Now more than ever, running a brick-and-mortar restaurant has become unprecedentedly expensive. Today, when the demand is leaning toward delivery, 60% of US consumers order delivery or pickup at least once a week; Ghost or virtual kitchens are predominantly looked at to fill this demand.
While ghost kitchens have existed for a long time, it was the COVID-19 pandemic that accelerated their growth. Since then, the concept has become a hit and is still growing progressively. This blog will explore why ghost kitchens are in demand and the basics of how to run one.
Also known as dark or commercial kitchens, they are physical spaces that run food preparation and other operations without a storefront. The food prepared is only available for delivery. Ghost kitchens don't have a store display but have space to cook and sell food online via third-party delivery apps. The experience created here is with the food itself.
The operations workflow of a ghost kitchen focuses on preparing the food and cooking, essentially by dividing up the tasks among different stations. The staff is trained to leverage the point-of-sale software to cater to various orders and act quickly. Depending on the order forecast, the ghost kitchen team coordinates with the delivery partners. They also ensure the orders are packed and labeled correctly before being handed off for delivery.
Ghost kitchen owners generally prefer to locate their business on the outskirts of cities or industrial parks. It is because there’s no need to pay downtown rent when there’s no front-of-house operation. Instead of a physical location, the presence is digital. However, we recommend you choose your location strategically. You should be located where you will capture the most online orders from customers nearby.
Ghost kitchens are one of the biggest 2024 trends in the restaurant industry. Businesses have been successful in operating the ghost kitchen. Here are some of the benefits to consider.
The online meal delivery segment contributes to about 40% of restaurant sales. The growing demand for online food delivery is evident. It’s the opportunity that first-time ghost kitchen operators can leverage to cater to the increased demand. Moreover, already-established restaurants can expand their business and capitalize on the increased demand for food delivery services.
The cost of starting the ghost kitchen business is low. You don't require a server, counter service, staffing for the bar, huge space, and a no-cost ambiance setup that includes tables, interiors, and cutlery. That means the ghost kitchen costs significantly less than a full-service or fast-casual restaurant with all these factors to consider.
Starting up a ghost kitchen model takes simpler efforts. All it requires is a brand, a rental space for a kitchen to prepare food, marketing spending to create brand awareness, and integration with a third-party delivery app. All this, accompanied by a solid and sound menu, is a crucial aspect of the model compared to the traditional, which also has to focus on the interiors, exteriors, location, and much more.
If starting a restaurant business is where your interest lies, then there is nothing less risky than the ghost kitchen. Its minimal cost requirement to start a business is lower than any other restaurant business model. Also, the ghost kitchen model allows you to try something new without making a significant investment.
When there is no fixed storefront to serve the customers, there is no restriction on who your customers are. That way, your delivery range can increase with third-party delivery apps or by increasing the number of kitchens. Initially, integrating a third-party delivery app is beneficial as it is more known in the market and can increase sales volume. Once your brand is established, you can select delivery partners to cater to various locations. As you grow, you can increase the kitchens in multiple locations to expand the delivery locations.
Though the ghost kitchen and cloud kitchen are often interchangeably used, their differences make them different.
The ghost kitchen concept of the model is simple. Many businesses have implemented it and have expanded themselves. Here are some popular brands that work on ghost kitchen models.
Krispy Rice is the only delivery restaurant, otherwise called Ghost Kitchen, launched by Creating Culinary Communities. It is a Japanese concept kitchen established in 2020. The concept is built around a signature dish, spicy tuna crispy rice. Hence, the menu has a variation of crispy rice made available in three combinations, or à la carte, which is attractive to all sushi lovers. C3 is a subsidiary of SBE Entertainment Group, a hospitality lifestyle company leveraging its vast restaurant network and ghost kitchens to deliver Krispy Rice’s recipes to doorsteps through DoorDash, Uber Eats, and Postmates.
MrBeast Burger is a virtual restaurant operating from ghost kitchens across the United States. It is owned by a famous personality on YouTube, Mr. Beast. Found in 2020, this ghost kitchen was a sensation. People order food via delivery apps. It is situated in 300 locations. They run from the virtual dining concept by Robert Earl, who has successful franchise ownership. VDC is the one that rolls out MrBeast Burger, which uses ghost kitchens to run a brand, and each of the concepts gets endorsed by a celebrity’s branding. With a strategic location spread, they take over the delivery app algorithm to reach every city with delivery.
Another ghost kitchen company based in Pasadena provides delivery-only restaurants with fully equipped kitchen spaces. It was founded in 2017. Kitchens located in strategic areas where food delivery is in high demand allow existing restaurants or new ones to partner so that they can run multiple such virtual brands in the same space. The restaurants can share the infrastructure, utilities, and equipment to use resources efficiently. Their software for ordering can be integrated into significant delivery service apps to receive the orders.
The working of ghost kitchens is quite simple. Besides how you receive the order, here’s who is potentially involved. There’s a chef, kitchen assistant, packer, dispatcher, and manager to oversee the entire operation.
Pro tip: Like every other commercial kitchen, Ghost Kitchen must ensure compliance with relevant agencies and institutions set in place. Ensure food safety regulations with the U.S. Food and Drug Administration or state and local health authorities. Whether it's the FDA or state and local authorities, your ghost kitchen must meet food safety standards.
Now that we know it works like any other commercial kitchen, what does the cost look like? The essential cost varies depending on these factors:
If you are setting up a ghost kitchen, the question of whether to build or rent is common. Let’s quickly understand whether it is good to build or rent.
Building a ghost kitchen has benefits, but it is one’s decision whether to take the initial setup's expenses on themselves.
There are rental spaces equipped with shared spaces that you need not set up from scratch.
Ghost kitchen are the new trend circling the restaurant industry. They reduce overhead costs, increase operational efficiency, and expand market reach. Coupled with automation and technology, ghost kitchen make up to 200 times more money.
Now that you know the ins and outs of ghost kitchens, what are you waiting for? It's time to capitalize on this increasing demand and start a ghost kitchen. And on the way, if you need help with a point-of-sale solution to make your operations manageable, check out OneHubPOS. This easy-to-use software is designed for restaurants, making kitchen operations a breeze. Book a demo with us to learn how!
Federal law allows including only employees who customarily and regularly receive tips. This typically excludes back-of-house staff like cooks and dishwashers. However, some states might have different regulations.
Tips are typically collected throughout the day and pooled at the end of the shift. The pool is then distributed among eligible employees based on the chosen method.
In some states with allowed tip credits, employers can take a portion of the minimum wage based on tips received by employees. This essentially allows employers to pay tipped employees a lower base wage.
Non-compliance can lead to fines and penalties from the Department of Labor, wage-and-hour lawsuits from employees, and employee morale issues.
Tip sharing is voluntary. An employee might choose to share some of their own tips with colleagues. Tip pooling is a mandatory system where all tips are collected and then distributed among eligible employees based on a predetermined method.
No, managers and supervisors cannot participate in the tip pool.
There are no standard percentages by law. However, 15-20% is a common tipping range for good service in the USA. Tip pooling eliminates the need for individual tip calculations.
Tip pooling can be beneficial for restaurants of all sizes. It can foster teamwork, ensure everyone benefits from good service, and simplify tip distribution.
Yes, tip pooling is legal under federal law (FLSA) with some key restrictions. However, some states might have additional regulations. Always check your state's Department of Labor website to ensure compliance.
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.
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.
Absolutely! Many online food cost calculators can handle various cuisines. Look for tools that consider ingredient types, portion sizes, and even regional pricing variations.
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.
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.
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.