Ghosts Kitchen's Big Future Potential

If you haven't heard of them, ghost kitchens (also sometimes called cloud kitchens) are commercial kitchen facilities that restaurant brands rent space in to optimize preparation of delivery-only food. And as we're sure you have heard or seen firsthand, delivery orders have done nothing but...

Published On:
January 25, 2021
January 25, 2021
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How has the pandemic accelerated the US ghost kitchen market.

If you haven't heard of them, ghost kitchens (also sometimes called cloud kitchens) are commercial kitchen facilities that restaurant brands rent space in to optimize preparation of delivery-only food. And as we're sure you have heard or seen firsthand, delivery orders have done nothing but increase amidst the Covid-19 pandemic.

Delivery has been gaining popularity for some time now, but the pandemic has put it in the express lane. There's no sure way to forecast if this popularity will increase further or even remain steady post-pandemic, but at the very least, it's shown us what's possible. Restaurants everywhere have had to adapt to these changes; some have had to bolster their delivery capabilities, while others have had to create a delivery system for the first time. Either way, delivery has been the way or the restaurant world lately. So, as one of the most efficient ways to provide delivery, ghost kitchens have seen a significant uptick in business as of late.

Can ghost kitchens help major restaurants recoup lost revenue?

In theory, yes. However, it's not a tried and true strategy. Because more people are ordering delivery now, it would make sense that restaurants which previously relied on dine-in business could and should increase their efforts to provide delivery to compensate. However, if nobody is accustomed to ordering delivery from them to begin with, they'll have to address this first.

That most likely means investing a lot of money into advertising efforts and hoping their customers are willing to switch from their routines of ordering from places they usually do, to ordering from them. And with the pandemic (hopefully) nearing its end this upcoming year, there may not be time to make up the lost revenue from fewer dine-in guests and the money put into advertising. If a restaurant is already known for offering delivery, then of course investing in ghost kitchens to even further expand this ability is probably a good move. It depends on their reputation and scenario

A flurry of investor interest

As you might expect, many observant investors have taken an interest in ghost kitchens. With the pandemic still in full swing, it doesn't take a Wall Street genius to understand why this investment is so appealing. Delivery orders continue to increase, and ghost kitchens continue to see more growth, so shares in the companies operating them are becoming more valuable as well. But is it sustainable? There are certainly some very valid concerns that don't bode particularly well for the market in the coming year.

Barriers to future growth

There is a considerable argument that can be made saying that delivery orders will decrease whenever the pandemic has finally passed. As stated before, there's no guaranteed way to forecast this, but its fair to assume people will be eager to return to standard restaurants and enjoy dining out once again, so in-person orders may skyrocket. At the very least, it's not far fetched to say that things will return to "normal" again; either way, delivery orders would probably decrease compared to their mid-pandemic rates.

This would render all the resources restaurants have put into ghost kitchen spaces effectively useless, so they'd have to let go of these operations and return to focusing on their in-person dining rooms once again. Obviously, this would take a huge toll on the ghost kitchen market, and is undoubtedly the largest current barrier to future growth for the industry.

Summary

Ghost kitchens are undoubtedly a novel and exciting industry. The pandemic has caused delivery orders to skyrocket, and in turn, bolstered the ghost kitchen market as well. In the short term, ghost kitchens have been and are a wise investment, but in the long term, it's hard to say for sure how successful and widespread they'll become. They will likely remain relevant post-pandemic, especially because all other facets of delivery have also become more streamlined and convenient. We've seen the true potential of delivery services, and people will continue to utilize them from here on out. However, ghost kitchens and delivery as a whole most likely will not continue to enjoy the growth they have over the past year or so.

Cloud Kitchens are certainly an exciting endeavor, but if you're a little worried about what the future may hold, let us set you up with a virtual restaurant with less risk. With the help of our team at Forward Kitchens, you can use your existing operation, however big or small, to launch a virtual restaurant with multiple brands. This means you'll have even more chances to reach consumers, with even less investment.

We'll handle branding, website and menu design, and everything else needed to get you going. All you have to do is what you're best at: make great food (just for more people). If this sounds more like what you need, email us at hello@forwardkitchens.com or fill out this form to talk with a team expert!

Published On:
January 25, 2021

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