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The Spoon

Daily news and analysis about the food tech revolution

ChefReady

Is Your Restaurant Ready for Ghost Kitchens?

Ghost kitchens. You’ve heard about them nonstop since the pandemic overturned the foodservice industry and forced almost every restaurant in the country to go off-premises. And with the fate of the restaurant dining room still very much uncertain (see below), we’ll see more restaurants turn to the ghost kitchen model in the future.

That’s a nice blanket statement, but which restaurants, exactly, should use ghost kitchens? And there being more than one kind of ghost kitchen, which do they choose? Where do they locate? Will it affect franchisees?

I could go on, but instead, I’ll point you to our latest report, The Spoon Plus Guide to Ghost Kitchens. In it, I address all of the above questions (spoiler alert: ghost kitchens do affect your franchisees) and many more in an effort to understand just how widely ghost kitchens will serve the restaurant industry in the future. I’ll leave you to read the report for more how-tos and considerations on opening a ghost kitchen. In the meantime, here are a few things driving the growth of this potentially $1 trillion market:

  • Virtual restaurants. Soaring rents, high operational and labor costs, one pandemic and a lot of economic uncertainty make the idea of running a delivery-only brand attractive. After all, they don’t need a front of house to function and live solely in the digital realm, which is where most customers are the days anyway.
  • Off-premises everything. There’s no telling when — or if — restaurant dining rooms will again function at the scale and capacity they did before COVID. By now, consumer habits will have shifted farther towards pickup, delivery, drive-thru, and curbside orders. They may not shift back once we can (safely) venture out again.
  • Demand for delivery. Love ‘em or hate ‘em, third-party delivery aggregators keep getting bigger, and that’s not likely to change anytime soon. Many of these companies’ services are built right into the monthly membership of ghost kitchens, making them, for better and for worse, an obvious choice when it comes to fulfilling the aforementioned off-premises orders. 

But don’t sign your business away to a commissary space just yet. Certain parameters have to be in place in order for restaurants to justify the cost of doing a ghost kitchen. Kitchen United, ChefReady, Fat Brands, and other food industry leaders give their thoughts in the report on how to get your business ready for ghost kitchens.  

Grab yourself a Spoon Plus subscription to read the full report. And let us know what you think.

Yelp’s Latest Restaurant Data Is Alarming

Almost 16,000 restaurants have permanently closed, according to new data from Yelp that came out this week. In the site’s latest Economic Average Report, restaurants surpassed retail as having the highest rate of permanent closures.

Bear in mind, those numbers are only for restaurants listed on Yelp. It will be a long time before we know the exact number of total restaurant closures around the U.S., though plenty of other organizations have released their own data sets that give us an idea. For example, a June report from the Independent Restaurant Coalition found that as many as 85 percent of independent restaurants couLd shutter by the end of the year. And at least 3 percent of restaurants overall have alreadyclosed, according to the National Restaurant Association.

Beyond the closures themselves, what’s alarming about Yelp’s data is that it also found “a statistically significant correlation” between consumers’ interests in restaurants and other businesses and an increase in COVID cases. In other words, more people going to restaurants means a higher risk of the coronavirus spreading, which seems obvious but also puts restaurants in something of a catch-22. Many restaurants still need foot traffic to survive, but that foot traffic is a public health risk that, to get really Doomsday, could eventually lead to widespread shutdowns once again. Then nobody wins.

As we say ad infinitum these days, switching to off-premises formats is the surest way to stay in business without putting customers’ health at risk. But this is not a simple pivot for everyone, and as the industry reinvents itself for this to-go-centric era, I’m afraid many more restaurants could go by the wayside. So if you’re able, support your local indie restaurants by ordering a takeout meal every once in a while. Don’t forget to tip the staff.

Restaurant Tech ‘Round the Web

Clean Juice launches a new app with Lunchbox. Juice Bar franchise has teamed up with restaurant tech platform Lunchbox on a new app that services pickup, curbside, and, for the first time, delivery. 

Wendy’s launches a loyalty program. In a bid to compete with the McDonald’s and Burger Kings of the world, Wendy’s finally launched its own digital loyalty program. Customers earn points by ordering directly through the Wendy’s app, not through third-party delivery services.

Sonic has a new Alexa skill. Amazon and Sonic have partnered to give Sonic a new skill for Echo and Alexa devices. Customers can ask things like “Alexa, ask Sonic for a nearby location” in order to make the process of finding stores and new menu items faster.

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ChefReady to Launch Ghost Kitchens With a Mom-and-Pop Mentality

Denver, CO-based ChefReady will launch its first ghost kitchen later this summer, in part to help keep restaurants alive that have been impacted by the COVID-19 crisis. According to a press release sent to The Spoon, the facility will open in July in Denver and provide space for 10 restaurants or restaurant concepts wanting to focus specifically on delivery.

Speaking in today’s press release, ChefReady cofounder Nili Malach Poynter said that when the company first examined the ghost kitchen concept, they found that “operate with a ‘churn and burn’ mentality, resulting in an unprofitably high tenant turnover. We decided to create a company that offers the convenience of a ghost kitchen, but with more of a ‘mom and pop’ personalized level of customer service, as well as greater efficiency, and a ‘greener’ footprint.”

Which is something a lot of restaurants are going to need soon.

That the pandemic is wrecking havoc on the restaurant industry is a point that’s starting to become old-hat. Many restaurants, especially independents, have already closed permanently. Many more will in the coming months thanks to the metaphorical train wreck of lost revenue, reduced capacity, upset business models, high rents, and many other factors converging at once on the industry.

Ghost kitchens, meanwhile, have so far been an obvious solution for larger chains that already generate the kind of demand needed to justify the expense of an off-premises-only location. But as restaurants close their doors forever, the concept might also be a way for them to save their business without the extra expense of running a brick-and-mortar location.

For ChefReady, the idea is to provide restaurants a way to keep their doors open without actually having to reopen any actual doors. 

ChefReady will provide restaurants with fully equipped kitchen space they can customize to some degree, as well as guidance on marketing, permits, and other areas of operations. Membership includes integration with third-party delivery providers. As with other ghost kitchens, there is also the benefit of lower overhead costs, since equipment is provided and rent is typically lower due to restaurants using less space. And for any restaurant trying to operate in this pandemic era, ghost kitchens provide the added benefit of not having to worry about the social distance guidelines and crowd control that comes with operating a front of house.

In all likelihood, the pandemic will accelerate the adoption of ghost kitchens, which were already getting popular beforehand. Kitchen United just announced a new facility in Austin, TX. Zuul Kitchens, which opened its first facility in 2019 in SoHo, NYC, recently teamed up with Figure 8 to start a ghost kitchen consulting firm. Equipment manufacturer Middleby is selling out-of-the-box ghost kitchen solutions, and there are plenty others in the space. 

While ChefReady didn’t say it was targeting a specific type of restaurant with its facility, one area that could benefit would be family dining. Those are your full-service restaurants like Applebee’s, Denny’s or the independent equivalents. Full-service restaurants have taken the hardest hit over the last few months in terms of sales declines, and that isn’t likely to change anytime soon. A recent survey found that 66 percent of consumers would not immediately eat in a restaurant dining room once it reopened.

As to whether fine dining restaurants could benefit from ghost kitchens remains to be seen. Food is just one part of the experience of many upscale establishments, and that experience is tough to replicate in a to-go box. For smaller fast causals, family dining joints, and other indies, though, ChefReady’s approach to ghost kitchens might be just what they need to keep the lights on another day.