's no doubt that modern technology is the critical success factor for cloud kitchens and the ghost restaurant concept. One great example is the Uber ghost kitchen, which relies on third-party Uber service to facilitate meal delivery. However, not every Uber eats a ghost kitchen is successful. It is crucial to identify and review the core technologies your business needs. The goal is convenience, automation and cost reduction. You can save more on marketing and advertising, SEO, online orders management, data collection and analysis, lead generation and more.
Making a ghost kitchen profitable involves calculating the total cost of running the kitchen and ensuring revenue generated is sufficient to cover these costs. If you can break even, small adjustments in pricing and business automation can significantly boost your profits. Nonetheless, it calls for constant research and analysis. You should also provide delicious meals, a memorable ordering experience and swift delivery to build trust with customers.
In this two-part series, we'll analyse what are virtual kitchens, what are their advantages, and why you should launch one.
In a business where margins are already razor-thin, COVID measures have had some negative consequences; meanwhile some independent restaurant owners are not just beating the odds, but actually thriving. So how are they doing it?
Join our community and subscribe today for daily tips and insights on restaurant trends.