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Trends

Who is Afraid of Ghost Kitchens?

Wouter Veldman
October 2021

As an industrial designer with a “licence to cook”, Wouter Veldman advised leading food brands and kitchen equipment manufacturers on the development of innovative digital gastronomy concepts. He worked as culinary manager in a food box company and helped build SMUNCH, which is mentioned in the article here. Wouter creates and maintains the DISH.co blog and also organises the DISH webinars.

 

They don’t have a seating area; the location is a secret and no one knows what exactly happens there – and yet “ghost kitchens” are an important trend that all restaurateurs should follow closely. Because soon the faceless ghost kitchens could dominate the online delivery business – at least in the larger cities.

Even before Corona, various brands are investing in commercial kitchens that prepare and deliver dishes for online orderers. From one day to the next, unknown restaurants in the immediate neighbourhood thus appear in the online gastronomy portals. An interesting menu, reasonable prices, professional pictures and good reviews – why not give it a try?

 

What’s behind the faceless ghost kitchens?

What customers don’t know: The Chinese restaurant “Shanghai-Panda” in the online portal is only a digital facade. Behind it is a commercial kitchen that takes, prepares and delivers orders for the Chinese restaurant. The orders for the online restaurants “Athens”, “Pulcinella” and “Max und Moritz” are processed in the same commercial kitchen. No one knows how many online restaurants are served by the Ghost Kitchen and how many cooks work there. That is a trade secret. As a Ghost Kitchen is big business.

Unlike a large kitchen that specialises in one country’s cuisine or one type of preparation, for example, the Ghost Kitchens of ambitious big brands like Unilever are designed for growth from the start. They can respond with maximum flexibility to customer wishes and the ordering behaviour of the guests. To achieve this, they rely on seamless digitalisation of all the ordering and work processes as well as sales. In this way, feedback loops are created in real time at various points in the value chain, the findings of which in turn flow immediately into optimisation.

 

The future of digitalisation in gastronomy has already arrived in Ghost Kitchens

How rapidly the development is progressing can be seen in the scaling of the model: the delivery business was in steady growth until the first Corona cases appeared, the delivery business literally exploded last year. Not only did more and more online ghost restaurants emerge, but also more networked commercial kitchens. These were digitally and logistically connected to each other in order to be able to deliver to as many local customers as possible.

The Ghost Kitchen operators see themselves not only as producers, but also as intermediaries. Similar to the approach of the start-up Smunch, which connects lunch orders from online customers with local restaurants, the brands will increasingly involve local gastronomy. The scenario could look like this: A restaurant has an extra Ghost Kitchen fridge in the kitchen and cooks meals for the online Ghost Kitchen orders with these pre-made ingredients. This could go as far as an Italian restaurant preparing “pulled pork with fried potatoes” and then having it picked up by the Ghost Kitchen or by Lieferando or another delivery service.

Such a venture can only work if everything is digitised and works reliably. Ultimately, the Ghost Kitchens are IT companies with an attached kitchen: if you order from Shanghai Panda now, you don’t know exactly who is preparing the dish. Now it’s the Commercial Kitchen A, an hour later it might be another Chinese restaurant around the corner. The preparers are flexibly interchangeable, the dishes are prepared and standardised so that customers receive consistently high quality. That’s the promise and at the same time it’s a huge challenge for overall quality assurance.

 

Full flexibility, more power in negotiations with suppliers and higher margins

Like other IT companies, ghost kitchens optimise processes and feedback from customers in real time. They track customer behaviour, every parameter from recipe, preparation to delivery. This includes the times for each preparation step up to delivery at the doorstep, the temperature of the food, packaging options and all individual costs of the overall process.  Everything is constantly monitored and changed at lightning speed.

If the Shanghai Panda shows poor sales figures, for example, it can be reacted to immediately and various adjustments can be made, such as the selection of dishes, recipes, but also in pricing or marketing. If this does not work, the restaurant is simply removed from the portal and replaced by “Delhi Belly” the next day. The individual restaurants of the brand run against each other. Comparing the performance data of the restaurants gives more clarity on what is running and what is not.

With the high number of restaurants, dishes and customers, the brands get “Big Data”. The companies use the insights from this to experiment further on which dishes, recipes and marketing measures are successful. In doing so, the ghost kitchens not only fish in the usual delivery business pool, but also increasingly offer special gourmet dishes with higher margins.

Another aspect for the success of the Ghost Kitchen is the good negotiating position with suppliers due to the mass of required ingredients. This allows Ghost Kitchens to significantly increase margins and, if it continues, “clean up” the market by offering high quality dishes at predatory prices. So far this has not happened, Ghost Kitchen are using the higher margins to invest further in their IT infrastructure.

 

What does this mean for traditional gastronomy?

When you look at it soberly, the ghost kitchens might scare you a little. After all, the delivery business has proven to be a vital building block in the crisis. If the big fish are on the move there, is there still room to breathe for the smaller fish?

But fear is not the answer. You could also use the opportunity to understand the Ghost Kitchen concept in detail, learn from it and implement much of it:

  • Which of your competitors are Ghost Kitchens? Find out if you are already competing with ghost kitchens and what dishes they offer and at what prices. These dishes are probably all winners because the companies are very data driven. Have dishes delivered to another address and closely observe the ordering process, communication, packaging and ultimately the quality of the dishes. Can you implement something from this in your practice?
  • Where can you optimise digitally? You can further digitalise your business at various points of the guest journey and also in the restaurant processes and react more quickly to changes in your guests or costs. Tools such as Cockpit can help you to do this. Take a look at all DISH tools for the guest journey.
  • Where are experiments worthwhile? The constant optimisation process of the Spirit Kitchens consists of constant trial and error and the knowledge gained from the successes and failures. You too can conduct A/B tests and flexibly adjust various parameters such as the recipe, prices and selection of dishes, but also the presentation of the dishes online.
  • What can you learn from the dishes and their preparation? All dishes are optimised from the beginning to survive the journey to the customer as fresh, warm and well presented as possible. The Ghost Kitchen works here with “food designers” who take care of exactly these qualities. Larger restaurants in particular could also work out optimised solutions here with their chefs to improve the quality of the dishes delivered. One example is French fries, which quickly lose their crunchiness in the delivery boxes. Can a solution be found for this?
  • How can you reward loyal customers? Your advantage is your face, your emotions. How can you transport this into the delivery business? How can you position yourself in this way online?
  • Should you take advantage of the opportunities to work together? For many, it seems like a deal with the devil. But maybe there are also win-win situations when you work with the Ghost Kitchen, especially in less lucrative times?

 

The cards are not yet dealt in the delivery business. If you can build a strong relationship of trust with your guests, then you are well prepared. However, you should always keep an eye on the development of Ghost Kitchens in order to be able to react quickly.

Maybe you don’t have the finances and possibilities like the big brands. But that doesn’t mean you should be afraid of the Ghost Kitchens. You bring authenticity, passion and experience and that’s how you can keep and win your guests. At DISH, we want to support you with our digital tools, tips and tricks from our gastronomy experts in the form of articles and webinars, as well as a lot of best practice experience from our business.

 

What do you think about Ghost Kitchens? Have you already identified any and how do you see it developing? Does it worry you or leave you cold? We would like to hear from you.

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