Ghost Kitchen: Definition, Benefits, Example, and How To Start One

What if you get to run a restaurant but without worrying about the high rent, fancy interiors, or even waitstaff? Well, that’s exactly what ghost kitchens offer: you can serve delicious food without the high costs of a traditional restaurant. 

Plus, the online food delivery market is booming. Customers are also craving convenience. So, ghost kitchens are becoming the future of dining. 

This guide covers what ghost kitchens are, their benefits, successful examples, and how you can start your own. Let’s dive in!

Summary

• A ghost kitchen is a delivery-only restaurant with no physical storefront, operating via food delivery apps.
• Orders are placed online, prepared in a shared or private kitchen, packed, and delivered.
• Different models include shared commissary kitchens, virtual brand extensions, independent ghost kitchens, and franchise ghost kitchens.
• Lower startup and operational costs, lower risk, and wider delivery reach make ghost kitchens a smart alternative to traditional restaurants.
• Popular examples include Krispy Rice, MrBeast Burger, and The Burger Den.
• Starting one involves picking a niche, choosing a strategic location, setting up a commercial kitchen, listing on delivery apps, building a brand, and optimizing operations with technology.
• Costs vary based on setup (rent vs. build), menu type, and marketing expenses. Renting is faster and cheaper, while building offers more control but requires higher investment.
• Ghost kitchens are a scalable, cost-effective way to enter the food industry, with tools like OneHubPOS helping streamline operations.

What is a Ghost Kitchen?

Ghost kitchens are physical spaces that run food preparation and other operations without a storefront. The food prepared is only available for delivery. Ghost kitchens don't have a store display but have space to cook and sell food online via third-party delivery apps. Instead of a physical location, the presence is digital. 

How Do Ghost Kitchen Work?

The working of ghost kitchens is quite simple. Besides how you receive the order, here’s who is potentially involved. There’s a chef, kitchen assistant, packer, dispatcher, and manager to oversee the entire operation. 

1. Order placement: Customers place orders via any food delivery platform. 
2. Order details receipt: Your ghost kitchen receives the order. It is accompanied by all the required details and special requests, if any.
3. Preparation: Your chef starts cooking the fresh meal. Since you need to fulfill the order in the designated timeline provided to the consumers, you need to balance quality and speed. 
4. Packing: Packing the meals in safe, hygienic, and convenient packaging pleases the eye and follows all the food safety regulations. 
5. Delivery: Mark the order as complete in the food delivery app/website. The delivery person would then visit your premises, pick up the order, and deliver it to the customer.   

Different Models of Ghost Kitchen

Ghost kitchens come in different types, each catering to unique business needs:

• In shared commissary spaces, multiple brands share one kitchen, cutting costs while maximizing efficiency. Think of a pizzeria and a sushi brand operating side by side but separately.
• In virtual brand extensions, existing quick service restaurants launch delivery-only brands using their existing kitchen. For example, a burger spot might add a wings-only brand without extra space or staff.
• Independent ghost kitchens are single-brand, delivery-only kitchens.
• In franchise ghost kitchens, big brands run multiple virtual brands from one location.

Benefits of Opening a Ghost Kitchen

By 2030, ghost kitchens are predicted to hold a 50% market share of the drive-thru and takeaway foodservice markets. Here are some of the benefits to consider. 

1. Capitalize on Online Ordering Demand

The online meal delivery segment contributes to about 40% of restaurant sales. So, first-time ghost kitchen operators can leverage online ordering to cater to the increased demand. Moreover, already-established restaurants can expand their business and capitalize on the increased demand for food delivery services.

2. Low Overhead Costs

The cost of starting the ghost kitchen business is low. You don't require a server, counter service, staffing for the bar, huge space, and a setup that includes tables, interiors, and cutlery. That means the ghost kitchen costs significantly less than a full-service or fast-casual restaurant. 

3. Simpler Startup Efforts

Starting up a ghost kitchen model takes simpler efforts. All it requires is a brand, a rental space for a kitchen to prepare food, marketing spending to create brand awareness, and integration with a third-party delivery app. All this, accompanied by a solid and sound menu, is a crucial aspect of the model compared to the traditional, which also has to focus on the interiors, exteriors, location, and much more.

4. Lower Risk

If opening a quick service restaurant business is where your interest lies, then there is nothing less risky than the ghost kitchen. Its minimal cost requirement to start a business is lower than any other restaurant business model. Also, the ghost kitchen model allows you to try something new without making a significant investment. 

5. Increased Delivery Range

When there is no fixed storefront to serve the customers, there is no restriction on who your customers are. That way, your delivery range can increase with third-party delivery apps or by increasing the number of kitchens. 

Initially, integrating a third-party delivery app is beneficial as it is more known in the market and can increase sales volume. Once your brand is established, you can select delivery partners to cater to various locations, increasing your revenue. As your business grows, you can increase the number of kitchens in multiple locations to expand the delivery locations.

Ghost Kitchen vs. Cloud Kitchens

Though the ghost kitchen and cloud kitchen are often interchangeably used, their differences make them distinct.

Popular Ghost Kitchen Examples

The ghost kitchen concept of the model is simple. Many businesses have implemented it and have expanded themselves. Here are some popular brands that work on ghost kitchen models.

1. Krispy Rice

Krispy Rice is a Japanese concept kitchen established in 2020. The concept is built around a signature dish, spicy tuna crispy rice. Hence, the menu has a variation of crispy rice made available in three combo deals, or à la carte, which is attractive to all sushi lovers. 

C3 is a subsidiary of SBE Entertainment Group, a hospitality lifestyle company leveraging its vast restaurant network and ghost kitchens to deliver Krispy Rice’s recipes to doorsteps through DoorDash, Uber Eats, and Postmates.  

2. MrBeast Burger

MrBeast Burger is a virtual restaurant operating from ghost kitchens across the United States. It is owned by a famous personality on YouTube, Mr. Beast. Found in 2020. People order food via delivery apps. It is situated in 300 locations. They run from the virtual dining concept by Robert Earl, who has successful franchise ownership. 

VDC is the one that rolls out MrBeast Burger, which uses ghost kitchens to run a brand, and each of the concepts gets endorsed by a celebrity’s branding. With a strategic location spread,  they take over the delivery app algorithm to reach every city with delivery.  

3. The Burger Den

With The Burger Den and The Meltdown, Denny’s is tapping into online food delivery without opening new restaurants. The Burger Den serves up stacked burgers, while The Meltdown focuses on gourmet sandwiches loaded with cheesy goodness. 

These virtual brands operate from existing Denny’s kitchens, allowing the company to maximize its resources and drive more traffic through delivery apps.  

How to Start a Ghost Kitchen?

Here’s how to get started.

1. Pick Your Niche & Menu

What’s your specialty? Burgers, sushi, protein-packed bowls, or something else? Choose a niche that stands out and keeps customers coming back. Using the efficient menu management features, keep the menu focused. Too many options lead to chaos. Also, make sure that you price right so that you sell more.

2. Choose the Right Location

Since you don’t need a fancy storefront, pick a spot near your target customers. A central location with high delivery demand and affordable rent is ideal. Check app hotspots like UberEats to see where orders are booming.

3. Set Up Your Kitchen

Rent a commercial kitchen or build your own. Make sure you have the right equipment for your menu. For example, a pizza place needs top-notch ovens, while a smoothie bar should have high-speed blenders.

4. Get on Delivery Apps & Set Up Direct Orders

List your ghost kitchen on platforms like DoorDash to enable mobile ordering and boost visibility. But remember, they take a cut. To maximize profits, you can create a website or WhatsApp order system with discounts and contactless payment options so that they can simply order and pay.

5. Build Your Brand & Market Smartly

A ghost kitchen is invisible, unless you make noise! Use social media, mouthwatering food photography, and influencer collabs to create hype. Build trust through:

• amazing branding
• great packaging
• fun social media engagement
• real customer reviews

A behind-the-scenes video of your kitchen is a personal touch that builds credibility. You can also send a QR code with the order to your customer so that they can leave a review.

6. Optimize Operations & Scale

Ensure smooth logistics, train staff, and focus on fast, quality deliveries. Customers won’t return for cold fries and soggy pizza. You can use ventilated boxes for fries and secure lids for soups. Plus, test delivery times and tweak routes. 

Ghost Kitchen Costs

Now that you know it works like any other commercial kitchen, what does the cost look like? The essential cost varies depending on these factors:

1. Your food niche and menu determine the necessary equipment and facilities.
2. Costs vary based on whether you build or rent the kitchen.
3. Operating expenses include utilities, equipment, insurance, packaging, salaries, licenses, and setup costs.
4. Digital presence costs cover apps, websites, and promotions.
5. Supply chain expenses depend on food type (fresh or frozen), storage needs, and future scaling. 

Ghost Kitchen for Rent vs. Buy

If you are setting up a ghost kitchen, le’s quickly understand whether it is good to build or rent.  

Option 1: Build Ghost Kitchen 

Building a ghost kitchen has benefits, but it is one’s decision whether to take the initial setup's expenses on themselves. 

Pros: 

• It gives space to build per your needs, whether you want to optimize the layout, pick up specific equipment, or design as per the menu.  
• Consider this a long-term investment if you plan to expand your ghost kitchen. 
• Hygiene, operations, and maintenance can be entirely under your control. 

Cons:  

• Constructing, purchasing utilities, and getting permits is an upfront expenses. 
• The launch can be delayed due to setting things up from scratch.  
• The maintenance, management, repairs, and compliance hassle will be on you.  
• If the investment does not succeed, it can remain an asset that can't be repurposed easily.  

Option 2: Rent Ghost Kitchen

There are rental spaces equipped with shared spaces that you need not set up from scratch. 

Pros:  

• It is cost-effective compared to expenses incurred in construction.  
• The ready infrastructure comes with equipped utilities that are commercial grade and with licenses.  
• You can adapt quickly to test out different menus as you customize them. 
• It can be an efficient solution, as other tenants can share the cost with you.  

Cons:  

• You’ll have limited control over the layout of the kitchen and equipment. 
• You must rely on the owner for the repairs and maintenance. 
• A lease arrangement cannot offer flexibility or might even cost more.

Wrapping Up

Ghost kitchens reduce overhead costs, increase operational efficiency, and expand market reach. Coupled with automation and technology, ghost kitchens can be managed way more efficiently and profitably. 

So, what are you waiting for? It's time to capitalize on this increasing demand and start a ghost kitchen. On the way, if you need help with a point-of-sale solution to make your operations manageable, check out OneHubPOS. This easy-to-use software is designed for restaurants, making kitchen operations a breeze. Book a demo with us to learn how!

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