A recent wave of ghost kitchen openings shows the business model is getting a major rebrand.
Walmart Canada recently announced it is opening a ghost kitchen at its St. Catherine’s location with additional locations in Woodstock, Toronto, Lachenaie, and Saint-Constant to open in the coming months, according to a press release.
Customers can order freshly prepared meals in-store and online for contactless pickup or delivery from a third-party such as Uber Eats and mix-and-match from more than 20 well-known brands. They can also order grocery items such as a pint of ice cream or a 12-pack of soda.
“We believe in Ghost Kitchen’s strategy and vision and we’re very excited to be the first retailer to team up with Ghost Kitchens,” Sam Hamam, Senior Director of Licensees at Walmart Canada, said in a statement. “We’re always looking at ways to improve our customer shopping experience with greater access to affordable products, services and brands.”
Similarly, The Detroit Pistons launched the “Pistons Dish,” a ghost kitchen concept that will sell sports-inspired dishes and some Pistons merchandise through third-party delivery companies.
The menu has shareable appetizers, soft drinks, and entrée items like “Hooper’s Honey Walnut Shrimp” with sautéed vegetables and Basmati rice. Merchandise includes branded hats, beanies, and face masks, according to a report by The Detroit News.
To create the kitchen, the team partnered with Reef Technology, a logistics company. The project is expected to create up to 200 jobs, primarily consisting of staff prep and line cooks, assistant kitchen supervisors, and drivers.
“In a time where sports remain spectator-less and fans are craving a live stadium experience, we’re excited to bring the same energy home to Pistons fans and foodies,” Reef CCO Alan Philips said in a statement.
To industry analysts like Joe Guszkowski, the senior editor for Restaurant Business Online, these openings represent a major shift in the ghost kitchen space. Essentially, restaurants and grocery stores are becoming micro-fulfillment centers.
“These outlets are intended to help brands move into new areas or double down in existing ones, taking advantage of established delivery networks to make it work,” Guszkowski argued in an article.
Taking advantage of this trend will be paramount for restaurants as the industry emerges from underneath the COVID-19 pandemic. Restaurants initially invested in ghost kitchens to reduce square footage while privileging to-go and delivery meals. However, now that national retailers are entering the ghost kitchen waters, it will become increasingly important for restaurants to capitalize on the movement.
Grocery chains such as Wegmans and H-E-B have shifted their in-store restaurants to takeout and delivery only to comply with local restrictions. Kroger opened two in-store ghost kitchens that offer their customers 80 menu items each.
Meanwhile, third-party delivery companies have accelerated the growth of these “micro-fulfillment centers.” DoorDash recently acquired ChowBotics, a robot-driven prepared salad company, in February. The move is the latest sign that the company is moving closer to opening its own fulfillment center. Uber agreed to purchase its rival Postmates for $2.65 billion in July 2020 after Postmates successfully provided retailers and grocers with no-commission curbside pickup and delivery services.
But some are not convinced that ghost kitchens are really a good thing for restaurants. In an article for New York Magazine’s Grub Street, Rachel Sugar recently wrote that ghost kitchens are “a trend that manages, triumphantly, to strip away all joy from the act of eating.”
“What ghost kitchens are not, as should be clear by now, are restaurants. They are food-logistics operations,” Sugar continues.
The virtual prowess that ghost kitchens offer is the main reason why some economists anticipate the concept that will drive its growth into the future. Euromonitor, a research firm, anticipates ghost kitchens will become a $1 trillion industry by 2030.
However, the space is overloaded with restaurants that sell sandwiches and grain bowls—food items that travel well, Eurovision’s survey found. The entrance of retailers like Walmart and sports franchises like the Pistons offers a great opportunity to diversify the space.