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A ghost kitchen is a financial strategy used by traders and investors to reduce their tax liability. The concept works when an investor borrows money with the intention of paying it back without incurring any interest or fees, but then changes his mind during the loan period.
A ghost kitchen is a type of investment strategy that allows for an investor to enter into a business with little or no money, and then increase the value of the business in a short amount of time. The “ghost kitchen examples” are many different types of businesses that can be entered into as a ghost kitchen.
A ghost kitchen is a restaurant that solely makes meals for delivery. Ghost kitchens, also known as cloud kitchens, virtual restaurants, or dark kitchens, may be standalone commercial kitchens or part of a “virtual brand” that shares cooking space with a typical brick-and-mortar restaurant. In comparison to full-service restaurants, ghost kitchens offer a shorter construction duration and fewer upfront expenditures. According to Euromonitor, the worldwide market for ghost kitchens is expected to reach $1 trillion by 2030.
Ghost Kitchens Come in a Variety of Shapes and Sizes
Just as there are various types of restaurants, there are different Ghost Kitchens Come in a Variety of Shapes and Sizes. Businesses as diverse as food truck brands and massive national restaurant chains are experimenting with the ghost format. Each brings unique ideas to the virtual restaurant concept.
There are three distinct types of ghost kitchens:
Individually owned small companies, independent ghost kitchens are similar to independent eateries. Independent ghost kitchens might operate in a single dedicated location or rent commissary cooking space. A common alternative is to rent a regular restaurant kitchen during off-hours.
Types of locations:
- Commercial kitchen that is self-contained
- Kitchenette in the commissary
- Kitchen at a rented brick-and-mortar restaurant
Independently owned LLC is a common company form.
iEight Sushi is a real-life example.
Instagram, Facebook, and third-party delivery platforms are examples of affiliated platforms and services.
Cloud kitchens are commercial ghost kitchens that are shared and purpose-built. Cloud kitchens are generally created in densely populated locations where delivery is in great demand. Several independent restaurant chains use the same premises. CloudKitchens and Kitchen United, for example, own and run a number of them.
Types of locations:
- Kitchenette in the commissary
Independently owned LLC is a common company form.
Craft Burger is a real-life example.
CloudKitchens, Kitchen United, and third-party delivery platforms are examples of affiliated platforms and services.
Restaurants that solely exist on internet ordering platforms are known as virtual kitchen brands. The actual cooking is normally done in a regular restaurant’s kitchen. A mom-and-pop restaurant, a celebrity-backed franchise, or a supplemental income source for restaurant chains like Applebee’s may all benefit from virtual kitchens. Virtual brands may operate from a single kitchen they control, or they can build a virtual concept that works like a mini-franchise, providing menus and recipes for restaurants to make in their own kitchens.
Types of locations:
- Kitchen of a brick-and-mortar restaurant
- Commercial kitchen that is self-contained
- Kitchen of a franchised restaurant
Independently owned LLC is a common company form., Franchise, or Multi-unit Chain
George Lopez Tacos is a real-life example.
Nextbite, third-party delivery platforms are examples of affiliated platforms and services.
These categories are not fixed in stone since the ghost kitchen idea is continually changing. Some ghost kitchens combine elements of all three kinds of kitchens. While the majority of ghost kitchens sell their meals via third-party delivery companies like Grubhub and DoorDash, others choose to deliver their own cuisine.
Ghost kitchens aren’t a new concept; they first appeared in the late 2010s, when third-party delivery services became popular. Large restaurant chains introduced the first ghost ideas in order to accommodate customer demand for delivery without overburdening their already overburdened kitchens. Those ghost kitchens were usually standalone commercial kitchens where big businesses like The Halal Guys routed all of their delivery and takeout orders. As restaurants throughout the United States were forced to shut due to the COVID-19 outbreak, ghost kitchens proliferated.
What’s the Big Deal About Ghost Kitchens?
The popularity of ghost kitchens stems from two factors: they are less costly to establish than regular restaurants, and large corporations are investing heavily in them. Investment funds have flooded into ghost kitchen ideas since the Euromonitor research unveiled the astronomical $1 trillion market projection.
There will be roughly 1,500 ghost kitchens in the United States by the end of 2020. Given that third-party delivery sales increased by 116% year over year, and C3 Kitchen claimed to have created 200 ghost kitchens, there might be hundreds more ghost ideas that the number does not include.
How Do Ghost Kitchens Survive?
Ghost kitchens, like other restaurant companies, generate money by carefully controlling their expenses and profit margins; the only difference is that ghost kitchens have somewhat different costs to deal with. For example, although the labor expenses of a ghost kitchen are cheaper than those of a regular restaurant, they must also factor in delivery fees and take-out containers. The cost of each purchase might range from 15% to more than 30%, depending on the kind of online ordering and delivery chosen by a ghost restaurant.
Successful ghost ideas must have the following criteria in order to be profitable:
- Attract a large number of orders: Most ghost restaurants depend on third-party networks to increase their exposure. Instead of paying commission fees, some free-standing businesses use a comprehensive social media marketing campaign. Comfort food (such crispy chicken, pizza, and burgers) appears on many ghost menus in order to lure orders.
- Their meals are attractively priced: Customers pay delivery costs for ghost kitchen meals, therefore a menu with excessively high prices may cause sticker shock.
- Correctly calculate their costs: Ghost kitchens must spend for takeaway supplies and storage space in addition to rent, food costs, and delivery fees. When your firm can’t depend on foot traffic, marketing becomes more expensive. Even though ghost restaurants have fewer employees than typical restaurants, they must nevertheless manage labor and payroll expenditures.
Pros and Cons of Ghost Kitchen
When compared to a typical restaurant, there are several advantages to creating a ghost kitchen. The lowest upfront cost is the most compelling argument to create a ghost kitchen rather than a standard restaurant. CloudKitchens, a ghost kitchen platform, says that the first investment is roughly $30,000. When you consider how much it costs to create a full-service restaurant, it’s simple to understand why restaurant owners are ecstatic.
Other advantages of establishing a ghost kitchen include:
Shorter start-up time: Whether you use a commercial kitchen platform or rent space in an existing restaurant, your ghost kitchen usually comes with everything you need to get started.
Lower technology costs: Third-party delivery systems supply tablets for receiving inbound orders and processing all online payments. So, if you just utilize third-party platforms, you may not even need a point-of-sale system (POS).
Ghost kitchens are only obliged to have the bare minimum of restaurant licenses. Basic restaurant permissions, such as tax ID numbers and health department licenses, must be obtained. Ghost kitchens, on the other hand, do not need the same level of construction permits and liquor licenses as full-service restaurants.
Smaller personnel: With labor shortages on the rise and the threat of a higher minimum wage, the tiny crew necessary to manage a ghost kitchen is enticing.
Because your ghost brand is virtual, you have complete control over your menu, price, and name. Or, for a fresh idea from the same kitchen, add a side menu.
Reduced risk: Traditional restaurant leases and software subscriptions need a three- to ten-year commitment. You’re still responsible if your company fails. The periods of ghost kitchens are usually significantly shorter, even month-to-month.
Of course, there are drawbacks to owning a ghost kitchen. They are as follows:
Ghost kitchens have marketing issues in getting their company in front of clients. It will cost time and money to purchase marketing packages on third-party platforms or to engage in social media marketing.
High commission fees: Third-party platforms charge anywhere from 15% to 30% on each purchase. That may soon pile up. However, by providing pickup or developing an in-house system for online ordering and delivery, you may avoid these issues.
Increased payment processing expenses: If you handle purchasing and delivery in-house, you’ll almost certainly pay higher processing fees for online credit card purchases since they’re more vulnerable to fraud.
There is no increase in sales due to the use of alcohol: The majority of new ghost kitchens lack liquor permits. Even if you have one, many localities prohibit the delivery of alcoholic beverages.
Consumer data isn’t shared: Third-party platforms don’t disclose your customer information. Purchase costly marketing packages from your delivery platform if you want to pitch specials and discounts to promote future orders.
No direct customer interaction: Seeing happy customers enjoying their meal gives many restaurateurs a boost of energy. However, ghost kitchens lose some control over their clients’ experiences outside human encounters. If you use third-party systems, for example, you won’t be able to regulate when a consumer gets a refund.
Not suitable for rural areas: To be lucrative, ghost kitchens need a large number of orders. A ghost enterprise may not be viable in rural places due to a lack of customers.
Outlook in the Kitchen of a Ghost
So, are ghost kitchens the way of the future in the restaurant industry? They’ll undoubtedly be a part of it. According to the same estimate that predicted $1 trillion in ghost kitchen sales by 2030, ghost kitchens would account for 50% of global takeout food business by 2030.
According to another study conducted by the National Restaurant Association, 77 percent of Americans intend to order takeout or delivery in the future months. From January to December 2020, 33 percent to 52 percent of customers stated they didn’t order takeout or delivery as often as they would want. As a result, there is a lot of unmet demand, particularly for independent restaurant concepts; 64% of guests prefer to order delivery directly from a restaurant rather than via a third-party platform.
New ghost kitchen operators, on the other hand, should be aware of potential hazards. According to the same National Restaurant Association poll, 72 percent of respondents believe that ordering delivery from restaurants they can visit in person is significant. According to some industry experts, ghost kitchens will be even more competitive than typical restaurants, with up to 80% of ghost companies failing.
Institutional locations, such as college campuses and airports, may offer the most viable future for ghost kitchens. Hospitality activities on a large scale, such as hotel chains and coworking spaces, are potentially interesting opportunities.
Conclusion
Ghost kitchens, also known as dark kitchens, cloud kitchens, or virtual brands, are a great way for small restaurants to try out new ideas and grow into new areas. New restaurant enterprises may also benefit from ghost kitchens since they are a low-cost method to get started. However, if you want to start a ghost idea, you should be aware of the dangers. The market is quickly developing, which might lead to higher leasing pricing and more competition. You’ll be well on your way to operating a lucrative ghost restaurant if you keep your expenses under control and aggressively advertise your brand.
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“A ghost restaurant is a business that operates with no physical presence, but has an online presence.” Ghost restaurants are popular in the food industry. They can be found near you by looking for nearby businesses. There are many strategies to find a ghost restaurant. These include: visiting your favorite restaurants, searching for ghost restaurants on social media, and using a website like Yelp. Reference: ghost restaurants near me.
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