The pandemic has prompted restaurants to shift their focus to delivery and takeaway, accelerating the demand for ghost kitchens. If we talk about the statistics, according to Valuates Report published in November 2020, The Global Cloud Kitchen Market size is estimated to reach USD 71.4 Billion by 2027, with a CAGR of 12.0% from 2021 to 2027.
This booming virtual business is surely going to outstrip in the coming months, and with the looming pandemic, we can expect more than 75% of world restaurants to be having at least one ghost kitchen to do well out of.
What is a ghost kitchen?
Ghost kitchens also referred to as virtual kitchens or cloud kitchens, are essentially commercial kitchens optimized for online ordering and delivery. This means no physical location, no fancy decor, no dine-in area, and no servers. Just a bunch of kitchen staff preparing meals to go.
For new entrepreneurs, ghost kitchens offer a platform to experiment and launch their restaurant brand with low investment and low risk. Ghost kitchens can also be used to expand existing restaurant brands to new neighborhoods, a new city, or even a new country, without any upfront costs and risks. As a result, many QSRs of today are rapidly adding virtual off-premise kitchens to create more revenue streams and expand the delivery range.
In simple words, Ghost Kitchens are the co-working space for restaurants, and they solve the most harrowing challenges of the industry – high operating costs and high rentals.
How does a ghost kitchen work?
After having a successful start with their first delivery-only kitchen in Bislett, Pacific Poke in Oslo expanded their delivery reach to new locations with the help of Livly, a popular community kitchen brand based out of Oslo, Norway. In just three months, their virtual kitchens had served up 2500 poke bowls.
Ghost kitchens are popping up around the world and changing the way the customers dine, but more than that it’s changing the way restaurants operate in the new world. Modern kitchens are equipped with technology and platforms that allow them to reach a wider audience with minimum risk. In addition to this, they now have the flexibility and the ability to add new revenue streams that not only make them highly profitable but also create a strong brand identity that their customers can resonate with. Even without a fancy store, a small restaurant can create a big brand presence just through its website, food photography, and of course, the packaging.
So how do they work? What do you need to become another success story in the business? Let’s find out!
Similar to delivery at any traditional restaurant, customers can place orders via a third-party app like GrubHub or Ubereats, or through the brand’s native website. Most brands these days have their own ordering website and mobile ordering app that customers can use to place direct raiders with them. This helps restaurants save on the high commissions that third-party aggregators charge.
> Customers can access the digital menu on their preference sales channels, place the order, and pay for their food online.
> Once the customer places the order, the kitchen staff gets notified, and food preparation begins.
> When the food is ready, the customer is sent details about the delivery drier assigned for delivering the food package and ETA (estimated time of arrival). Now the restaurant could be using their own drivers to make deliveries or tie up with last-mile delivery companies like Postmates to streamline logistics.
> Once the customer receives the order, the transaction is marked as complete.
Now in the pandemic world, customers are opting for contactless deliveries and payment to ensure safety at all touchpoints. In such a case, the customer is required to click on the “contactless delivery” tab on the ordering website and make the payment online before the order is dispatched from the kitchen. The driver is instructed to leave the food package at the door and the customer is notified via the app about the delivery.
So what would you need to set up a robust ghost kitchen infrastructure?
Select a Location: One of the biggest advantages of ghost kitchens is that you don’t have to worry about being in the most top-notch neighborhood with a parking facility. You can run a ghost kitchen from your garage for all that we know. As long as you deliver good quality food, maintain hygiene and sanitation, your customer will keep coming back for more. But if you are looking for an organized space, you can always get in touch with Cloud Kitchen companies like KitchenUnited, CloudKitchens, REEF Technologies, and other alike to set up your virtual kitchen. These organizations have pre-fabricated kitchens with all the necessary equipment, tools, and amenities. All you have to do is rent out space with them and start preparing meals.
Optimize your menu for delivery: The secret to a ghost kitchen’s profitability lies in its menu. You must focus on dishes that are not only easy to prepare but also travel well. You really don’t want your customers to wait for over an hour for the delivery, and neither you want them to experience food that’s soggy, unappetizing, and clearly spoilt because it was not travel friendly. Take into account the time and temperature when developing your delivery menu. Keep your food costs and wastage low by offering a small menu with items that use similar ingredients.
Choose a delivery method: One of the biggest challenges when launching a delivery-only kitchen is choosing between in-house delivery, third-party delivery apps, or a combination of both. A lot of independent restaurants with no logistics infrastructure often avoid getting into the delivery business. But with the right logistics partner, one can leverage the benefits of the proven technology to connect with customers and provide reliable delivery fulfillment.
On the other hand, restaurants can also utilize their current employees to make deliveries. You can always train the staff to make timely, error-free deliveries.
Ensure That Your Ghost Kitchen Meets Health & Safety Requirements: It is more important now than never, especially if you are just starting out and need a business license to start a kitchen. The food regular department in your state will review the kitchen hygiene, storage facility, and production methods to ensure that your customers would nothing but the best quality food from your kitchen. So ensure that the Food Manager at your facility takes into account all the regulations and hygiene standards implied by the Food Administration in your state. Also with the COVID-19 scenario, there would be some additional guidelines that you would need to comply with while preparing food and making deliveries – like all staff should wear gloves and PPE kits while preparing and handling food and temperature monitoring on daily basis.
Online Ordering System: This goes without saying but a Cloud Kitchen cannot thrive without a robust online ordering system. Even if you choose to get orders via third-party aggregators, having a native website and a mobile ordering app that your customers can use to place orders would make a lot of difference to the bottom line. In the long run, having an in-house online ordering and delivery system would ensure maximum profitability, which is hard to earn with high-commission models of third-party aggregation system. They might be good for marketing, but in the end, you need customers who can stay loyal to your brand and help your business stay afloat during tough times.
How online ordering system helps ghost kitchen thrive in the new market
Did you know? In 2019, 51% of regular restaurant-goers agreed that they ordered food online directly from a restaurant website or app. During the pandemic times, that number jumped to 82%, further demonstrating that customers are actively looking to order from their favorite brand online.
Direct ordering: As mentioned above, online ordering offers customers a platform to stay connected to their favorite brands without any middlemen. On the other hand, restaurants save on high commissions that eventually lead to high profitability per order. Most online ordering systems work on a subscription basis, but with Tasti, you can implement the system to your existing website at absolutely no cost. We have a Freemium plan for restaurants that are just starting out or want to test the market before going big.
Understanding customers better: Of course, an online ordering system providers many opportunities to better understand customers and their needs. The data that you get in your custom dashboard helps you create personalized experiences for your customers that eventually lead to high customer satisfaction and increase loyalty.
High average cart value: When a customer feels comfortable while browsing the menu, he or she is more likely to add more items compared to someone standing in front of the takeaway cash counter at the restaurant premises. Moreover, the upsell and cross-sell opportunities encourage online customers to add more items for less. All these cumulatively resulting in high cart value, thereby, maximizing profitability.
No errors: Since the customer is placing the order with clear instructions on the checkout page, the slightest chance of error is eliminated resulting in more satisfied customers. Manual entries can often get missed or miscommunicated, but digital ones never!
Update menu on the go – With an online ordering system restaurants have the flexibility to update the menu as often as they want. New-season coming up? Add items that costumes can resonate with. Want to hide the lunch menu before dinner? Do it with just a few taps on the device. It’s as easy as pie.
Creating a Strong Online Brand with Tasti
The ghost kitchen concept may not be suitable for everyone — but all restaurants can leverage the power of online ordering and delivery.
If your restaurant is looking to pivot to online ordering or add a delivery-only kitchen, Tasti can help you set up a robust online ordering or mobile ordering system so you can create a successful online ordering experience for your customers.
The online ordering and delivery segment is expected to become a $76 billion industry in the next five years; don’t be the last one when you can be among the early adopters and make it big for your brand.