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Ghost Kitchen Vs Cloud Kitchen: Which One is Better to Expand Your Business?

Sahana Ananth
June 6, 2024
1 mins

Table of Content

The restaurant industry is revolutionizing with the growth of delivery-only kitchens. 52% of USA restaurant consumers state they would love to order from a ghost kitchen. In the crowd of dine-in restaurants, people now like delivery-only restaurants.

This is the perfect time to start your own ghost or virtual kitchen. This blog will discuss ghost kitchen vs. cloud kitchen in detail. Eventually, this will assist you in making a wise decision about which model to start with to compete in the restaurant business and earn a smart amount of money.  

Let’s get into the nuances of both ghost kitchens and cloud kitchens. 

What is a Ghost Kitchen?

Ghost Kitchens are delivery-only restaurants without a storefront or dining area. So, how are they contacting a vast number of consumers? 

You might have once ordered food from Uber Eats, Grubhub, DoorDash or any other platforms. Ghost kitchens prepare meals at their place and deliver via third-party apps. With third-party food-ordering apps, you are just moving around from restaurants to consumers and get a commission for the delivery service. Also, they get commissions from the kitchens and restaurants.

What is a Cloud Kitchen?

A cloud kitchen, aka virtual kitchen, is a unified food production system. Diverse restaurant brands operate their businesses under one cloud kitchen roof. 

This is a money-saving solution where restaurants don’t need kitchen equipment, resources, and space. This restaurant model will raise the business quickly without paying for physical dining spaces and decorations. 

Cloud Kitchen has focused on food quality and delivery speed, which is why it's evolving daily. Most importantly, food consumers love it. 

5 Key Differences: Ghost Kitchen Vs Cloud Kitchen

At a glance, both kitchens look similar yet have multiple differences to distinguish them easily. 

1. Operational Facilities

Most of the restaurants operate by ghost kitchen work independently. A group of kitchens work under a third-party app, which is excellent for dedicated order fulfillment.

On the other hand, cloud kitchens work like a platform that houses multiple restaurant brands in a single shared space. These brands will work together and share standard kitchen tools such as equipment, furniture, and other necessary utensils. For this type of arrangement, cloud kitchens can offer cousins and similar delicacies to their customers. 

2. Physical Setup

In a ghost kitchen, there are no storefronts or physical dining areas; the focus is entirely on kitchens. This is why ghost kitchens are cheap, non-location-based, and reduce pressure by concentrating solely on delivery.

Cloud kitchens don’t have physical setups like dining or storefronts, but the platform can support multiple brands simultaneously. With their collective use of space and resources, cloud kitchen restaurants can significantly reduce costs and create coordination among various restaurants. 

3. Brand Visibility and Customer Interaction

Ghost kitchens often lack visibility because of the absence of a physical store and customer interaction through different locations. Most of these kitchens will depend on large delivery and distribution networks.

However, cloud kitchens will gain visibility because their brands work under one roof and share resources among their kitchens. Even though there is no physical presence, the joint branding effort can influence and improve overall visibility. 

4. Investment and Overhead Costs

The best part of ghost kitchens is that they are low-cost, so you can easily start a business. That’s why they are ideal for startups and small businesses willing to enter the restaurant business. 

Cloud kitchens might be expensive because of their large facilities and extensive operations. However, they might still promote cost efficiency by distributing expenses across multiple restaurants. 

5. Flexibility and Scalability

For less attention and visibility, ghost kitchens are pretty flexible towards their work. Their business strategies are based on consumer trends and feedback. You can experiment with multiple cuisines without incurring financial risk. Changing your menu according to your consumer's preferences is super easy. 

Cloud kitchens can extend their business by providing ever-growing scalability, without additional physical premises. Moreover, this restaurant model can spread with shared resources, allowing it to focus on food quality and a swift delivery system.

Here's a closer look at the differences:

Key Differences Ghost Kitchen Cloud Kitchen
Operational Facilities Independent kitchens focused on order fulfillment. Multiple brands in a shared space with shared kitchen tools.
Physical Setup No storefronts; focus solely on delivery. No storefronts; multiple brands share space and resources.
Brand Visibility Limited visibility; relies on delivery networks. Better visibility through joint branding and shared resources.
Investment and Costs Low-cost, ideal for startups and small businesses. Higher costs, but expenses are shared across multiple restaurants.
Flexibility and Scalability Flexible, allows experimenting with different cuisines easily. Highly scalable, can expand without additional premises.

Real Life Examples of Ghost Kitchen and Cloud Kitchen

There are thousands of Ghost Kitchen and Cloud Kitchen services available. Let’s look at some real-life examples of them. 

3 Ghost Kitchen Case Studies

1. Kitchen United

Founded in 2017, Kitchen United has quickly emerged as a leader in the Ghost Kitchen industry. It provides multi-tenant kitchen spaces where multiple independent restaurant brands can operate simultaneously. Its location is perfect for serving a local population, delivering food effectively, and handling complex logistics under one platform. 

2. Virtuant

Virtuant is also a great Ghost Kitchen brand that offers solutions for individual restaurants that want to expand their reach by using delivery and takeout services without the traditional overheads. By hosting multiple independent kitchens in a single facility equipped with shared resources and advanced technology, Virturant optimizes operations and reduces wait times.

3. Backstage Food Hall

In the heart of Times Square, Backstage Food Hall provides access to up to 1.2 million customers. It has a walkable area and nearby shopping areas, which attract tourists worldwide. This is a high-demand ghost kitchen for both online delivery and walk-in traffic. Moreover, they provide modern chefs with specialized kitchen resources that ensure a smooth and efficient setup process.

3 Cloud Kitchen Case Studies

1. MrBeast Burger

The legendary Youtuber Jimmy Donaldson Aka Mr Beast opened Mr Beast Burgers, a sub-company of Mr Beast Brand. After its initial launch in December 2020, MrBeast Burgers has gained many recognitions. Mr Beast Burgers is a virtual restaurant brand that uses other kitchen spaces in the United States and other international spaces. 

2. NASCAR Refuel

Nascar Refuel is another Cloud Kitchen platform that offers fans an amazing experience. It hosts many independent kitchens dedicated to creating meals with flavors at an exhilarating pace associated with NASCAR events. The company solely operates through delivery services and offers a diverse menu inspired by the various tracks and cultures represented in the NASCAR community.

3. CloudKitchens

CloudKitchens are renowned for food quality, scalability, and delivery speed. It is specially designed to start food production with minimal staff and lower capital investment. It’s not a matter whether you are initiating the restaurant business from scratch, they will minimize the setup process and run the kitchen quickly. The most crucial part is you can access many customers without spending time on growth. 

Choosing Between Cloud Kitchens vs Ghost Kitchens: What to Consider?

From a customer perspective, cloud kitchen platforms should offer better service than ghost kitchens. However, there are many points to consider. 

1. Business Model Suitability

As a startup, you should consider your investment options before selecting between Cloud Kitchen and Ghost Kitchen. You will also need to know what type of food you will offer your customers and what is popular in particular regions. 

If you want to host multiple brands from one platform, selecting Cloud Kitchen platform can help you because it has the potential to work on shared resources. However, if you want to work from one brand with multiple kitchen brands, consider Ghost Kitchen because of its cost efficiency.

2. Cost Considerations

You are starting an online food business that requires a solid platform and people who will work for your restaurant. This is why it’s crucial to consider the investment, because the food business may take away your savings. So, think about the financial aspect carefully. 

Ghost Kitchen Platform requires less upfront investment because its kitchen requirements are not insanely high and only require minimal setup. However, the amount will continuously depend on various factors like kitchens, staff, delivery, and platform costs.

3. Wider Reach

It’s important that your business reaches the people who are willing to buy through your platform. Also, you might not become famous locally, but might get many users in a completely different way, no one knows! 

For this instance, you can consider selecting a ghost kitchen. This allows you to diversify your locations, optimizing delivery logistics and market demand without the constraints of a physical dining space.

Meanwhile, cloud kitchens allow you to expand your reach by hosting multiple dining brands from a single platform. This ultimately leads to shared marketing efforts and promotion, making everyone a win-win situation! 

Final Verdict 

Let’s review everything one more time, Ghost Kitchen requires less investment, and infrastructure, and is financially less risky. With Cloud Kitchen, you can infinitely scale, have wider reach, and have chances of increasing your platform value massively. 

Both kitchens have their uniqueness, and both have values in different areas. Your financial statement and willingness to stick to a business till goal achievement can assist in choosing the perfect restaurant business model for you. 

In the process, you'll need a POS system to help you kickstart your food business, OneHubPOS is available for $1. Book a demo to learn more!

How do I figure out how much to charge for food?

Pricing is a balancing act! You need to cover your costs (including the food cost per portion) while offering a price point that feels valuable to your customers. Consider factors like competition, target audience, and the overall dining experience you create.

What tools are available for tracking food costs?

Food cost calculators are great for initial estimates, but consider restaurant management software for ongoing success. This software tracks inventory, automates cost calculations, and generates reports to identify cost-saving opportunities.

Can I use a food cost calculator for different types of cuisine?

Absolutely! Many online food cost calculators can handle various cuisines. Look for tools that consider ingredient types, portion sizes, and even regional pricing variations.

How often should I calculate food cost percentage?

Consider your food cost percentage your restaurant's financial fitness tracker. It's the total cost of recipe ingredients divided by your total menu sales. Ideally, calculate this regularly, like weekly or bi-weekly, to monitor profitability and adjust pricing or portions as needed.

What is the standard costing model?

The standard costing model is like a recipe for consistent pricing. It uses historical data and market trends to predict ingredient costs, allowing you to budget, purchase, and maintain profit margins even when prices fluctuate.

What is food cost per portion?

Food cost per portion is the actual cost of creating a single serving of a dish. It considers all ingredients, including spices, garnishes, and even waste!  This number helps you understand your profitability and set menu prices effectively.

AUTHOR
Sahana Ananth
Director, GTM - OneHubPOS

Sahana is a seasoned GTM leader with a passion for building startups. She excels in crafting GTM strategies for tech products, driving revenue growth.

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