CapitalTechnology

Are Ghost Kitchens the Next Big Thing?

Ghost Kitchens (restaurants) are food service businesses that serve customers exclusively with delivery. While early experiments haven’t all gone well, the most notorious flop was David Chang’s concept Ando that was ultimately sold to UberEats. The concept is an intriguing business model that I think we will see a lot more of in the future. 

As restaurants use delivery apps or focus on catering to meet demands of consumers, some chefs are skipping the restaurant altogether and just going the delivery route. 

The Chicago Tribune reports that NYC startup Green Summit Group is using one physical kitchen to service nine different “restaurants,” through delivery. 

Traditionally a sphere held only by pizza joints, demand for delivery of all different cuisines has seen a huge uptick over the years. There seems to be potential for growth as evidenced by Green Summit’s quick growth. What began with a couple hundred thousand dollars in seed money and has generated millions of dollars as they continue to expand and seek investors.

Green Summit says that they are still working on locations, but some of their newest spots are already showing revenue despite being only a few months old. Offering different brands with distinct menus is part of the way that they market their foods.

The ghost kitchen model has many benefits for operators because it avoids most service issues, saves on buildout costs, and can take advantage of cheaper rents. If a concept isn’t working well it is much cheaper for an operator to change the menu or even pivot cuisines. For a kitchen that operates multiple concepts you can share ingredients and other benefits from economies of scale.

Ghost kitchens that rely on established apps like Grubhub and Doordash, while they do pay hefty fees for the service, have a built-in marketing plan because the apps themselves help attract new customers. While the model hasn’t yet proven to be overwhelmingly successful, the great cost advantages make it a trend that seems likely to grow.  

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