For chefs looking to pivot, a ghost kitchen commissary could be just the ticket for survival.
Ghost kitchens may sound like the next tech-bro fever dream, but they could also be a reasonable opportunity for independent restaurants looking for revenue. Ghost kitchens (or “Cloud Kitchens”) are re-vamped commissary kitchens without physical spaces for customers to dine in. Instead, they are heavily reliant on delivery services like Grubhub, Postmates, UberEats, and DoorDash. They’re an affordable option for up and coming chefs or established spots pivoting concepts seeking to gain some revenue – especially during the pandemic. Here’s an overview of some of the players in this quickly developing scene.
Reef’s Neighborhood Kitchens
A subsidiary of Reef Technology, this Miami-based company has obtained over 4,500 parking lots to create modular, off-premise-only “neighborhood kitchens”(which look a lot like food carts to the untrained eye.) Strategically located in surface parking lots, Reef’s kitchens can reach up to 70% of the population via partnerships with delivery apps. This potential new customer reach is crucial for new businesses. There can also be multiple concepts under one roof, so operators can keep costs down by preparing food for a variety of brands at once. Some renowned names have partnered with Reef during COVID – David Chang’s Fuku, Andy Ricker’s Ike’s Vietnamese Fish Sauce Wings pop-up, and Jack’s Wife Freda to name a few. What’s the model? Restaurants are paid a licensing fee, and in turn, are paid a percentage of the revenue from orders. Reef staff is trained on the preparation of recipes by the restaurant and then Reef handles the rest.
CloudKitchens is like the coworking incubator for the food industry. With promises of the ability to open a kitchen in as little as a month, CloudKitchens is a low-risk, low-cost option for budding young chefs who want to test their concept out of one commercial kitchen, making them highly profitable with low overhead costs. The initial startup costs are low, ranging from $2-4k depending on the market. They could provide everything from the real estate, storage space, technology, facility management, potentially kitchen equipment, and logistics. All you need to do is provide staff and cook the food. This concept also relies heavily on third-party delivery apps, but in a socially-distanced world, that is becoming the new norm.
Based out of Pasadena, California, This Google Ventures-backed company has big plans for expansion with goals of opening 10-30 more kitchens nationwide by next year. Jim Collins, a tech-veteran turned restaurateur, used his background to re-think ghost kitchens. They use machine learning to optimize fire times and built a pick-up center in the front of the space for drivers and consumers in order to streamline the take-out process for maximum efficiency. Along with the ability to rent a commercial kitchen, Kitchen United offers delivery services, carry-out, catering, as well as back-of-house labor and access to analytics integrated from third-party apps to the restaurant’s ordering platform.
Currently, only in Soho, Zuul Kitchens created a 5,000 square foot facility to house ghost kitchens for local restaurants to optimize their take-out and delivery capabilities. Hosting independent restaurants like one of NYC’s long-running delicatessen Sarge’s, three Franklin Becker concepts, Taco Rancheros, and Stonebridge Pizza. Tenants pay for their own kitchen equipment, monthly membership fees, and a percentage of delivery fees per order in return for a low-risk commercial space, delivery fulfillment, porter services, labor support, as well as virtual brand and menu consulting. Zuul takes just as good of care of couriers as they do their tenants. By offering a waiting room with a phone charging station, seating, and perpetual stream of free beverages –they ensure there is always a delivery person nearby to satiate their commitment to completing orders in 15 minutes or less.
While the pandemic outlook looks promising with the new administration’s plan for better vaccine rollout, it could still be longer than we want before our dining rooms go back to normal. Weighing out options for alternative methods of operation could be the way they go to build back the revenue lost to the black hole that was 2020.