Still Unsure About Shifting to a Ghost Kitchen Model During COVID?

The restaurant industry was one of the hardest-hit sectors during the 2020 COVID-19 pandemic. In places that observed full or partial lockdowns, mask mandates and social distancing requirements, the formerly simple act of going out to eat became harder than ever before. The dip in traffic was devastating for countless restaurants, which could not earn revenue from all of their unused floor space. Ghost kitchens emerged as a partial answer to this issue.

Ghost kitchens are effectively restaurants that don't have lobbies, and that usually deliver through online ordering, rather than serving on the premises. This approach has been more than a temporary measure during lockdown. It has the potential to become a permanent feature of how restaurants operate even after the pandemic has subsided.

The Business Model of Ghost Kitchens

Ghost kitchens existed before the pandemic, but it was the lockdowns that gave them a chance to shine. A typical ghost kitchen has all of the professional-quality equipment you can find in any restaurant, but instead of a lobby with seating for customers it usually just has a pickup window for online orders.

Overhead is one of the biggest expenses restaurants have to manage. Every square foot of floor space costs money every month for leased space, and unused lobby space is a financial drain on restaurants that typically operate on razor-thin margins. By doing away with space that's legally required to be empty, and hence unprofitable, ghost kitchen restaurants can downsize to a much more streamlined operation without giving up any of their services.

How Restaurants Are Surviving the Pandemic

Switching to the ghost model does more than just save on overhead. Many restaurants have been inspired to expand their offerings during the pandemic. Without customers onsite, establishments are no longer bound by a single theme. This means that an Italian-themed restaurant that in the past had a menu strictly limited to Italian cuisine can now offer Chinese food, Mexican food and Ethiopian takeout without any discontinuity, since online ordering technology creates a different ordering experience for every customer. Every type of cuisine could be offered from a single kitchen, and the customers ordering pasta and the customers ordering chow mein might not even know their meals are being made side-by-side in one kitchen. This allows complex online order consolidation, which lets every person in a household order from what seems like a different restaurant, only to have everything arrive at once from the same source.

The 4th Wave of COVID and Beyond

The COVID pandemic arrived in waves, and each wave brought its own regional lockdowns and dining restrictions. In many places, just as the local restaurant and hospitality businesses were recovering, another wave would come along and shut them down again. Every time this happens, restaurants that still operate traditional spaces lose the majority of their customers for as long as the restrictions last. For every shutdown, a certain number of regular customers never return.

Very few of those lost customers have stopped patronizing restaurants altogether. Rather, most have shifted their habits to ordering home delivery instead. With the bulk of restaurant customers downloading and regularly using online ordering apps instead of visiting in person, a huge market has developed for early adopters of the virtual kitchen model.

Shifting Your Restaurant Operations

Restaurants don't have to make the shift from traditional facilities to ghost kitchens all at once, and you can probably keep the disruption to a minimum by doing it in stages. One thing you can try in the beginning is to form a partnership with other restaurants in your area. By working together on orders, each of your restaurants can get the advantages of having a second kitchen without the cost.

Once your online ordering and delivery system is up and smoothly running, think about physically moving to a smaller kitchen-only space that costs far less each month than the facility you occupy now. If that's not practical, either because you own your site or you have a long time left on your lease, consider converting some of your lobby into supplemental kitchen space. Even without a stove, grill or other equipment, the space that used to hold customers can be repurposed for mixing and food prep, packing or any other purpose you need for the higher volume a ghost kitchen can handle.

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