Benefits of Opening a Ghost Restaurant

Firstly what are ghost restaurants? Ghost restaurants are an online-only or delivery-only restaurant that serves customers exclusively through online food delivery only to your doorstep.

Now that we have acknowledged that, what are the benefits of opening a ghost restaurant? If you want to know more about how opening a ghost restaurant is beneficial, keep reading.

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Virtual vs Physical

Why should you open a ghost restaurant? Because ghost restaurants eliminate the need for operating a dining room, the cost of acquiring a space for a restaurant, renovating, and refurbishing the property can be costly. Also, ghost restaurants don’t need a storefront as they don’t have waiting or seating areas, hence requiring significantly lesser total square footage.

Opening a typical restaurant requires significant capital and time investment as compared to ghost restaurants. This is because traditional restaurants require substantial upfront capital, overhead costs, labor costs, and not to mention the many

competitors in the F&B industry,  which makes it difficult for new and upcoming brick and mortar F&B businesses to grow.  Plus, even successful restaurants close in less than a year because of high operating costs, and too many competitors.

 

Essentials for Starting a Ghost Restaurant

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All it takes to open a ghost restaurant is a space equipped with industrial kitchen equipment, along with chefs to prepare the food. Fixed costs are noticeably lower in operating ghost restaurants. For larger chains that have existing restaurant locations operating as ghost restaurants, it is crucial that the quality of their in-house dining experience is not impacted or disrupted by the delivery process.

For restaurateurs who don’t have the capital to own a customized kitchen space for their ghost restaurant, working with a commissary kitchen is a great alternative. However, what is a commissary kitchen? Commissary kitchens are established commercial kitchens where food service providers can go to prepare and store their food.

But others may be businesses that just rent out their kitchen space for some extra income, although most ghost restaurateurs prefer a private kitchen, it serves as a great starting point for your business.

In either case, these are the essentials a commissary kitchen will usually need to provide – ample cooking space, including counter space, industrial-size ovens, freezers and cooktops, and storage, as well as trash removal and recycling services.

 

Strengths and Growth of Ghost Restaurants

However, ghost restaurants are easier to scale and test, especially In new markets where delivery demand multiplies rapidly, current restaurants sometimes cannot grow to meet the demand and as a result, these restaurants close down. Since the market is still in its infancy stage, there are tons of opportunities and experiments you can conduct.

Ghost restaurants are able to operate their restaurants with lesser staffs such as waiters and receptionists, this, in turn, helps reduce labor cost. Not only do you reduce labor cost, but ghost restaurants also minimize the need to constantly train and recruit new staff.

Insurance and other expenses are also factors contributing to the high cost of operating a restaurant. However, ghost restaurants have significantly lower overhead cost in comparison to typical restaurants or “sit-in” restaurants, that have many rules and regulations to comply to.

In addition, the kitchen can be housed in an inexpensive location that would not typically be considered a suitable place for a sit-in restaurant. Ghost restaurants are also able to operate and set up multiple kitchens under one ecosystem that allows them to deliver to a wider demographic.

 

Opportunities and Collaborations

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Ghost restaurants mainly utilize online services and deliveries, some examples in Malaysia include: Dahmakan, Foodpanda, and GrabFood delivery which delivers food made from the third party restaurants.

Ghost restaurants are able to collaborate with these third-party brands to further elevate company growth, also by adding new services and menu options for customers.

Furthermore, multiple ghosts restaurants can be run by a single company and a single location’s kitchen and staff can function as multiple branded restaurants. Ghost restaurant franchises can provide quality service to customers and try new brands and cuisines with little risk.

It is because of this, companies try to appeal to changing tastes and trends from Millennials, who want fast and delicious food delivered to their doorstep.

“In high labor cost markets, ghost restaurants can bring down the price of handmade meals, and at the end of the day, convenience will always win. Cooking on a daily basis is a mandatory chore that many people hate. By enhancing the whole value chain of food, we can provide better choices for healthy eating every day. Eventually, ghost restaurants will start to replace home kitchens,” Martti Paatela of Epic Foods, a Nordic food delivery company, and ghost restaurant, explained. Source: Forbes

 

Conclusion

In conclusion, are ghosts restaurants the future of the F&B industry? Or just a flash in the pan? Nonetheless, ghost restaurants incur lesser costs as compared to sit-in restaurants. Not to mention, it can also reach out to new markets, such as hungry customers who are unwilling to leave the comfort of their homes.

Ghost restaurants teach a valuable lesson: on the off-chance that you change how customers get to a business, there are always new chances for business opportunities.

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