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Kennedy: Pandemic helps popularity of ‘ghost’ kitchens grow

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Even before the coronavirus pandemic forced restaurants to find new ways to operate, “ghost” kitchens were gaining traction.

The sites, also called “dark,” “cloud” and “virtual” kitchens, essentially are restaurants without the dining rooms – lower-cost ventures that focus solely on food for takeout, delivery and drive-thru.

Last year, off-premises food and drink rang up $200 billion-plus in sales, says Melissa Wilson, a principal at Technomic, a Chicago-based food industry consultant, representing close to half of U.S. restaurants’ total 2019 revenue.

More importantly, growth in off-premises sales “was significantly outpacing” growth in restaurants’ total sales, she indicated in a recent webinar on ghost kitchens hosted by The Food Institute.

Yet while the off-premises growth was driven by the rise of third-party delivery services like Grubhub, DoorDash and Uber Eats, Wilson said only 15 percent of restaurant operators reported using ghost kitchens prior to this year.

Then, of course, the pandemic hit, and by late April dine-in service ended at virtually every restaurant across the country (save in some counties in South Dakota). The National Restaurant Association pegged industry losses then at $80 billion, and projected a full-year hit of $240 billion.

But as states and localities allowed restaurants to continue to offer meals without the dining room, many became their own ghost kitchens by adding curb-side pickup and delivery, Wilson said.

Still, sales failed to fully bounce back. Even now, with widespread stay-at-home orders lifted, pent-up demand for restaurant food is more likely to exhibit a preference for off-premises over dine-in. “There’s still that wariness there,” Wilson said.

The result is a “massive spike in popularity” for ghost kitchens as an option, she said, with 51 percent of restaurant operators saying they used them for some or all off-premises orders during the shutdown.

Wilson was joined on the webinar by Jim Collins, CEO of Kitchen United, one of several companies now offering fully outfitted ghost kitchens for restaurants to rent.

Founded in California in 2017, Kitchen United has a handful of current locations and designs on metro areas nationwide. Collins disclosed that its first Manhattan site should open by year’s end.

The company seeks out commercial space of about 10,000 square feet in “pretty fast-moving, high-compression retail zones,” into which eight to 12 individual kitchens are built. Cooking is done by a restaurant’s staff; Kitchen United supplies ancillary services like pickup coordination, marketing support, and trash and utilities.

National chains are tenants, as are local independents. Collins said the “secret sauce” for success was not size but a restaurant’s “vibrant digital connection to their consumer.”

Both Wilson and Collins see rapid ghost kitchen growth in the near term, but Wilson says predictions are harder three to five years out. “We have to see how we come through this pandemic and what the societal shifts are” in where people live and work, she stated.

Marlene Kennedy is a freelance columnist. Opinions expressed in her column are her own and not necessarily the newspaper’s. Reach her at [email protected]

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