Ghost kitchens are online restaurants that usually don’t have an existing storefront for walk-up traffic. In the last few years, the concept has exploded. Digital delivery has taken over dine-in sales, with over 60% of U.S. consumers having food delivered once a week.
All of which has resulted in big money for restaurants willing to dive in. By 2030, delivery sales worldwide could increase by almost 20% from $35 billion to $365 billion. So, now is the moment to take part in this digital revolution. But like traditional restaurants, there are different kinds of ghost kitchen business models, so let’s break this 21st-century concept down.
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Model 1: Rent the Commissary Ghost Kitchen For An Independent Model
The Independent Model is by far the most popular and super easy to operate. The owner has one brand online and not much upfront cost. So basically, the order comes in, and the cook whips up the food. A few minutes later, a delivery driver picks up the food and delivers it to the customer.
Sounds like normal delivery, right? Yeah, for the most part, it is. Except the kitchen operator isn’t cooking in a restaurant with any kind of dining room. Instead, the kitchen is a smaller kitchen off of a larger shared kitchen. So inside the giant space could be 5-20 independent virtual restaurants doing precisely the same thing.
By grouping together, the ghost kitchens can save money by not forking out for high rent in a high-trafficked part of town. What matters is how convenient delivery is for their customer base and how easy it is for delivery drivers to pick up food.
The Independent Model helps build community and has popped in old warehouses to parking lots. If you have a plan, setting up a ghost kitchen in this model is by far the simplest.
Model 2: The Multi-Brand Ghost Kitchen
You have more than one idea for a ghost kitchen and don’t know how to choose— in steps the Multi-Brand Ghost Kitchen. Think of it exactly the same kind of operation as the Independent model, except you’re running multiple brands through the same kitchen. So, for example, one ghost kitchen can flip burgers and fry egg rolls at the same time.
The customers have no idea that the burger they just ordered came from the same kitchen as the Chinese food delivered two doors down. They believe they’re ordering from different brands but, in fact, came from the same kitchen and cook. Ghost Kitchens who operate in this fashion, do to capture more market share. People like different food and want a choice, but the idea of ordering two types of cuisine from the same restaurant isn’t appealing.
Sure, we’ve seen a few brick-and-mortar restaurants that sell donuts and Chinese food together, but they’re few and far between. But virtual brands don’t need to advertise that Bob’s Burgers is the same as General Lee’s.
The online storefront has a different URL and theme altogether. Of course, the customer isn’t the wiser, but the operator can direct more digital traffic to their virtual brand with tons of customer choices.
Model 3: Mid-Ground Model
Okay, you’re interested in the Independent Model but wondering if there’s a way to capture both foot traffic and online traffic together. Well, the Mid-Ground Model is the right one for you. It operates like the Independent Model, except you can offer walk-in traffic and in-person pickup.
The benefits are that you’re trying to grab more of the market share, and you have some face-to-face customer interaction, which can be beneficial for brand loyalty. The downside is that the whole point of a ghost kitchen is to lower costs and become a digital guru, not interact directly with customers.
Restaurant operators lower costs by joining a shared kitchen space in a lower-cost area to save on rent and other restaurant expenses. Unfortunately, foot traffic usually means that you’re in a higher rent area to nab the flow of feet. So, the Mid-Ground Model is more complicated and more expensive to operate. For this reason, they aren’t as popular.
Model 4: Brand Owned Kitchen
Ghost kitchens have two main parts: the kitchen and the delivery service. One cannot function without the other, and operators need to be in place with an efficient food delivery system. While native delivery is always better, ghost kitchen operators may decide to partner with a third-party food delivery app.
This partnership makes them an exclusive brand to the food app and must only use their delivery services. So, the ghost kitchen can’t use any other delivery app to grab business and commits to exclusivity. The idea is that the app promotes the ghost kitchen over other similar brands and directs more traffic your way.
Yet, they retain complete control over your brand and charge exorbitant fees for the service that can change at any time. By putting all your spatulas in one basket, you take away your choice and control over delivery fees, drivers, and marketing. Not with ShiftPixy’s native delivery. We give you control, your data, and lower the costs.
Model 5: Hub and Spoke Model
Imagine a bicycle tire with a central kitchen hub in the center and the spokes leading to different virtual kitchens when you think of this model. The centralized kitchen cooks all the food and then ships it to individual cloud locations to warm up and deliver to customers.
The Hub and Spoke Model allows the brand to have a wider reach and serve more than one area. It’s suitable for more advanced operators who want hands in multiple pots in the city. By having a centralized kitchen, you can control the food quality by cooking it in one place yet have the ability to expand your profit margins and deliver food quicker than if you only served one location.
Model 6: Outsourcing Model
Ghost kitchens work better to some degree when serving up everyday items. Customers look for food they know and love, and the Outsourcing Model feeds this need. In this model, the ghost kitchen purchases ready-made food from the distributor and then puts the finishing touches on it.
The ghost kitchen operator repackages the food with their brand information and sends it out as their own. The customer gets to enjoy the classic dish, and you get their business. The downside to this model is that your food may not be unique and taste just like the guy’s next door.
Model 7: Rent Your Kitchen
In this model, you’ve got some extra space, so why not rent it? Think of it like Airbnb for kitchens. If you have a large kitchen or are only open for breakfast and lunch, why not share your kitchen with a virtual brand in the evening hours.
While this model isn’t the most common, it is a way for a ghost kitchen to utilize space with a more established brand and for a restaurant to make extra cash. The Rent Your Kitchen Model is a win for everyone.
How to choose?
Choosing the right ghost kitchen model for your business depends on a few factors. The first step is to review your budget and what you can afford. Each model has different startup costs involved. Also, look at the ghost kitchen location. Even in delivery-only models, you’ll want to be somewhere convenient for delivery. When we say convenient, we mean close to where your customers are and easy for delivery drivers to load and unload.
But perhaps the most crucial consideration is the ghost kitchen’s support, training, and equipment. The ShiftPixy Labs Ghost Kitchen Incubator Program gives restaurant entrepreneurs the resources, mentorship, and tools needed to choose the right ghost kitchen model for them.
If accepted, the ghost kitchen operator goes through a series of challenges from the initial planning stages to a successful online food business. Get in touch today to find out how you can apply.