What Happened to All the Ghost Kitchens?

What happened to Virtual brands and ghost kitchens?

Until recently, ghost kitchens and virtual restaurants seemed like the next big thing in the restaurant industry. But after Wendy’s decided to scrap its historic investment into ghost kitchens earlier this year, restaurant industry experts are asking: Did ghost kitchens get ghost-busted? Although reduced operating costs, greater flexibility, and faster concept launch times are all appealing factors to restaurateurs, there are significant challenges that ghost kitchens face in a post-pandemic world:

Diners Have Become Cost-Conscious

After delivery fees, service fees, and tips, more consumers view food delivery as a luxury. Customers are leaning toward food pick-up orders, which they simply cannot do if their food comes from a ghost kitchen. Restaurants are struggling to provide an economic delivery service to customers while still making money, especially small operations.

Consumers Crave Authenticity

A recent study showed that three out of four diners feel it’s important to know where their food is prepared. So, when a consumer orders wings from what seems to be a trendy local brand, they might be a little upset to learn their food was prepared in, say, a Chuck E. Cheese kitchen. Consumers are awakening to these misleading ghost kitchen operations and are now less trusting of brands without a brick-and-mortar location.

The Delivery App Relationship is Strained

Third-party delivery apps have been the driving force behind ghost kitchens. However, with increased instances of kitchens posting duplicate, low-quality menus under different business names, apps like Uber Eats are implementing a variety of regulations for ghost kitchens and virtual brands. Of course, many ghost kitchens do produce quality food with transparency. However, these regulations may cast a negative light over the entire ghost kitchen industry.

Drive-thru Competition is Fierce

Brands with brick-and-mortar locations have realized that investing in high-tech take-out operations is more lucrative than honing delivery operations. Diners are becoming more cost-conscious. Third-party service fees, delivery fees, and tips feel like unnecessary expenses.

Recruit Strategic Restaurant Leaders

Although the ghost kitchen industry faces significant challenges, there are a variety of virtual business models that can be used effectively by restaurants. However, ghost kitchens will go through more growing pains as they find a foothold in the industry.
There is no cut-and-paste solution for your restaurant business success. You need restaurant managers who can develop and execute strategic business plans. Contact the Restaurant Recruiters at Horizon Hospitality to learn how we create a talent acquisition plan that is unique to your restaurant’s needs.



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