Is It Worth Expanding Your Ghost Kitchen Into New States?

Is It Worth Expanding Your Ghost Kitchen Into New States?

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For years, successful restaurant owners have taken a unique concept and applied it to multiple locations, creating a strong brand that's recognized across the country. Expanding isn't just for traditional, brick-and-mortar restaurants anymore — ghost kitchens are joining the trend as well.

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Ghost kitchens, also known as dark kitchens or virtual kitchens, are food preparation facilities that connect with consumers through delivery and online ordering. Because they only require a kitchen space, virtual kitchens are easier to open than traditional restaurants. However, that doesn't mean expanding a virtual brand is simple. Before making a decision, it's important to carefully consider the pros and cons of staying put versus expanding your business.

Staying in One Location

With more and more people relying on takeout and delivery services, it's no surprise that the virtual kitchen trend is taking off. If you're the owner of a successful ghost kitchen, it might be tempting to try and capitalize off that success by expanding your business. However, in some cases, remaining in place might be better in the long term. Here are the pros and cons of staying in one location.

Pro: Become a Market Leader in Your Area

If you expand your virtual brand, you'll have to split your attention between your different locations. Conversely, if you retain one location, you can focus all your time and energy on becoming a market leader in your area. For example, if you run a sandwich brand, you can work on becoming the most popular sandwich brand in your neighborhood. Benefits of being a market leader include:

  • Strong brand loyalty
  • Less competition
  • Increased profits

If you try to manage multiple locations at once, it will be more difficult to become a market leader.

Pro: Save on Costs

Expanding a brand isn't cheap. In addition to renting a space, you have to find and hire a team to run your new place. You'll also likely build up travel costs as you go from one location to the other. While your new location may bring in profits, it's still a risky endeavor.

Con: Limited Growth Potential

The main reason why people expand their virtual brand is that they want to grow as a business and share their food with new people. If you choose to remain in the same state, you're putting a cap on how much you can grow. You may be well-known in your area, but you won't be recognized in other states.

Expanding Your Ghost Kitchen

When done correctly, expanding your ghost kitchen can be just what you need to take your business to the next level. Consider Kitchen United — this virtual brand raised over $50 million in venture capital and can currently be found in four cities. However, before you decide that expanding is the right choice for you, it's important to consider the pros and cons.

Pro: Increased Brand Awareness

The most obvious advantage of expansion is increased brand awareness. The more people that know about your brand, the more revenue you'll get. Spreading into different states is a great way to connect with new audiences. However, you should never choose new locations at random — some states offer better conditions for ghost kitchens than others.

Pro: Bigger Team

Your brand wouldn't be able to thrive if it weren't the hard work of your team. Every member, from the cooks to managers, plays a valuable role in your ghost kitchen. By expanding, you get the chance to grow your team and introduce more people to your brand.

Con: Expenses and Management

Costs are a major deterrent when it comes to expanding. Not only do you have to rent or purchase a new location, but you also have to invest in a bigger staff, insurance and appliances. Furthermore, it becomes increasingly difficult to monitor your supply chain management and accommodate your online orders. Even just one mistake in management can negatively impact the quality of your services.

Should I Expand My Ghost Kitchen?

There's no right answer when it comes to expanding your brand. If you haven't yet dominated in your current area, you may want to focus on a single location for now. However, if you're doing well and you have the capital available, expanding might be a good choice. In general, make sure you have the following before franchising:

Prior to expanding, you should make sure there's a strong demand for your services and that you have a devoted team by your side. It's also beneficial to have high-quality restaurant tech that can integrate with your restaurant SaaS system and help you achieve a smoother order management process, such as Cuboh. The better your management, the more likely you'll be able to keep your new customers happy.

Grow Orders, Save Time & Eliminate Tablet Chaos

Integrate your delivery apps and online orders with your POS and consolidate them into a single tablet. Helping you reduce order issues, grow your sales, and eliminate delivery headaches.

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