There’s no denying that customers who dine in spend more. Learn why a ghost kitchen franchise might sound easier to own but is less profitable for most.
THE RISE OF THE GHOST KITCHEN
The concept of a ghost kitchen or “virtual restaurant” is fairly new to the dining lexicon. Essentially, they are fully functional restaurants without the dining space. They exist to sell and fulfill online food orders for third-party delivery platforms such as UberEats and Grubhub. Or they operate independently. They typically have no visible storefront and no on-site customer interaction.
They are generally structured in a few different ways:
Shared commissary spaces. Some ghost kitchens aren’t located within an actual restaurant. They are used for delivery purposes only and often share the food preparation facility with one or more other independent brands.
A virtual spin-off. Some dine-in restaurants are launching delivery-only alternatives to their more traditional restaurant, a trend that gained traction during 2020 for restaurants that were forced to close their dining rooms but still had the means to prepare and deliver food. This allows restauranteurs to leverage their existing kitchens into new sources of revenue.
Renting out kitchens. Another trend is for restaurant owners to lease their space and equipment to accommodate other virtual restaurants, providing an additional source of income to offset lower dine-in sales during the pandemic.
Ghost kitchens have been popping up everywhere over the last few years, never more so than during 2020, with the COVID-19 pandemic and financial fallout forcing many restaurants to temporarily suspend services or shutter completely. Owners in the restaurant industry were forced to get more creative and resourceful than ever before.
Even prior to the pandemic, the average American orders takeout at least once a week, with 20 percent of Generation Z consumers ordering delivery more than three times that. Some studies have found that delivery food orders more than doubled in 2020.
Ghost kitchens have been able to capitalize on the virtual ordering and delivery service models most restaurants have been required to embrace within the confines of a pandemic while reducing typical brick and mortar costs. Rising real estate prices and the steady growth of the gig economy have also contributed to the emergence of more ghost kitchens. Initially, the cost of renting and operating within a smaller space while hiring delivery drivers for cheap seems like an appealing prospect.
PROS & CONS OF OPERATING A GHOST KITCHEN
As with any restaurant, there are pros and cons for both the owners and the guests.
Low overhead. Less expensive real estate costs, operating expenses, inventory, and labor.
Speedy launch. Needing only a cooking space and small staff allows a ghost kitchen to be fully functional in significantly less time than a traditional restaurant.
Additional revenue. Established restaurants have the opportunity to keep their doors open and staff employed by subsidizing their income.
Convenience. Customers can access your menu from the comfort and safety of their own homes and have their food delivered quickly and easily.
Additional costs. It should be noted that while in-house delivery methods may cost you money in some ways, third-party delivery isn’t free. Most platforms charge between 20–30 percent commission to the restaurant per order.
Customer experience. It’s called the hospitality industry for a reason, and, unfortunately, the ghost restaurant process can diminish the relationship between restaurant and customer. Once your food leaves your restaurant, quality control is completely out of your hands.
Brand visibility and awareness. Online marketing is always important, but without a physical storefront, it can be hard for even an established brand to stand out. Additionally, your location won’t play an organic role in customers’ decision to choose you over the competition as it might with a dine-in option.
<h2>THE FUTURE OF GHOST KITCHEN FRANCHISES
The number of Americans who are ready and excited to return to in-person dining is steadily on the rise, as pandemic restrictions relax and the world re-emerges from a difficult year. While the ease and convenience of delivery services are likely to remain a popular option among diners for the foreseeable future, a whopping 90 percent of millennial consumers say that authenticity is important when choosing where to spend their money. It is hard to distinguish or differentiate dining options without the benefit of experiencing them in person.
Ghost kitchens often lack the loyalty and credibility of a trusted burger franchise, making them less appealing long-term options for discerning entrepreneurs. Third-party delivery fees add up over time, limiting a brand’s return on investment and potential for growth.
As restaurants around the country are reopening their doors to in-person dining, the sensory delights of an authentic restaurant experience are what customers truly crave, and Wayback Burgers is thrilled to provide it. Awarding 23 new franchise locations since the beginning of the pandemic, Wayback has maintained a level of quality, guest loyalty, and franchisee support through a difficult year.
Combining in-person dining, takeout, curbside pickup and delivery services, Wayback Burgers provides guests with options, and franchisees with new opportunities as they adapt to challenges and remain true to the Wayback Burgers mission.
Visit us to learn more about franchising opportunities with Wayback Burgers in your area.