How to start a ghost kitchen

Have you ever ordered food from a ghost kitchen? A lot of people have without even knowing it. 

And, as crazy as it may sound, that’s part of the appeal of opening one. Consumers don’t even need to know it exists before becoming regular customers. 

Plus, the potential market share is huge!

According to CBRE Research and Hospitality Technology, the ghost kitchen market share of  U.S. restaurant sales is expected to reach 21% by 2025 and be worth $71.4B by 2027.

So, how do you get your slice of the ghost kitchen pie? And what do you need to know to give yourself the best shot at success? 

Those are the questions we’ll be helping you answer in this article as we look at: 

• Examples of successful virtual kitchens 
• How to pick the right ghost kitchen model
• The pros and cons of opening one
• The 5 essential steps to start one in 2022

But let’s kick things off by looking at what makes them different from traditional restaurants. 

What is a ghost kitchen? 

A ghost kitchen is a restaurant kitchen space used solely to make food for delivery and takeaway orders. Unlike traditional brick-and-mortar restaurants, the main staff on-site are chefs, cooks and the people who package delivery orders. All customers’ orders come directly via third-party delivery service apps or a restaurant’s own online ordering platform. 

Ghost kitchens are also sometimes referred to as cloud kitchens, virtual kitchens, dark kitchens, ghost restaurants, virtual brands or delivery-only concepts. All of those terms mean the same thing. But there are different ghost kitchen models that you’ll want to know about if you’re interested in setting up and running one yourself. 

We’ll look into those distinct models later. But, first, let’s look at some examples to give you an even better idea of how this new concept works. 

Ghost kitchen examples

Guy Fieri’s Flavortown Kitchen is one of the most famous and fastest-growing ghost kitchens in the country. Flavortown Kitchen currently has 23 locations across the U.S., mostly operating out of the kitchens of restaurants like Buca di Beppo, Brio Italian Grille, Bravo Italian Kitchen and Bertucci’s.

Another popular ghost kitchen, Pasqually’s Pizza & Wings, operates out of the kitchens of Chuck E. Cheese restaurants. This ghost kitchen model has helped Chuck E. Cheese recover some of its financial losses (as a result of the pandemic) and reach new markets while still using the same ingredients and offering a somewhat similar menu.

How do ghost kitchens work? 

We’re sure you’d agree: the basic concept of ghost kitchens is fairly easy to understand. It’s a virtual restaurant that exists only as a kitchen preparing delivery and takeaway orders. But, as we mentioned, there are different ghost kitchen models to suit different needs. Let’s take a look at those now. 

Commissary kitchens

The most popular model is the commissary kitchen. Owned and rented out by an entrepreneur or third-party service, commissary kitchens are a shared kitchen space among several virtual restaurants that pay a membership fee or rent the space by the hour. 

The main benefits of using commissary kitchens are flexibility, convenience and (most of all) price. Since you do not own the facility, the setup and maintenance costs are low.

Commercial kitchens

For more established restaurants with large quantity orders, commercial kitchens tend to be the best option. Commercial kitchens are usually larger, have all of the essential kitchen equipment, and are rented for private use. 

The main benefit of using commercial kitchens is that it’s a private kitchen space that is used only to prepare orders for one restaurant.  

Incubator/Pop-up kitchens

Incubator/Pop-up kitchens operate out of extra kitchen space in brick-and-mortar restaurants and food trucks. Within that space, workers focus exclusively on preparing online and delivery orders. By creating this separate space and workflow, other restaurant workers are freed from the responsibility of preparing both dine and delivery orders. 

The main benefit of incubator/pop-up kitchens is that they allow existing restaurants to experiment with new revenue streams. Pasqually’s Pizza and Wings virtual restaurants, which we mentioned earlier, are an example of this model as they operate out of the kitchens of Chuck E. Cheese restaurants. 

Kitchen pods

Kitchen pods are small ghost kitchens with only essential supplies and equipment since they are usually built in shipping containers. This setup makes kitchen pods easy to transport to different locations (e.g. parking lots) and directly serve customers for takeaway orders. 

The main benefits of kitchen pods are their mobility and cheap start-up costs. However, due to limited kitchen space, it can be difficult to provide safe, adequate working conditions and enough physical space to prepare orders. 

Pros and cons of ghost kitchens

The ghost kitchen business model is promising, given the current preference many consumers have for delivery and takeaway orders as a result of the ongoing pandemic.

But before you decide to give opening a ghost restaurant a try, there are also some drawbacks you might want to consider. So, let’s now take a look at some of the major pros and cons.

Pro #1: Low cost 

Running a ghost restaurant is a lot cheaper than running a traditional restaurant. Since you only need kitchen space, you save a lot on operational and overhead costs. You also save on labor costs as you don’t need to hire customer-facing staff, like servers and hosts. 

Pro #2: Flexibility and experimentation

By existing solely online, ghost kitchens give you the flexibility to adapt and pivot whenever needed. That means you can experiment with your menu and offerings until you find what appeals most to your customers. For example, if no one is ordering a particular offering or something becomes out of stock, you can remove it from the menu with just a few clicks.

Pro #3: Wider customer reach

In the past, restaurants only served people onsite with limited occupancy. Ghost kitchens eliminate table turnover restrictions and increase the volume of customers you can serve per day. And by effectively marketing the virtual restaurants, you can attract new customers from all over your area. 

Con #1: Third-party app fees and algorithms

Third-party food delivery apps like UberEats, DoorDash and GrubHub can help you grow your customer base in a way that might be difficult to achieve alone. But there’s a price. The commission fees for these apps can be as high as 30%. Additionally, when and how often customers see your restaurant depends on the delivery app’s algorithm, which you have no control over. 

Con #2: Limited interaction with customers 

Unlike brick-and-mortar restaurants, as a ghost kitchen, you don’t get to interact with your customers. All transactions are made on third-party apps. And these apps usually withhold all of your customers’ data and information.

Con #3: Difficult to build and manage your brand 

Your ghost kitchen’s online presence is all you have when it comes to branding. And, most of that online presence exists entirely on third-party apps where reviews can make or break how customers perceive your restaurant. One or two bad customer reviews can tank your orders at any moment. 

How to start a ghost kitchen 

So, you’ve reviewed those pros and cons and still think starting a ghost kitchen is the right move for you? Fantastic! Here are the five essential steps to set one up in 2022.

Step 1 - Create your concept

Which ghost kitchen model makes the most sense for you? Will your kitchen host one or multiple virtual restaurants? Who are your target customers? 

Answering these questions from the start will help you develop your positioning strategy and stand out among competitors. It will also help you narrow down your menu offerings and determine how to best market your virtual restaurant(s) to customers.

Step 2 - Find a kitchen

Next, you’ll have to find a kitchen space that suits your preferred ghost kitchen model. For example, if you only plan to operate at a certain time, renting a commissary kitchen is probably your best option. 

To find both commercial and commissary kitchens for rent, check out The Kitchen Door. Or, if you have the right resources and connections, you can also establish an incubator kitchen or kitchen pod. 

Step 3 - Choose your delivery method

You can either deliver meals using your own in-house delivery team or by partnering with third-party delivery apps. As we mentioned earlier, there are pros and cons to both options. 

While third-party apps simplify the process, the commission rate might not be worth it. If you opt to use an in-house delivery system, ensure you have enough labor to prevent compromising your food quality and customer service.

Step 4 - Hire staff

Luckily, ghost kitchens don’t need many staff members onsite. You just need to hire enough cooks to prepare the food and workers to package and manage online orders. 

That being said, hiring staff amid a pandemic and labor shortage isn’t exactly easy. So, you may want to use a restaurant hiring solution like Workstream that can help streamline your hiring process and get open rolls filled quickly. 

Step 5 - Establish your online presence 

Your online presence plays a vital role in determining the success of your virtual restaurant. Build a website and create social media accounts for your business so your customers can engage with you. 

These online marketing tactics are cheap and effective to reach out to your potential customers. You can also run marketing promotions on third-party apps to entice new customers to try your menu. 

Final thoughts 

If you want to start a ghost kitchen, the best time to do it is as soon as possible. As we’ve shown in this article, there is a ton of demand for this restaurant business model now and in the future. We hope the information we’ve shared helps you begin the journey of opening your own! 

And, for more tips like these, be sure to also check out our blog where we discuss topics like how to find and hire great employees!