As technology rapidly advance, so is the innovation within the food and beverage sector. Restaurant businesses are using technology to adapt to consumer changes during this coronavirus period. Since the typical dine-in restaurants are closed down, there has been an explosion of ghost kitchen companies to cater to the online food demand. Consumers in areas with strict lockdown restrictions are relying more on online delivery apps to purchase food and other household products.
What are virtual restaurants?
Ghost kitchens are becoming a common business model as a reaction to changing consumer behavior. Consumers are no longer comfortable with dining out, and others are tired of cooking at home. Since no one wants to leave the home's comfort, there is a sudden interest in demanding food delivery.
A virtual restaurant is a restaurant kitchen that doesn't offer dine-in service. The restaurants are employing online ordering to cater to changing consumer behavior and cross the digital divide. This expansion model is similar to the lean startup model that allows entrepreneurs to cut down on the labor and operating costs.
Third-party apps are the biggest winners with this ghost restaurant concept as they make food ordering easy. The restaurants are partnering with virtual third parties to facilitate online ordering and delivery of food to consumers. With the click of a button, the uber ghost kitchen can deliver the food from virtual restaurants. Hence, these are eliminating the need to step into a restaurant for food, thus disrupting the restaurant industry.
How virtual restaurants work
The ghost kitchen concept has revolutionized the food and beverage industry by taking out the dine-in area. This means the commercial kitchen is optimized for food delivery only. The focus of this virtual kitchen model is to eliminate several bottlenecks in the food delivery supply chain. It emphasizes lean manufacturing methodologies that integrate technology and food into a single system.
The nature of the ghost restaurant concept relies on making digital ordering efficient. Customer experience with digital ordering determines this model's success and whether a restaurant will retain its customers. As a result, most restaurants are using mobile applications or websites to facilitate online food ordering.
However, transiting from the dine-in to virtual restaurants is not all cozy. Restaurants are struggling with making the transition and maintain revenue. For example, restaurants have to partner with third parties such as Uber Eats ghost kitchen, Grubhub, and Doorhush. At the same time, marketing is one of the challenges for restaurants to promote their businesses and promote third-party delivery providers.
Transiting to ghost kitchen business model
There are several reasons why restaurants are adopting the virtual business model. The main reason is the promise of lower operational costs when compared to a conventional restaurant. These ghost kitchens do not serve walk-in traffic, which means they don't require much operating space. For example, the restaurant does not need front-line staff due to virtual kitchens' nature, which reduces labor costs.
Apart from saving costs, virtual kitchens are more efficient than typical restaurants. They only focus on cooking quality food without worrying about servicing and ambiance. This means there will be little complaints about customer service. These benefits are the driving factor facilitating a transition to the ghost kitchen business model.
Are consumers ready?
The recent data shows that consumers have embraced this model. Most consumers in the United States are likely to order food from a restaurant with no physical location. Even before the pandemic, restaurants were already adopting the virtual kitchen model. More people were already ordering foods from ghost kitchen food trucks as they embrace technology that comes with eCommerce.
Between February and April, the number of restaurants employing online food delivery increased by 169%. The trend is projected to continue even when things return to normal. By 2030, the online food ordering industry is projected to expand immensely as retailers, and grocery stores hope onto the trend. Businesses are embracing the changes brought by technology as they seek to appeal to the millennial generation.
There is an explosion of ghost kitchen startups looking to increase their margins and move upstream. This technology has allowed partnerships with third parties such as ghost kitchens uber eats to facilitate online ordering and food delivery. Cuboh is one of the third parties that is helping businesses start a ghost kitchens venture.